§ 58‑7‑21. Creditallowed a domestic ceding insurer.
(a) The purpose of thissection and G.S. 58‑7‑26 is to protect the interest of insureds,claimants, ceding insurers, assuming insurers, and the public generally. TheGeneral Assembly declares its intent is to ensure adequate regulation ofinsurers and reinsurers and adequate protection for those to whom they oweobligations. In furtherance of that interest, the General Assembly provides amandate that upon the insolvency of an alien insurer or reinsurer that providessecurity to fund its United States obligations in accordance with this sectionand G.S. 58‑7‑26, the assets representing the security shall bemaintained in the United States and claims shall be filed with and valued bythe state insurance commissioner with regulatory oversight, and the assetsshall be distributed, in accordance with the insurance laws of the state inwhich the trust is domiciled that are applicable to the liquidation of domesticUnited States insurance companies. The General Assembly declares that thematters contained in this section and G.S. 58‑7‑26 are fundamentalto the business of insurance in accordance with 15 U.S.C. §§ 1011‑1012.
(b) Credit forreinsurance shall be allowed a domestic ceding insurer as either an asset or areduction from liability on account of reinsurance ceded only when thereinsurer meets the requirements of subdivisions (1), (2), (3), (4), or (5) ofthis subsection. Credit shall be allowed under subdivision (1), (2), or (3) ofthis subsection only with regard to cessions of those kinds or classes ofbusiness in which the assuming insurer is licensed or otherwise permitted towrite or assume in its state of domicile or, in the case of a United Statesbranch of an alien assuming insurer, in the state through which it is enteredand licensed to transact insurance or reinsurance. Credit shall be allowedunder subdivision (3) or (4) of this subsection only if the applicablerequirements of subdivision (6) of this section have been satisfied.
(1) Credit shall beallowed when the reinsurance is ceded to an assuming insurer that is licensedto transact insurance or reinsurance in this State.
(2) Credit shall beallowed when the reinsurance is ceded to an assuming insurer that is accreditedas a reinsurer in this State. An accredited reinsurer is one that:
a. Files with theCommissioner evidence of its submission to this State's jurisdiction;
b. Submits to thisState's authority to examine its books and records;
c. Is licensed totransact insurance or reinsurance in at least one state, or in the case of aUnited States branch of an alien assuming insurer is entered through andlicensed to transact insurance or reinsurance in at least one state;
d. Files annually withthe Commissioner a copy of its annual statement filed with the insuranceregulator of its state of domicile, a copy of its most recent audited financialstatement, and a fee of seven hundred fifty dollars ($750.00) and either
1. Maintains apolicyholders' surplus in an amount that is not less than twenty milliondollars ($20,000,000) and whose accreditation has not been denied by theCommissioner within 90 days after its submission; or
2. Maintains apolicyholders' surplus in an amount less than twenty million dollars($20,000,000) and whose accreditation has been approved by the Commissioner.
Creditshall not be allowed a domestic ceding insurer if the assuming insurer'saccreditation has been revoked by the Commissioner after notice and opportunityfor a hearing.
(3) Credit shall beallowed when the reinsurance is ceded to an assuming insurer that is domiciledin, or in the case of a United States branch of an alien assuming insurer isentered through, a state that uses standards regarding credit for reinsurancesubstantially similar to those applicable under this section and the assuminginsurer or United States branch of an alien assuming insurer:
a. Maintains apolicyholders' surplus in an amount not less than twenty million dollars($20,000,000); and
b. Submits to theauthority of this State to examine its books and records.
Therequirement in sub‑subdivision (3)a. of this subsection does not apply toreinsurance ceded and assumed under pooling arrangements among insurers in thesame holding company system.
(4) a. Creditshall be allowed when the reinsurance is ceded to an assuming insurer thatmaintains a trust fund in a qualified United States financial institution, asdefined in G.S. 58‑7‑26(b), for the payment of the valid claims ofits United States ceding insurers, their assigns and successors in interest.The assuming insurer shall report annually to the Commissioner informationsubstantially the same as that required to be reported on the NAIC AnnualStatement form by licensed insurers to enable the Commissioner to determine thesufficiency of the trust fund. The assuming insurer shall submit to examinationof its books and records by the Commissioner and bear the expense ofexamination.
b. Repealed by SessionLaws 2001‑223, s. 3.1. For applicability, see note.
