State Codes and Statutes

Statutes > Arizona > Title20 > 20-261.01

20-261.01. Credit for reinsurance

A. A domestic ceding insurer shall be allowed a credit for reinsurance as an asset to or a deduction from liability on account of reinsurance ceded if the reinsurer satisfies one of the following requirements, except that a reinsurer that satisfies the requirements of paragraph 3 or 4 of this subsection must also satisfy the requirements of paragraph 6 of this subsection:

1. The reinsurance is ceded to an assuming insurer that is licensed to transact insurance or reinsurance in this state.

2. The reinsurance is ceded to an assuming insurer that is accredited as a reinsurer in this state. Credit shall not be allowed a domestic ceding insurer if the director after notice and a hearing revokes the assuming insurer's accreditation. For the purposes of this paragraph, "accredited reinsurer" means a reinsurer that:

(a) Files with the director evidence of its submission to this state's jurisdiction.

(b) Submits to this state's authority to examine its books and records.

(c) Is licensed to transact insurance or reinsurance in at least one state, or if the accredited reinsurer is a United States branch of an alien assuming insurer, is entered through and licensed to transact insurance or reinsurance in at least one state.

(d) Files annually with the director a copy of its annual statement that is filed with the insurance department of its state of domicile and a copy of its most recent audited financial statement and maintains either:

(i) A surplus as regards policyholders in an amount of not less than twenty million dollars and the director within ninety days of submission has not denied its accreditation.

(ii) A surplus as regards policyholders in an amount of less than twenty million dollars and the director approves its accreditation.

3. The reinsurance is ceded to an assuming insurer that is domiciled and licensed in, or is a United States branch of an alien assuming insurer that is entered through and licensed in, a state that employs standards regarding credit for reinsurance substantially similar to the standards applicable under this section and the assuming insurer does both of the following:

(a) Maintains a surplus as regards policyholders in an amount of not less than twenty million dollars. This subdivision does not apply to reinsurance that is ceded and assumed pursuant to pooling arrangements among insurers in the same holding company system.

(b) Submits to the authority of this state to examine its books and records.

4. The reinsurance is ceded to an assuming insurer that maintains a trust fund in a qualified United States financial institution as defined in section 20-261.03, subsection B exclusively for the payment of the valid claims of its United States policyholders and ceding insurers and their assigns and successors in interest. To enable the director to determine the sufficiency of the trust fund, the assuming insurer shall report annually to the director information that is substantially similar to the information that must be reported by licensed insurers on the national association of insurance commissioners form. The amount of the trust shall be as follows:

(a) In the case of a single assuming insurer, the trust shall consist of a trusteed account representing the assuming insurer's liabilities that are attributable to business written in the United States and the assuming insurer shall maintain a trusteed surplus of not less than twenty million dollars. In the case of a group including incorporated and individual unincorporated underwriters, the trust shall consist of a trusteed account representing the group's liabilities that are attributable to business written in the United States and the group shall maintain a trusteed surplus of which one hundred million dollars shall be held jointly for the benefit of United States ceding insurers of any member group. The incorporated members of the group shall not engage in any business other than underwriting as a member of the group and are subject to the same level of solvency regulation and control by the group's domiciliary regulator as are the unincorporated members. The group shall make available to the director an annual certification of the solvency of each underwriter by the group's domiciliary regulator and its independent public accountants.

(b) In the case of a group of incorporated insurers under common administration that complies with the filing requirements under this paragraph, that has transacted continuously for at least three years immediately before applying for accreditation an insurance business outside the United States, that submits to this state's authority to examine its books and records and bears the expense of that examination and that has an aggregate policyholders' surplus of ten billion dollars, the trust shall be in an amount equal to the group's several liabilities that are attributable to business ceded by United States ceding insurers to any member of the group pursuant to reinsurance contracts issued in the name of the group. The group shall maintain a joint trusteed surplus of which one hundred million dollars shall be held jointly as additional security for any such liabilities and shall be held exclusively for the benefit of United States ceding insurers of any member of the group. Each member shall make available to the director an annual certification of the member's solvency by the member's domiciliary regulator and its independent public accountant.

5. The reinsurance is ceded to an assuming insurer that does not satisfy the requirements of paragraph 1, 2, 3 or 4 of this subsection with respect to the insurance of risks that are located in foreign or alien jurisdictions where the reinsurance is required by law or regulation.

