§ 27-1.1-1 - Credit allowed a domestic ceding insurer. - Rhode Island Statutes

SECTION 27-1.1-1

   § 27-1.1-1  Credit allowed a domesticceding insurer. – (a) Credit for reinsurance shall be allowed a domestic insurer as either anasset or a deduction from liability on account of reinsurance ceded only whenthe reinsurer meets the requirements of subsection (b), (c), (d), (e), or (f).If meeting the requirements of subsection (d) or (e), the requirements ofsubsection (g) of this section must also be met.

   (b) Credit shall be allowed when the reinsurance is ceded toan assuming insurer which is licensed to transact insurance or reinsurance inthis state.

   (c) Credit shall be allowed when the reinsurance is ceded toan assuming insurer which is accredited as a reinsurer in this state. Anaccredited reinsurer is one which:

   (i) Files with the commissioner evidence of its submission tothis state's jurisdiction;

   (ii) Submits to this state's authority to examine its booksand records;

   (iii) Is licensed to transact insurance or reinsurance in atleast one state, or in the case of a United States branch of an alien assuminginsurer is entered through and licensed to transact insurance or reinsurance inat least one state; and

   (iv) Annually files with the commissioner a copy of itsannual statement filed with the insurance department of its state of domicileand a copy of its most recent audited financial statement, and either:

   (A) Maintains a surplus regarding policyholders in an amountwhich is not less than twenty million dollars ($20,000,000) and whoseaccreditation has not been denied by the commissioner within ninety (90) daysof its submission; or

   (B) Maintains a surplus regarding policyholders in an amountless than twenty million dollars ($20,000,000) and whose accreditation has beenapproved by the commissioner;

   (2) No credit shall be allowed a domestic ceding insurer ifthe assuming insurers' accreditation has been revoked by the commissioner afternotice and hearing.

   (d) Credit shall be allowed when the reinsurance is ceded toan assuming insurer which is domiciled and licensed in, or in the case of aUnited States branch of an alien assuming insurer is entered through, a statewhich employs standards regarding credit for reinsurance substantially similarto those applicable under this statute, and the assuming insurer or U.S. branchof an alien assuming insurer:

   (i) Maintains a surplus regarding policyholders in an amountnot less than twenty million dollars ($20,000,000); and

   (ii) Submits to the authority of this state to examine itsbooks and records;

   (2) Provided, that the requirement of subsection (d)(1)(i)does not apply to reinsurance ceded and assumed pursuant to poolingarrangements among insurers in the same holding company system.

   (e) Credit shall be allowed when the reinsurance is ceded toan assuming insurer which maintains a trust fund in a qualified United Statesfinancial institution, as defined in § 27-1.1-3(b), for the payment of thevalid claims of its United States policyholders and ceding insurers, and theirassigns and successors in interest. The assuming insurer shall report annuallyto the commissioner information substantially the same as that required to bereported on the National Association of Insurance Commissioners annualstatement form by licensed insurers to enable the commissioner to determine thesufficiency of the trust fund. In the case of a single assuming insurer, thetrust shall consist of a trusted account representative of the assuminginsurer's liabilities attributable to business written in the United Statesand, in addition, the assuming insurer shall maintain a trusted surplus of notless than twenty million dollars ($20,000,000). In the case of a groupincluding incorporated and/or individual unincorporated underwriters, the trustshall consist of a trusted account representative of the group's liabilitiesattributable to business written in the United States and, in addition, thegroup shall maintain a trusted surplus of which one hundred million dollars($100,000,000) shall be held jointly for the benefit of United States cedinginsurers of any member of the group; the incorporated members of the groupshall not be engaged in any business other than underwriting as a member of thegroup and shall be subject to the same level of solvency regulation and controlby the group's domiciliary regulator as are the unincorporated members; and thegroup shall make available to the commissioner an annual certification of thesolvency of each underwriter by the group's domiciliary regulator and itsindependent public accountants;

   (2) In the case of a group of incorporated insurers undercommon administration which: (i) complies with the filing requirementscontained in subsection (e)(1), (ii) has continuously transacted an insurancebusiness outside the United States for at least three (3) years immediatelyprior to making application for accreditation, (iii) submits to this state'sauthority to examine its books and records and bears the expenses of theexamination, and (iv) has aggregate policyholders surplus of ten billiondollars ($10,000,000,000), the trust shall be in an amount equal to the group'sseveral liabilities attributable to business ceded by United States cedinginsurers to any member of the group pursuant to reinsurance contracts issued inthe name of the group; plus the group shall maintain a joint trusted surplus ofwhich one hundred million dollars ($100,000,000) shall be held jointly for thebenefit of United States ceding insurers of any member of the group asadditional security for any liabilities, and each member of the group shallmake available to the commissioner an annual certification of the member'ssolvency by the member's domiciliary regulator and its independent publicaccountant;

   (3) The trust shall be established in a form approved by thecommissioner. The trust instrument shall provide that contested claims shall bevalid and enforceable upon the final order of any court of competentjurisdiction in the United States. The trust shall vest legal title to itsassets in the trustees of the trust for its United States policyholders andceding insurers, and their assigns and successors in interest. The trust andthe assuming insurer shall be subject to examination as determined by thecommissioner. The trust described in this subsection must remain in effect foras long as the assuming insurer shall have outstanding obligations due underthe reinsurance agreements subject to the trust;

   (4) No later than February 28 of each year the trustees ofthe trust shall report to the commissioner in writing setting forth the balanceof the trust and listing the trust's investments at the preceding year end andshall certify the date of termination of the trust, if this is planned, orcertify that the trust shall not expire prior to the next following December 31;

   (f) Credit shall be allowed when the reinsurance is ceded toan assuming insurer not meeting the requirements of subsections (b), (c), (d),or (e), but only with respect to the insurance of risks located injurisdictions where the reinsurance is required by applicable law or regulationof that jurisdiction; or

   (2) Credit may be allowed, at the discretion of thecommissioner, when reinsurance is ceded to a protected cell of a protected cellcompany organized under the Protected Cell Companies Act, chapter 64 of thistitle, in the form of an attribution of assets, insurance liabilities andexposures from the general account of the protected cell company as required by§§ 27-64-4 and 27-64-5.

   (g) If the assuming insurer is not licensed or accredited totransact insurance or reinsurance in this state, the credit permitted bysubsections (d) and (e) shall not be allowed unless the assuming insurer agreesin the reinsurance agreements:

   (i) That in the event of the failure of the assuming insurerto perform its obligations under the terms of the reinsurance agreement, theassuming insurer, at the request of the ceding insurer, shall submit to thejurisdiction of any court of competent jurisdiction in any state of the UnitedStates, will comply with all requirements necessary to give the courtjurisdiction, and will abide by the final decision of the court or of anyappellate court in the event of an appeal; and

   (ii) To designate the commissioner or a designated attorneyas its true and lawful attorney upon whom may be served any lawful process inany action, suit, or proceeding instituted by or on behalf of the cedingcompany;

   (2) This subsection is not intended to conflict with oroverride the obligation of the parties to a reinsurance agreement to arbitratetheir disputes, if an obligation is created in the agreement.