b1. Credit forreinsurance shall not be granted under this subdivision unless the form of thetrust and any amendments to the trust have been approved by:
1. The insuranceregulator of the state where the trust is domiciled; or
2. The insuranceregulator of another state who, pursuant to the terms of the trust instrument,has accepted principal regulatory oversight of the trust.
b2. The form of the trustand any trust amendments also shall be filed with the insurance regulator ofevery state in which the ceding insurer beneficiaries of the trust aredomiciled. 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 its trustees for the benefit of the assuming insurer's United Statesceding insurers, their assigns, and successors in interest. The trust and theassuming insurer shall be subject to examination as determined by theCommissioner.
b3. The trust shallremain in effect for as long as the assuming insurer has outstandingobligations due under the reinsurance agreements subject to the trust. No laterthan February 28 of each year, the trustees of the trust shall report to theCommissioner in writing the balance of the trust, shall list the trust'sinvestments at the end of the preceding year, and shall certify the date oftermination of the trust, if so planned, or shall certify that the trust willnot expire before the following December 31.
c. The followingrequirements apply to the following categories of assuming insurer:
1. The trust fund for asingle assuming insurer shall consist of funds in trust in an amount not lessthan the assuming insurer's liabilities attributable to reinsurance ceded byUnited States ceding insurers, and, in addition, the assuming insurer shallmaintain a surplus in trust of not less than twenty million dollars($20,000,000).
2. In the case of agroup including incorporated and individual unincorporated underwriters:
I. For reinsuranceceded under reinsurance agreements with an inception, amendment, or renewaldate on or after August 1, 1995, the trust shall consist of an account in trustin an amount not less than the group's several liabilities attributable tobusiness ceded by United States domiciled ceding insurers to any member of thegroup.
II. For reinsuranceceded under reinsurance agreements with an inception date on or before July 31,1995, and not amended or renewed after that date, notwithstanding the otherprovisions of this section and G.S. 58‑7‑26, the trust shallconsist of an account in trust in an amount not less than the group's severalinsurance and reinsurance liabilities attributable to business written in theUnited States.
Inaddition to these trusts, the group shall maintain in trust a surplus of whichone hundred million dollars ($100,000,000) shall be held jointly for thebenefit of the United States domiciled ceding insurers of any member of thegroup for all years of account. Each incorporated member of the group shall notbe engaged in any business other than underwriting as a member of the group andshall be subject to the same level of regulation and solvency control by thegroup's domiciliary insurance regulator as are the unincorporated members.Within 90 days after its financial statements are due to be filed with thegroup's domiciliary insurance regulator, the group shall provide to theCommissioner an annual certification by the group's domiciliary insuranceregulator of the solvency of each underwriter member or, if a certification isunavailable, financial statements prepared by independent public accountants ofeach underwriter member of the group.
d. Repealed by SessionLaws 2001‑223, s. 3.1. For applicability, see note.
(5) Credit shall beallowed when the reinsurance is ceded to an assuming insurer not meeting therequirements of subdivisions (1), (2), (3), or (4) of this subsection, but onlywith respect to the insurance of risks located in jurisdictions where thereinsurance is required by applicable law or regulation of that jurisdiction.
(6) If the assuminginsurer is not licensed or accredited to transact insurance or reinsurance inthis State, the credit permitted by subdivisions (3) and (4) of this subsectionshall not be allowed unless the assuming insurer agrees in the reinsuranceagreements:
a. That if the assuminginsurer fails to perform its obligations under the terms of the reinsuranceagreement, the assuming insurer, at the ceding insurer's request, shall submitto the jurisdiction of any court of competent jurisdiction in any state of theUnited States, shall comply with all requirements necessary to give the courtjurisdiction, and shall abide by the final decision of the court or of anyappellate court if there is an appeal; and
b. To designate theCommissioner or a designated attorney as its true and lawful attorney upon whommay be served any lawful process in any action, suit, or proceeding begun by oron behalf of the ceding company.
Thissubdivision does not affect the obligation of the parties to a reinsuranceagreement to arbitrate their disputes, if the obligation is created in theagreement.