6. If the assuming insurer is not licensed or accredited to transact insurance or reinsurance in this state, credit will be allowed pursuant to paragraph 3 or 4 of this subsection only if the assuming insurer agrees in the reinsurance agreement:

(a) That, if the assuming insurer fails to perform its obligations under the agreement and at the request of the ceding insurer, the assuming insurer shall submit to the jurisdiction of any court of competent jurisdiction in the United States, comply with all jurisdictional requirements and abide by the court's final decision or, if an appeal is taken, the final decision of an appellate court.

(b) To designate the director or a qualified person under section 20-218.01 as its true and lawful agent upon whom may be served any lawful process in any action, suit or proceeding instituted by or on behalf of the ceding company.

B. A trust under subsection A, paragraph 4 of this section shall be established in a form that is approved by the director. The trust instrument shall provide that contested claims are valid and enforceable on the final order of any court of competent jurisdiction in the United States. The trust shall vest legal title to its assets in the trustees of the trust for its United States policyholders and ceding insurers and their assigns and successors in interest. The trust and the assuming insurer are subject to examination by the director. The trust shall remain in effect for as long as the assuming insurer has outstanding obligations due under the reinsurance agreements that are subject to the trust. On or before February 28 of each year, the trustees of the trust shall submit in writing to the director a report setting forth the balance of the trust and listing the trust's investments at the preceding year end. If the termination of the trust is planned, the trustees shall certify the date of termination of the trust. Otherwise the trustees shall certify that the trust will not expire before December 31 of the following year.

C. This section shall not override the obligation of the parties to a reinsurance agreement to arbitrate a dispute if the agreement requires arbitration.

State Codes and Statutes

Statutes > Arizona > Title20 > 20-261.01

20-261.01. Credit for reinsurance

A. A domestic ceding insurer shall be allowed a credit for reinsurance as an asset to or a deduction from liability on account of reinsurance ceded if the reinsurer satisfies one of the following requirements, except that a reinsurer that satisfies the requirements of paragraph 3 or 4 of this subsection must also satisfy the requirements of paragraph 6 of this subsection:

1. The reinsurance is ceded to an assuming insurer that is licensed to transact insurance or reinsurance in this state.

2. The reinsurance is ceded to an assuming insurer that is accredited as a reinsurer in this state. Credit shall not be allowed a domestic ceding insurer if the director after notice and a hearing revokes the assuming insurer's accreditation. For the purposes of this paragraph, "accredited reinsurer" means a reinsurer that:

(a) Files with the director evidence of its submission to this state's jurisdiction.

(b) Submits to this state's authority to examine its books and records.

(c) Is licensed to transact insurance or reinsurance in at least one state, or if the accredited reinsurer is a United States branch of an alien assuming insurer, is entered through and licensed to transact insurance or reinsurance in at least one state.

(d) Files annually with the director a copy of its annual statement that is filed with the insurance department of its state of domicile and a copy of its most recent audited financial statement and maintains either:

(i) A surplus as regards policyholders in an amount of not less than twenty million dollars and the director within ninety days of submission has not denied its accreditation.

(ii) A surplus as regards policyholders in an amount of less than twenty million dollars and the director approves its accreditation.

3. The reinsurance is ceded to an assuming insurer that is domiciled and licensed in, or is a United States branch of an alien assuming insurer that is entered through and licensed in, a state that employs standards regarding credit for reinsurance substantially similar to the standards applicable under this section and the assuming insurer does both of the following:

(a) Maintains a surplus as regards policyholders in an amount of not less than twenty million dollars. This subdivision does not apply to reinsurance that is ceded and assumed pursuant to pooling arrangements among insurers in the same holding company system.

(b) Submits to the authority of this state to examine its books and records.

4. The reinsurance is ceded to an assuming insurer that maintains a trust fund in a qualified United States financial institution as defined in section 20-261.03, subsection B exclusively for the payment of the valid claims of its United States policyholders and ceding insurers and their assigns and successors in interest. To enable the director to determine the sufficiency of the trust fund, the assuming insurer shall report annually to the director information that is substantially similar to the information that must be reported by licensed insurers on the national association of insurance commissioners form. The amount of the trust shall be as follows:

(a) In the case of a single assuming insurer, the trust shall consist of a trusteed account representing the assuming insurer's liabilities that are attributable to business written in the United States and the assuming insurer shall maintain a trusteed surplus of not less than twenty million dollars. In the case of a group including incorporated and individual unincorporated underwriters, the trust shall consist of a trusteed account representing the group's liabilities that are attributable to business written in the United States and the group shall maintain a trusteed surplus of which one hundred million dollars shall be held jointly for the benefit of United States ceding insurers of any member group. The incorporated members of the group shall not engage in any business other than underwriting as a member of the group and are subject to the same level of solvency regulation and control by the group's domiciliary regulator as are the unincorporated members. The group shall make available to the director an annual certification of the solvency of each underwriter by the group's domiciliary regulator and its independent public accountants.

