South Dakota Administrative Code

Rule 20:06:31:04 Repealed. 20:06:31:04. Reinsurers maintaining trust funds -- Requirements. Repealed. Source: 22 SDR 52, effective October 25, 1995; 44 SDR 71, effective October 23, 2017. Rule 20:06:31:04.01 Group of incorporated insurers under common administration. 20:06:31:04.…

Rule 20:06:31:04.01 Group of incorporated insurers under common administration. 20:06:31:04.01. Group of incorporated insurers under common administration. The trust fund for a group of incorporated insurers under common administration, whose members possess aggregate policyholde…

Rule 20:06:31:04.02 Trust liabilities. 20:06:31:04.02. Trust liabilities. For purposes of SDCL 58-14-11 to 58-14-12.1, inclusive, and §§ 20:06:31:03 and 20:06:31:04.01, the term, liabilities, shall mean the assuming insurer's gross liabilities attributable to reinsurance ceded by…

Rule 20:06:31:04.03 Trust assets and investments. 20:06:31:04.03. Trust assets and investments. Assets deposited in trusts established pursuant to SDCL 58-14-11 and this chapter shall be valued according to their current fair market value and shall consist only of cash in U.S. do…

Rule 20:06:31:04.04 Government obligations. 20:06:31:04.04. Government obligations. Trust assets may be invested in government obligations that are not in default as to principal or interest, that are valid and legally authorized, and that are issued, assumed, or guaranteed by: (…

Rule 20:06:31:04.05 Securities ratings. 20:06:31:04.05. Securities ratings. Trust assets may be invested in obligations that are issued in the United States, that are dollar denominated and issued in a non-U.S. market by a solvent U.S. institution other than an insurance company,…

Rule 20:06:31:04.06 Organization for Economic Cooperation and Development. 20:06:31:04.06. Organization for Economic Cooperation and Development. Trust assets may be invested in obligations issued, assumed, or guaranteed by a solvent non-U.S. institution chartered in a country th…

Rule 20:06:31:04.07 Investment limitations. 20:06:31:04.07. Investment limitations. An investment made pursuant to §§ 20:06:31:04.04 to 20:06:31:04.06, inclusive, shall be subject to the following additional limitations: (1) An investment in or loan upon the obligations of an ins…

Rule 20:06:31:04.08 Definition of mortgage-related security. 20:06:31:04.08. Definition of mortgage-related security. The term, mortgage-related security, means an obligation that is rated AA or higher, or the equivalent, by a securities rating agency recognized by the Securities…

Rule 20:06:31:04.09 Equity interests. 20:06:31:04.09. Equity interests. Trust investments shall be made in accordance with the following requirements: (1) Investments in common shares or partnership interests of a solvent U.S. institution are permissible if, its obligations and p…

Rule 20:06:31:04.10 Obligations guaranteed by multinational development banks. 20:06:31:04.10. Obligations guaranteed by multinational development banks. Trust assets may be invested in obligations issued, assumed, or guaranteed by a multinational development bank are permissible…

Rule 20:06:31:04.11 Investment companies. 20:06:31:04.11. Investment companies. Securities of an investment company registered pursuant to the Investment Company Act of 1940, 15 U.S.C. § 80a, are permissible investments if the investment company: (1) Invests at least ninety perce…

Rule 20:06:31:04.12 Limitations on investment companies. 20:06:31:04.12. Limitations on investment companies. Investments made by a trust in investment companies pursuant to § 20:06:31:04.11 may not exceed the following limitations: (1) An investment in an investment company qual…

Rule 20:06:31:04.13 Letters of credit. 20:06:31:04.13. Letters of credit. In order for a letter of credit to qualify as an asset of the trust, the trustee shall have the right and the obligation pursuant to the deed of trust or other binding agreement, as duly approved by the dir…

Rule 20:06:31:05 Jurisdiction defined. 20:06:31:05. Jurisdiction defined. For purposes of this chapter, "jurisdiction" means any state, district, or territory of the United States and any lawful national government. Source: 22 SDR 52, effective October 25, 1995. General Authority…