(7) If the assuminginsurer does not meet the requirements of subdivision (1), (2), or (3) of thissubsection, the credit permitted by subdivision (4) of this subsection shallnot be allowed unless the assuming insurer agrees in the trust agreements tothe following conditions:
a. Notwithstanding anyother provisions in the trust instrument, if the trust fund is inadequatebecause it contains an amount less than the amount required by sub‑subdivisionof this subsection, or if the grantor of the trust has been declared insolventor placed into receivership, rehabilitation, liquidation, or similarproceedings under the laws of its state or country of domicile, the trusteeshall comply with an order of the public official with regulatory oversightover the trust or with an order of a court of competent jurisdiction directingthe trustee to transfer to the public official with regulatory oversight all ofthe assets of the trust fund.
b. The assets shall bedistributed by, and claims shall be filed with and valued by, the publicofficial with regulatory oversight in accordance with the laws of the state inwhich the trust is domiciled that are applicable to the liquidation of domesticinsurance companies.
c. If the publicofficial with regulatory oversight determines that the assets of the trust fundor any part thereof are not necessary to satisfy the claims of the UnitedStates ceding insurers of the grantor of the trust, those assets shall bereturned by the public official with regulatory oversight to the trustee fordistribution in accordance with the trust agreement.
d. The grantor shallwaive any right otherwise available to it under United States law that isinconsistent with this provision.
(c) This sectionapplies to all reinsurance cessions made on or after January 1, 1992, underreinsurance agreements that have an inception, anniversary, or renewal date onor after January 1, 1992. (1991, c. 681, s. 22; 1993, c. 452, s. 42; 1993 (Reg.Sess., 1994), c. 678, s. 8; 1995, c. 193, s. 13; c. 360, s. 2(g); 2001‑223,s. 3.1; 2009‑451, s. 21.15(a).)
§ 58‑7‑21. Creditallowed a domestic ceding insurer.
(a) The purpose of thissection and G.S. 58‑7‑26 is to protect the interest of insureds,claimants, ceding insurers, assuming insurers, and the public generally. TheGeneral Assembly declares its intent is to ensure adequate regulation ofinsurers and reinsurers and adequate protection for those to whom they oweobligations. In furtherance of that interest, the General Assembly provides amandate that upon the insolvency of an alien insurer or reinsurer that providessecurity to fund its United States obligations in accordance with this sectionand G.S. 58‑7‑26, the assets representing the security shall bemaintained in the United States and claims shall be filed with and valued bythe state insurance commissioner with regulatory oversight, and the assetsshall be distributed, in accordance with the insurance laws of the state inwhich the trust is domiciled that are applicable to the liquidation of domesticUnited States insurance companies. The General Assembly declares that thematters contained in this section and G.S. 58‑7‑26 are fundamentalto the business of insurance in accordance with 15 U.S.C. §§ 1011‑1012.
(b) Credit forreinsurance shall be allowed a domestic ceding insurer as either an asset or areduction from liability on account of reinsurance ceded only when thereinsurer meets the requirements of subdivisions (1), (2), (3), (4), or (5) ofthis subsection. Credit shall be allowed under subdivision (1), (2), or (3) ofthis subsection only with regard to cessions of those kinds or classes ofbusiness in which the assuming insurer is licensed or otherwise permitted towrite or assume in its state of domicile or, in the case of a United Statesbranch of an alien assuming insurer, in the state through which it is enteredand licensed to transact insurance or reinsurance. Credit shall be allowedunder subdivision (3) or (4) of this subsection only if the applicablerequirements of subdivision (6) of this section have been satisfied.
(1) Credit shall beallowed when the reinsurance is ceded to an assuming insurer that is licensedto transact insurance or reinsurance in this State.
(2) Credit shall beallowed when the reinsurance is ceded to an assuming insurer that is accreditedas a reinsurer in this State. An accredited reinsurer is one that:
a. Files with theCommissioner evidence of its submission to this State's jurisdiction;
b. Submits to thisState's authority to examine its books and records;
c. Is licensed totransact insurance or reinsurance in at least one state, or in the case of aUnited States branch of an alien assuming insurer is entered through andlicensed to transact insurance or reinsurance in at least one state;
d. Files annually withthe Commissioner a copy of its annual statement filed with the insuranceregulator of its state of domicile, a copy of its most recent audited financialstatement, and a fee of seven hundred fifty dollars ($750.00) and either
1. Maintains apolicyholders' surplus in an amount that is not less than twenty milliondollars ($20,000,000) and whose accreditation has not been denied by theCommissioner within 90 days after its submission; or
2. Maintains apolicyholders' surplus in an amount less than twenty million dollars($20,000,000) and whose accreditation has been approved by the Commissioner.
Creditshall not be allowed a domestic ceding insurer if the assuming insurer'saccreditation has been revoked by the Commissioner after notice and opportunityfor a hearing.