(b) In the case of a group of incorporated insurers under common administration that complies with the filing requirements under this paragraph, that has transacted continuously for at least three years immediately before applying for accreditation an insurance business outside the United States, that submits to this state's authority to examine its books and records and bears the expense of that examination and that has an aggregate policyholders' surplus of ten billion dollars, the trust shall be in an amount equal to the group's several liabilities that are attributable to business ceded by United States ceding insurers to any member of the group pursuant to reinsurance contracts issued in the name of the group. The group shall maintain a joint trusteed surplus of which one hundred million dollars shall be held jointly as additional security for any such liabilities and shall be held exclusively for the benefit of United States ceding insurers of any member of the group. Each member shall make available to the director an annual certification of the member's solvency by the member's domiciliary regulator and its independent public accountant.

5. The reinsurance is ceded to an assuming insurer that does not satisfy the requirements of paragraph 1, 2, 3 or 4 of this subsection with respect to the insurance of risks that are located in foreign or alien jurisdictions where the reinsurance is required by law or regulation.

6. If the assuming insurer is not licensed or accredited to transact insurance or reinsurance in this state, credit will be allowed pursuant to paragraph 3 or 4 of this subsection only if the assuming insurer agrees in the reinsurance agreement:

(a) That, if the assuming insurer fails to perform its obligations under the agreement and at the request of the ceding insurer, the assuming insurer shall submit to the jurisdiction of any court of competent jurisdiction in the United States, comply with all jurisdictional requirements and abide by the court's final decision or, if an appeal is taken, the final decision of an appellate court.

(b) To designate the director or a qualified person under section 20-218.01 as its true and lawful agent upon whom may be served any lawful process in any action, suit or proceeding instituted by or on behalf of the ceding company.

B. A trust under subsection A, paragraph 4 of this section shall be established in a form that is approved by the director. The trust instrument shall provide that contested claims are valid and enforceable on the final order of any court of competent jurisdiction in the United States. The trust shall vest legal title to its assets in the trustees of the trust for its United States policyholders and ceding insurers and their assigns and successors in interest. The trust and the assuming insurer are subject to examination by the director. The trust shall remain in effect for as long as the assuming insurer has outstanding obligations due under the reinsurance agreements that are subject to the trust. On or before February 28 of each year, the trustees of the trust shall submit in writing to the director a report setting forth the balance of the trust and listing the trust's investments at the preceding year end. If the termination of the trust is planned, the trustees shall certify the date of termination of the trust. Otherwise the trustees shall certify that the trust will not expire before December 31 of the following year.

C. This section shall not override the obligation of the parties to a reinsurance agreement to arbitrate a dispute if the agreement requires arbitration.


State Codes and Statutes

State Codes and Statutes

Statutes > Arizona > Title20 > 20-261.01

20-261.01. Credit for reinsurance

A. A domestic ceding insurer shall be allowed a credit for reinsurance as an asset to or a deduction from liability on account of reinsurance ceded if the reinsurer satisfies one of the following requirements, except that a reinsurer that satisfies the requirements of paragraph 3 or 4 of this subsection must also satisfy the requirements of paragraph 6 of this subsection:

1. The reinsurance is ceded to an assuming insurer that is licensed to transact insurance or reinsurance in this state.

2. The reinsurance is ceded to an assuming insurer that is accredited as a reinsurer in this state. Credit shall not be allowed a domestic ceding insurer if the director after notice and a hearing revokes the assuming insurer's accreditation. For the purposes of this paragraph, "accredited reinsurer" means a reinsurer that:

(a) Files with the director evidence of its submission to this state's jurisdiction.

(b) Submits to this state's authority to examine its books and records.

(c) Is licensed to transact insurance or reinsurance in at least one state, or if the accredited reinsurer is a United States branch of an alien assuming insurer, is entered through and licensed to transact insurance or reinsurance in at least one state.

(d) Files annually with the director a copy of its annual statement that is filed with the insurance department of its state of domicile and a copy of its most recent audited financial statement and maintains either:

(i) A surplus as regards policyholders in an amount of not less than twenty million dollars and the director within ninety days of submission has not denied its accreditation.

(ii) A surplus as regards policyholders in an amount of less than twenty million dollars and the director approves its accreditation.