Rule 20:06:31:05.01 Security for risks located in foreign or alien jurisdictions. 20:06:31:05.01. Security for risks located in foreign or alien jurisdictions. A specific security provided to a ceding insurer by an assuming insurer pursuant to SDCL 58-14-14 shall be applied, unti…

Rule 20:06:31:06 Reduction from liability for reinsurance ceded to an unauthorized assuming insurer. 20:06:31:06. Reduction from liability for reinsurance ceded to an unauthorized assuming insurer. The director shall allow a reduction from liability for reinsurance ceded by a dom…

Rule 20:06:31:07 Trust agreements qualified under SDCL 58-14-16 -- Definitions. 20:06:31:07. Trust agreements qualified under SDCL 58-14-16 -- Definitions. The terms used in this chapter as they apply to trust agreements qualified under SDCL 58-14-16 mean: (1) "Beneficiary," the …

Rule 20:06:31:08 Trust agreements qualified under SDCL 58-14-16 -- Required conditions. 20:06:31:08. Trust agreements qualified under SDCL 58-14-16 -- Required conditions. The following required conditions apply to trust agreements qualified under SDCL 58-14-16: (1) The trust agr…

Rule 20:06:31:09 Trust agreements in conjunction with reinsurance agreements covering certain risks. 20:06:31:09. Trust agreements in conjunction with reinsurance agreements covering certain risks. Notwithstanding other provisions of this chapter, when a trust agreement is establ…

Rule 20:06:31:09.01 Trust agreements established under SDCL 58-14-16. 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…

Rule 20:06:31:09.02 Assets deposited in trust account. 20:06:31:09.02. Assets deposited in trust account. The reinsurance agreement or the trust agreement must stipulate that assets deposited in the trust account shall be valued according to their current fair market value and sh…

Rule 20:06:31:10 Trust agreements qualified under SDCL 58-14-16 -- Permitted conditions. 20:06:31:10. Trust agreements qualified under SDCL 58-14-16 -- Permitted conditions. The following permitted conditions apply to trust agreements qualified under SDCL 58-14-16: (1) The trust …

Rule 20:06:31:11 Trust agreements qualified under SDCL 58-14-16 -- Additional conditions applicable to reinsurance agreements -- Assets. 20:06:31:11. Trust agreements qualified under SDCL 58-14-16 -- Additional conditions applicable to reinsurance agreements -- Assets. A reinsura…

Rule 20:06:31:12 Reinsurance agreements -- Transfer of assets. 20:06:31:12. Reinsurance agreements -- Transfer of assets. The reinsurance agreement may also contain the following provisions: (1) Give the assuming insurer the right to seek approval from the ceding insurer, which m…

Rule 20:06:31:13 Use of trust agreement to reduce liability for reinsurance. 20:06:31:13. Use of trust agreement to reduce liability for reinsurance. A trust agreement may be used to reduce any liability for reinsurance ceded to an unauthorized assuming insurer in financial state…

Rule 20:06:31:14 Acceptability of existing trust agreements. 20:06:31:14. Acceptability of existing trust agreements. A trust agreement or underlying reinsurance agreement in existence before January 1, 2018, will continue to be acceptable to the director until renewal of the und…

Rule 20:06:31:15 Actions of director unaffected by failure to identify beneficiary. 20:06:31:15. Actions of director unaffected by failure to identify beneficiary. The failure of a trust agreement to specifically identify the beneficiary as defined in § 20:06:31:07 does not affec…

Rule 20:06:31:16 Other security. 20:06:31:16. Other security. A ceding insurer may take credit for unencumbered funds withheld by the ceding insurer in the United States that are subject to withdrawal solely by the ceding insurer and under its exclusive control. Source: 22 SDR 52…

Rule 20:06:31:17 Contracts affected. 20:06:31:17. Contracts affected. All new and renewal transactions entered into after December 31, 2017, must conform to the requirements of this chapter if credit for reinsurance is to be given to the ceding insurer. Source: 22 SDR 52, effecti…

Rule 20:06:31:18 Letters of credit qualified under SDCL 58-14-16. 20:06:31:18. Letters of credit qualified under SDCL 58-14-16. The letter of credit must be clean, irrevocable, unconditional, and issued or confirmed by a qualified United States financial institution as defined in…

