681A.240 - Requirements for reduction from liability when assuming insurer does not meet certain requirements concerning risk-based capital. - Nevada Statutes

681A.240  Requirements for reduction from liability when assuming insurer does not meet certain requirements concerning risk-based capital.  A reduction from liability for the reinsurance ceded by a domestic insurer to an assuming insurer not meeting the requirements of NRS 681A.110 or the regulations of the Commissioner concerning risk-based capital must be allowed in an amount not exceeding the liabilities carried by the ceding insurer and the reduction must be in the amount of assets held by or on behalf of the ceding insurer, including assets held in trust for the ceding insurer, under a contract of reinsurance with the assuming insurer as security for the payment of obligations thereunder, if the security is 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 financial institution in the United States. The security may be in any of the following forms:

      1.  Cash.

      2.  Securities listed by the Securities Valuation Office of the National Association of Insurance Commissioners and qualifying as admitted assets.

      3.  Irrevocable, unconditional letters of credit, each issued or confirmed by a qualified financial institution in the United States which has been determined by the Commissioner, or the Securities Valuation Office of the National Association of Insurance Commissioners, to meet such standards of financial condition and standing as are considered necessary or appropriate to regulate the quality of financial institutions whose letters of credit are acceptable to the Commissioner, no later than December 31 of the year for which filing is made, and in the possession of the ceding company on or before the date of filing its annual statement. A letter of credit meeting applicable standards of acceptability of its issuer as of the date of its issuance or confirmation, notwithstanding the issuing or confirming institution’s subsequent failure to meet applicable standards of acceptability, continues to be acceptable as security until its expiration, extension, renewal, modification or amendment, whichever first occurs.

      4.  Any other form of security acceptable to the Commissioner.

      (Added to NRS by 1995, 1759)