N.J. Admin. Code § 11:2-28.8

Current through Register Vol. 57, No. 1, January 6, 2025

Section 11:2-28.8 - Reduction from liability for reinsurance ceded to an unauthorized assuming insurer

(a) An insurer shall be permitted to take a reduction from liability for reinsurance ceded to an assuming insurer not meeting the requirements at N.J.A.C. 11:2-28.3, 28.4, 28.5, 28.6, 28.7, or 28.7A through 28.7E in an amount which does not exceed the liabilities carried by the ceding insurer. Such reduction shall be in the amount of the funds held by or on behalf of the ceding insurer, including funds held in trust for the exclusive benefit of the ceding insurer, under a reinsurance contract with such assuming insurer as security for the payment of obligations thereunder. Such security shall be held in the United States, subject to withdrawal solely by and under the exclusive control of the ceding insurer, or in the case of a trust held in a qualified United States financial institution, subject to withdrawal solely by and under the exclusive control of the ceding insurer.

(b) The security shall be in the form of:

1. Cash (United States legal tender);

2. Securities listed by the Securities Valuation Office of the NAIC, including those deemed exempt from filing as defined by the Purposes and Procedures Manual of the Securities Valuation Office, and qualified as admitted assets;

3. Clean, irrevocable, evergreen, unconditional letters of credit issued or confirmed by a qualified United States institution no later than December 31st of the year for which filing is being made, and in the possession of the ceding insurer on or before the filing date of its annual statement. Letters of credit meeting applicable standards of issuer acceptability as of the dates of their issuance or confirmation shall, notwithstanding the issuing or confirming qualified United States financial institution's subsequent failure to meet applicable standards of issuer acceptability, continue to be acceptable as security until their expiration, extension, renewal, modification, or amendment, whichever first occurs, unless the issuer has been declared insolvent under applicable statutory or regulatory provisions; or

4. Any other form of security approved by the Commissioner upon formal request.

N.J. Admin. Code § 11:2-28.8

Amended by R.2012 d.154, effective 9/4/2012.
See: 44 N.J.R. 360(a), 44 N.J.R. 2169(a).
In (b)2, inserted ", including those deemed exempt from filing as defined by the Purposes and Procedures Manual of the Securities Valuation Office,"; and in (b)3, substituted "insurer" for "company" and inserted a comma following "modification".

Amended by 54 N.J.R. 1735(a), effective 9/6/2022