§ 27-1.1-2 - Reduction from liability for reinsurance ceded by a domestic insurer to an assuming insurer. - Rhode Island Statutes

SECTION 27-1.1-2

   § 27-1.1-2  Reduction from liability forreinsurance ceded by a domestic insurer to an assuming insurer. – A reduction from liability for the reinsurance ceded by a domestic insurer toan assuming insurer not meeting the requirements of § 27-1.1-1 shall beallowed in an amount not exceeding the liabilities carried by the cedinginsurer. The reduction shall be in the amount of funds held by or on behalf ofthe ceding insurer, including funds held in trust for the ceding insurer, undera reinsurance contract with the assuming insurer as security for the payment ofobligations under the contract, if the security is held in the United Statessubject to withdrawal solely by, and under the exclusive control of, the cedinginsurer, or, in the case of a trust, held in a qualified United Statesfinancial institution as defined in § 27-1.1-3(b). This security may be inthe form of:

   (1) Cash;

   (2) Securities listed by the securities valuation office ofthe National Association of Insurance Commissioners and qualifying as admittedassets;

   (3) Clean, irrevocable, unconditional letters of credit,issued or confirmed by a qualified United States institution as defined in§ 27-1.1-3(a), no later than December 31st in respect of the year forwhich filing is being made, and in the possession of the ceding company on orbefore the filing date of its annual statement. Letters of credit meetingapplicable standards of issuer acceptability as of the dates of their issuanceor confirmation shall, notwithstanding the issuing or confirming institution'ssubsequent 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; or

   (4) Any other form of security acceptable to the commissioner.