D.C. Mun. Regs. tit. 26, r. 26-A2853

Current through Register 71, No. 45, November 7, 2024

Rule 26-A2853 - REQUIREMENTS APPLICABLE TO COVERED POLICIES TO OBTAIN CREDIT FOR REINSURANCE

2853.1

Subject to the exemptions described in §2855 and the provisions of §2854, credit for reinsurance shall be allowed with respect to ceded liabilities pertaining to Covered Policies pursuant to §§2 and 3 of the Law on Credit for Reinsurance Act of 1993 (D.C. Official Code §§ 31-501 and 502) only if, in addition to all other requirements imposed by law or regulation, the following requirements are met on a treaty-by-treaty basis:

(a) The ceding insurer's statutory policy reserves with respect to the Covered Policies are established in full and in accordance with the applicable requirements of §1 of Chapter V of the Life Insurance Act, approved June 19, 1934 (48 Stat. 1156; D.C. Official Code § 31-4701), and related regulations and actuarial guidelines, and credit claimed for any reinsurance treaty subject to this regulation does not exceed the proportionate share of those reserves ceded under the contract;

(b) The ceding insurer determines the Required Level of Primary Security with respect to each reinsurance treaty subject to this regulation and provides support for its calculation as determined to be acceptable to the Commissioner;

(c) Funds consisting of Primary Security, in an amount at least equal to the Required Level of Primary Security, are held by or on behalf of the ceding insurer, as security under the reinsurance treaty within the meaning of §2 of the Law on Credit for Reinsurance Act of 1993 (D.C. Official Code § 31-502), on a funds withheld, trust, or modified coinsurance basis;

(d) Funds consisting of Other Security, in an amount at least equal to any portion of the statutory reserves as to which Primary Security is not held pursuant to Paragraph (c) above, are held by or on behalf of the ceding insurer as security under the reinsurance treaty within the meaning of §2 of the Law on Credit for Reinsurance Act of 1993 (D.C. Official Code § 31-502);

(e) Any trust used to satisfy the requirements of this section shall comply with all of the conditions and qualifications of §2808, except that:

(1) Funds consisting of Primary Security or Other Security held in trust, shall for the purposes identified in §2852.9, be valued according to the valuation rules set forth in §2852.9, as applicable;

(2) There are no affiliate investment limitations with respect to any security held in such trust if such security is not needed to satisfy the requirements of paragraph (c) of this subsection;

(3) The reinsurance treaty must prohibit withdrawals or substitutions of trust assets that would leave the fair market value of the Primary Security within the trust (when aggregated with Primary Security outside the trust that is held by or on behalf of the ceding insurer in the manner required by paragraph (c) of this subsection) below 102% of the level required by paragraph (c) of this subsection at the time of the withdrawal or substitution; and

(4) The determination of reserve credit under §2808.14(c) shall be determined according to the valuation rules set forth in §2852.9, as applicable; and

(f) The reinsurance treaty has been approved by the Commissioner.

D.C. Mun. Regs. tit. 26, r. 26-A2853

Final Rulemaking published at 69 DCR 15557 (12/30/2022)