S.D. Admin. R. 20:06:31:09.01

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

Section 20:06:31:09.01 - Trust agreements established under SDCL 58-14-16

Notwithstanding other provisions of this chapter, when a trust agreement is established to meet the requirements of SDCL 58-14-16 in conjunction with a reinsurance agreement covering life, annuities or accident and health risks, where it is customary to provide a trust agreement for a specific purpose, the trust agreement may provide that the ceding insurer shall undertake to use and apply amounts drawn upon the trust account, without diminution because of the insolvency of the ceding insurer or the assuming insurer, only for the following purposes:

(1) To pay or reimburse the ceding insurer for:

(a) The assuming insurers share under the specific reinsurance agreement of premiums returned, but not yet recovered from the assuming insurer, to the owners of policies reinsured under the reinsurance agreement on account of cancellations of the policies; and

(b) The assuming insurers share under the specific reinsurance agreement of surrenders and benefits or losses paid by the ceding insurer, but not yet recovered from the assuming insurer, under the terms and provisions of the policies reinsured under the reinsurance agreement;

(2) To pay to the assuming insurer amounts held in the trust account in excess of the amount necessary to secure the credit or reduction from liability for reinsurance taken by the ceding insurer; or

(3) Where the ceding insurer has received notification of termination of the trust and where the assuming insurers entire obligations under the specific reinsurance agreement remain unliquidated and undischarged ten days prior to the termination date, to withdraw amounts equal to the assuming insurers share of liabilities, to the extent that the liabilities have not yet been funded by the assuming insurer, and deposit those amounts in a separate account, in the name of the ceding insurer in any qualified U.S. financial institution apart from its general assets, in trust for the uses and purposes specified in subdivisions (1) and (2) of this section as may remain executory after withdrawal and for any period after the termination date.

S.D. Admin. R. 20:06:31:09.01

44 SDR 71, effective 10/23/2017

General Authority: SDCL 58-14-17.

Law Implemented: SDCL 58-14-16, 58-14-17