3. The reinsurance is ceded to an assuming insurer that is domiciled and licensed in, or is a United States branch of an alien assuming insurer that is entered through and licensed in, a state that employs standards regarding credit for reinsurance substantially similar to the standards applicable under this section and the assuming insurer does both of the following:

(a) Maintains a surplus as regards policyholders in an amount of not less than twenty million dollars. This subdivision does not apply to reinsurance that is ceded and assumed pursuant to pooling arrangements among insurers in the same holding company system.

(b) Submits to the authority of this state to examine its books and records.

4. The reinsurance is ceded to an assuming insurer that maintains a trust fund in a qualified United States financial institution as defined in section 20-261.03, subsection B exclusively for the payment of the valid claims of its United States policyholders and ceding insurers and their assigns and successors in interest. To enable the director to determine the sufficiency of the trust fund, the assuming insurer shall report annually to the director information that is substantially similar to the information that must be reported by licensed insurers on the national association of insurance commissioners form. The amount of the trust shall be as follows:

(a) In the case of a single assuming insurer, the trust shall consist of a trusteed account representing the assuming insurer's liabilities that are attributable to business written in the United States and the assuming insurer shall maintain a trusteed surplus of not less than twenty million dollars. In the case of a group including incorporated and individual unincorporated underwriters, the trust shall consist of a trusteed account representing the group's liabilities that are attributable to business written in the United States and the group shall maintain a trusteed surplus of which one hundred million dollars shall be held jointly for the benefit of United States ceding insurers of any member group. The incorporated members of the group shall not engage in any business other than underwriting as a member of the group and are subject to the same level of solvency regulation and control by the group's domiciliary regulator as are the unincorporated members. The group shall make available to the director an annual certification of the solvency of each underwriter by the group's domiciliary regulator and its independent public accountants.

(b) In the case of a group of incorporated insurers under common administration that complies with the filing requirements under this paragraph, that has transacted continuously for at least three years immediately before applying for accreditation an insurance business outside the United States, that submits to this state's authority to examine its books and records and bears the expense of that examination and that has an aggregate policyholders' surplus of ten billion dollars, the trust shall be in an amount equal to the group's several liabilities that are attributable to business ceded by United States ceding insurers to any member of the group pursuant to reinsurance contracts issued in the name of the group. The group shall maintain a joint trusteed surplus of which one hundred million dollars shall be held jointly as additional security for any such liabilities and shall be held exclusively for the benefit of United States ceding insurers of any member of the group. Each member shall make available to the director an annual certification of the member's solvency by the member's domiciliary regulator and its independent public accountant.

5. The reinsurance is ceded to an assuming insurer that does not satisfy the requirements of paragraph 1, 2, 3 or 4 of this subsection with respect to the insurance of risks that are located in foreign or alien jurisdictions where the reinsurance is required by law or regulation.

6. If the assuming insurer is not licensed or accredited to transact insurance or reinsurance in this state, credit will be allowed pursuant to paragraph 3 or 4 of this subsection only if the assuming insurer agrees in the reinsurance agreement:

(a) That, if the assuming insurer fails to perform its obligations under the agreement and at the request of the ceding insurer, the assuming insurer shall submit to the jurisdiction of any court of competent jurisdiction in the United States, comply with all jurisdictional requirements and abide by the court's final decision or, if an appeal is taken, the final decision of an appellate court.

(b) To designate the director or a qualified person under section 20-218.01 as its true and lawful agent upon whom may be served any lawful process in any action, suit or proceeding instituted by or on behalf of the ceding company.

B. A trust under subsection A, paragraph 4 of this section shall be established in a form that is approved by the director. The trust instrument shall provide that contested claims are valid and enforceable on the final order of any court of competent jurisdiction in the United States. The trust shall vest legal title to its assets in the trustees of the trust for its United States policyholders and ceding insurers and their assigns and successors in interest. The trust and the assuming insurer are subject to examination by the director. The trust shall remain in effect for as long as the assuming insurer has outstanding obligations due under the reinsurance agreements that are subject to the trust. On or before February 28 of each year, the trustees of the trust shall submit in writing to the director a report setting forth the balance of the trust and listing the trust's investments at the preceding year end. If the termination of the trust is planned, the trustees shall certify the date of termination of the trust. Otherwise the trustees shall certify that the trust will not expire before December 31 of the following year.

C. This section shall not override the obligation of the parties to a reinsurance agreement to arbitrate a dispute if the agreement requires arbitration.