S.D. Admin. R. 20:06:30:13

Current through Register Vol. 50, page 159, June 17, 2024

Section 20:06:30:13 - Definitions

The following definitions apply to §§ 20:06:30:13 to 20:06:30:20, inclusive:

(1) "Actuarial method," the methodology used to determine the required level of primary security, as described in § 20:06:30:14;

(2) "Covered policy," subject to the exemptions described in § 20:06:30:18, a covered policy is a policy, other than a grandfathered policy, of the following policy types:

(a) Life insurance policy with guaranteed nonlevel gross premiums and/or guaranteed nonlevel benefits, except for flexible premium universal life insurance policy; or

(b) Flexible premium universal life insurance policy with provisions resulting in the ability of a policyholder to keep a policy in force over a secondary guarantee period;

(3) "Grandfathered policy," a policy of the types described in subsections 20:06:30:13(2)(a) and 20:06:30:13(2)(b) that was:

(a) Issued prior to January 1, 2015; and

(b) Ceded, as of December 31, 2014, as part of a reinsurance treaty that would not have met one of the exemptions set forth in § 20:06:30:18 had that section then been in effect;

(4) "Non-covered policy," any policy that does not meet the definition of covered policy, including grandfathered policy;

(5) "Other security," any security acceptable to the director other than security meeting the definition of primary security;

(6) "Primary security," the following forms of security:

(a) Cash meeting the requirements of SDCL 58-14-16;

(b) Securities listed by the National Association of Insurance Commissioners Securities Valuation Office meeting the requirements of SDCL 58-14-16, but excluding any synthetic letter of credit, contingent note, credit-linked note, or other similar security that operates in a manner similar to a letter of credit, and excluding any securities issued by the ceding insurer or any of its affiliates; and

(c) For security held in connection with funds withheld and modified coinsurance reinsurance treaties:

(i) Commercial loans in good standing of CM3 quality and higher as defined in the Valuation Manual;

(ii) Policy loans; and

(iii) Derivatives acquired in the normal course and used to support and hedge liabilities pertaining to the actual risks in the policies ceded pursuant to the reinsurance treaty;

(7) "Required level of primary security," the dollar amount determined by applying the actuarial method to the risks ceded with respect to a covered policy, but not more than the total reserve ceded;

(8) "Valuation Manual," the valuation manual adopted by the director under § 20:06:59:01 and SDCL 58-26-45.1, with all amendments adopted by the National Association of Insurance Commissioners (NAIC) that are effective for the financial statement date on which credit for reinsurance is claimed; and

(9) "VM-20," the definition of "Requirements for Principle-Based Reserves for Life Products" from the Valuation Manual, including all relevant definitions.

S.D. Admin. R. 20:06:30:13

49 SDR 009, effective 8/9/2022

General Authority: SDCL 58-14-17; 58-26-45.1.

Law Implemented: SDCL 58-14-17.