Rule 20:06:31:19 Heading and term for letters of credit. 20:06:31:19. Heading and term for letters of credit. The heading of the letter of credit may include a boxed section containing the name of the applicant and other appropriate notations to provide a reference for the letter…

Rule 20:06:31:20 Letter of credit issued by a financial institution. 20:06:31:20. Letter of credit issued by a financial institution. If the letter of credit is issued by a financial institution authorized to issue letters of credit, other than a qualified United States financial…

Rule 20:06:31:21 Reinsurance agreements in conjunction with letters of credit. 20:06:31:21. Reinsurance agreements in conjunction with letters of credit. The reinsurance agreement in conjunction with which the letter of credit is obtained may contain provisions that: (1) Require …

Rule 20:06:31:22 Interest payments and amounts drawn in excess. 20:06:31:22. Interest payments and amounts drawn in excess. Nothing contained in § 20:06:31:21 shall preclude the ceding insurer and assuming insurer from providing for: (1) An interest payment, at a rate not in exce…

Rule 20:06:31:23 Letters of credit and Uniform Customs and Practice for Documentary Credits. 20:06:31:23. Letters of credit and Uniform Customs and Practice for Documentary Credits. The letter of credit shall state whether it is subject to and governed by the laws of this state o…

Rule 20:06:31:24 Insolvency and intermediary clauses. 20:06:31:24. Insolvency and intermediary clauses. Credit will not be granted, nor an asset or reduction from liability allowed, to a ceding insurer for reinsurance effected with assuming insurers meeting the requirements of §§…

Rule 20:06:31:25 Certified reinsurers. 20:06:31:25. Certified reinsurers. Pursuant to SDCL 58-14-16.1, the director shall allow credit for reinsurance ceded by a domestic insurer to an assuming insurer that has been certified as a reinsurer in this state at all times for which st…

Rule 20:06:31:26 Certified reinsurers - certification procedure. 20:06:31:26. Certified reinsurers - certification procedure. The director shall post notice on the division's website promptly upon receipt of any application for certification, including instructions on how members…

20:06:31:27. Certified reinsurers -- Ratings. Each certified reinsurer shall be rated on a legal entity basis, with due consideration being given to the group rating where appropriate, except that an association including incorporated and individual unincorporated underwriters th…

Rule 20:06:31:28 Certified reinsurers - prompt payment of claims. 20:06:31:28. Certified reinsurers - prompt payment of claims. Based on the analysis conducted under subdivision 20:06:31:27(5) of a certified reinsurer's reputation for prompt payment of claims, the director may ma…

Rule 20:06:31:29 Certified reinsurers - form filing. 20:06:31:29. Certified reinsurers - form filing. A certified reinsurer must submit a properly executed Form CR-1, provided by the director, as evidence of its submission to the jurisdiction of this state, appointment of the dir…

20:06:31:30. Certified reinsurers -- Filing requirements. The certified reinsurer shall agree to meet applicable information filing requirements as determined by the director, both with respect to an initial application for certification and on an ongoing basis. All information s…

Rule 20:06:31:31 Certified reinsurers - change in rating or revocation of certification. 20:06:31:31. Certified reinsurers - change in rating or revocation of certification. In the case of a downgrade by a rating agency or other disqualifying circumstance, the director shall upon…

Rule 20:06:31:32 Certified reinsurers - qualified jurisdictions. 20:06:31:32. Certified reinsurers - qualified jurisdictions. If, upon conducting an evaluation under this section with respect to the reinsurance supervisory system of any non-U.S. assuming insurer, the director det…

Rule 20:06:31:33 Certified reinsurers - recognition of certification. 20:06:31:33. Certified reinsurers - recognition of certification. If an applicant for certification has been certified as a reinsurer in a National Association of Insurance Commissioners accredited jurisdiction…

Rule 20:06:32:01 Petition for declaratory ruling. 20:06:32:01. Petition for declaratory ruling. Any interested party wishing the Division of Insurance to rule on the applicability to that party of any statutory provision or rule or order may file a petition for a declaratory ruli…