[ARTICLE 4A]
CREDIT FOR REINSURANCE
§431:4A-101 Credit allowed a domestic ceding insurer. (a) Credit for reinsurance shall be allowed a domestic ceding insurer as either an asset or a reduction from liability on account of reinsurance ceded only when the reinsurer meets the requirements of subsection (b), (c), (d), (e), (f), or (m). The commissioner may adopt by rules pursuant to section 431:4A-104(b) specific additional requirements relating to:
Credit shall be allowed under subsection (b) or (c) only as respects cessions of those kinds or classes of business that the assuming insurer is licensed or otherwise permitted to write or assume in its state of domicile or, in the case of a United States branch of an alien assuming insurer, in the state through which it is entered and licensed to transact insurance or reinsurance. Credit shall be allowed under subsection (c) or (d) only if the applicable requirements of subsection (n) have been satisfied.
(b) Credit shall be allowed when the reinsurance is ceded to an assuming insurer that is licensed to transact insurance or reinsurance in this State, or is accredited by the commissioner as a reinsurer in this State. To be eligible for accreditation, a reinsurer shall:
(c) Credit shall be allowed when the reinsurance is ceded to an assuming insurer that is domiciled in, or in the case of a United States branch of an alien assuming insurer is entered through, a state that employs standards regarding credit for reinsurance equal to or exceeding those applicable under this article and the assuming insurer or United States branch of an alien assuming insurer:
provided that paragraph (1) does not apply to reinsurance ceded and assumed pursuant to pooling arrangements among insurers in the same holding company system.
(d) Credit shall be allowed as follows:
(e) Credit shall be allowed when the reinsurance is ceded to an assuming insurer that has been certified by the commissioner as a reinsurer in this State and secures its obligations in accordance with the requirements of this subsection as follows:
(f) Credit shall be allowed when the reinsurance is ceded to an assuming insurer meeting each of the following conditions:
(g) The commissioner shall timely create and publish a list of reciprocal jurisdictions. A list of reciprocal jurisdictions is published through the National Association of Insurance Commissioners committee process. The commissioner's list shall include any reciprocal jurisdiction as defined under subsection (f)(1)(A) and (B) and shall consider any other reciprocal jurisdiction included on the National Association of Insurance Commissioners list. The commissioner may approve a jurisdiction that does not appear on the National Association of Insurance Commissioners' list of reciprocal jurisdictions in accordance with criteria to be developed under rules adopted by the commissioner. The commissioner may remove a jurisdiction from the list of reciprocal jurisdictions upon a determination that the jurisdiction no longer meets the requirements of a reciprocal jurisdiction in accordance with a process set forth in rules adopted by the commissioner, except that the commissioner shall not remove from the list a reciprocal jurisdiction as defined under subsection (f)(1)(A) and (B). Upon removal of a reciprocal jurisdiction from this list, credit for reinsurance ceded to an assuming insurer that has its home office or is domiciled in that jurisdiction shall be allowed if otherwise permitted pursuant to this article.
(h) The commissioner shall timely create and publish a list of assuming insurers that have satisfied the conditions set forth in subsection (f) and to which cessions shall be granted credit in accordance with subsection (f). The commissioner may add an assuming insurer to the list if a National Association of Insurance Commissioners accredited jurisdiction has added the assuming insurer to its list of assuming insurers or if, upon initial eligibility, the assuming insurer submits the information to the commissioner as required under subsection (f)(4) and complies with any additional requirements that the commissioner may impose by rule, except to the extent that they conflict with an applicable covered agreement.
(i) If the commissioner determines that an assuming insurer no longer meets one or more of the requirements under this section, the commissioner may revoke or suspend the eligibility of the assuming insurer for recognition under this section in accordance with procedures set forth in rules.
While an assuming insurer's eligibility is suspended, no reinsurance agreement issued, amended, or renewed after the effective date of the suspension shall qualify for credit except to the extent that the assuming insurer's obligations under the contract are secured in accordance with section 431:4A-102.
If an assuming insurer's eligibility is revoked, no credit for reinsurance shall be granted after the effective date of the revocation with respect to any reinsurance agreements entered into by the assuming insurer, including reinsurance agreements entered into before the date of revocation, except to the extent that the assuming insurer's obligations under the contract are secured in a form acceptable to the commissioner and consistent with the provisions of section 431:4A-102.
(j) If subject to a legal process of rehabilitation, liquidation, or conservation, as applicable, the ceding insurer, or its representative, may seek and, if determined appropriate by the court in which the proceedings are pending, may obtain an order requiring that the assuming insurer post security for all outstanding ceded liabilities.
(k) Nothing in this section shall limit or in any way alter the capacity of parties to a reinsurance agreement to agree on requirements for security or other terms in that reinsurance agreement, except as expressly prohibited by this article or other applicable law or rule.
(l) Credit may be taken under this section only for reinsurance agreements entered into, amended, or renewed on or after May 27, 2022, and only with respect to losses incurred and reserves reported on or after the later of:
This subsection shall not be construed to alter or impair a ceding insurer's right to take credit for reinsurance to the extent that credit is not available under this subsection, as long as the reinsurance qualifies for credit under any other applicable provision of this article.
Nothing in this section shall authorize an assuming insurer to withdraw or reduce the security provided under any reinsurance agreement except as permitted by the terms of the agreement.
Nothing in this subsection shall limit or in any way alter the capacity of parties to any reinsurance agreement to renegotiate the agreement.
(m) Credit shall be allowed when the reinsurance is ceded to an assuming insurer not meeting the requirements of subsection (b), (c), (d), (e), or (f) but only with respect to the insurance of risks located in jurisdictions where the reinsurance is required by applicable law or regulation of that jurisdiction.
(n) If the assuming insurer is not licensed, accredited, or certified to transact insurance or reinsurance in this State, the credit permitted by subsections (c) and (d) shall not be allowed unless the assuming insurer agrees in the reinsurance agreements:
This subsection is not intended to conflict with or override the obligation of the parties to a reinsurance agreement to arbitrate their disputes, if this obligation is created in the agreement.
(o) If the assuming insurer does not meet the requirements of subsection (b), (c), (d), (e), or (f), the credit permitted by subsection (d) or (e) shall not be allowed unless the assuming insurer agrees in the trust agreements to the following conditions:
(p) If an accredited or certified reinsurer ceases to meet the requirements for accreditation or certification, the commissioner may suspend or revoke the reinsurer's accreditation or certification. In addition:
(q) A ceding insurer shall take steps to:
(r) For purposes of this section, "covered agreement" means an agreement entered into pursuant to Dodd-Frank Wall Street Reform and Consumer Protection Act (title 31 United States Code sections 313 and 314) that is currently in effect or in a period of provisional application and addresses the elimination, under specified conditions, of collateral requirements as a condition for entering into any reinsurance agreement with a ceding insurer domiciled in this State or for allowing the ceding insurer to recognize credit for reinsurance. [L 1992, c 176, pt of §5; am L 1993, c 321, §11; am L 1994, c 34, §1; am L 2014, c 234, §1; am L 2022, c 28, §2]