(3) Credit shall beallowed when the reinsurance is ceded to an assuming insurer that is domiciledin, or in the case of a United States branch of an alien assuming insurer isentered through, a state that uses standards regarding credit for reinsurancesubstantially similar to those applicable under this section and the assuminginsurer or United States branch of an alien assuming insurer:
a. Maintains apolicyholders' surplus in an amount not less than twenty million dollars($20,000,000); and
b. Submits to theauthority of this State to examine its books and records.
Therequirement in sub‑subdivision (3)a. of this subsection does not apply toreinsurance ceded and assumed under pooling arrangements among insurers in thesame holding company system.
(4) a. Creditshall be allowed when the reinsurance is ceded to an assuming insurer thatmaintains a trust fund in a qualified United States financial institution, asdefined in G.S. 58‑7‑26(b), for the payment of the valid claims ofits United States ceding insurers, their assigns and successors in interest.The assuming insurer shall report annually to the Commissioner informationsubstantially the same as that required to be reported on the NAIC AnnualStatement form by licensed insurers to enable the Commissioner to determine thesufficiency of the trust fund. The assuming insurer shall submit to examinationof its books and records by the Commissioner and bear the expense ofexamination.
b. Repealed by SessionLaws 2001‑223, s. 3.1. For applicability, see note.
b1. Credit forreinsurance shall not be granted under this subdivision unless the form of thetrust and any amendments to the trust have been approved by:
1. The insuranceregulator of the state where the trust is domiciled; or
2. The insuranceregulator of another state who, pursuant to the terms of the trust instrument,has accepted principal regulatory oversight of the trust.
b2. The form of the trustand any trust amendments also shall be filed with the insurance regulator ofevery state in which the ceding insurer beneficiaries of the trust aredomiciled. 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 its trustees for the benefit of the assuming insurer's United Statesceding insurers, their assigns, and successors in interest. The trust and theassuming insurer shall be subject to examination as determined by theCommissioner.
b3. The trust shallremain in effect for as long as the assuming insurer has outstandingobligations due under the reinsurance agreements subject to the trust. No laterthan February 28 of each year, the trustees of the trust shall report to theCommissioner in writing the balance of the trust, shall list the trust'sinvestments at the end of the preceding year, and shall certify the date oftermination of the trust, if so planned, or shall certify that the trust willnot expire before the following December 31.
c. The followingrequirements apply to the following categories of assuming insurer:
1. The trust fund for asingle assuming insurer shall consist of funds in trust in an amount not lessthan the assuming insurer's liabilities attributable to reinsurance ceded byUnited States ceding insurers, and, in addition, the assuming insurer shallmaintain a surplus in trust of not less than twenty million dollars($20,000,000).
2. In the case of agroup including incorporated and individual unincorporated underwriters:
I. For reinsuranceceded under reinsurance agreements with an inception, amendment, or renewaldate on or after August 1, 1995, the trust shall consist of an account in trustin an amount not less than the group's several liabilities attributable tobusiness ceded by United States domiciled ceding insurers to any member of thegroup.
II. For reinsuranceceded under reinsurance agreements with an inception date on or before July 31,1995, and not amended or renewed after that date, notwithstanding the otherprovisions of this section and G.S. 58‑7‑26, the trust shallconsist of an account in trust in an amount not less than the group's severalinsurance and reinsurance liabilities attributable to business written in theUnited States.
Inaddition to these trusts, the group shall maintain in trust a surplus of whichone hundred million dollars ($100,000,000) shall be held jointly for thebenefit of the United States domiciled ceding insurers of any member of thegroup for all years of account. Each incorporated member of the group shall notbe engaged in any business other than underwriting as a member of the group andshall be subject to the same level of regulation and solvency control by thegroup's domiciliary insurance regulator as are the unincorporated members.Within 90 days after its financial statements are due to be filed with thegroup's domiciliary insurance regulator, the group shall provide to theCommissioner an annual certification by the group's domiciliary insuranceregulator of the solvency of each underwriter member or, if a certification isunavailable, financial statements prepared by independent public accountants ofeach underwriter member of the group.
d. Repealed by SessionLaws 2001‑223, s. 3.1. For applicability, see note.
(5) Credit shall beallowed when the reinsurance is ceded to an assuming insurer not meeting therequirements of subdivisions (1), (2), (3), or (4) of this subsection, but onlywith respect to the insurance of risks located in jurisdictions where thereinsurance is required by applicable law or regulation of that jurisdiction.
(6) If the assuminginsurer is not licensed or accredited to transact insurance or reinsurance inthis State, the credit permitted by subdivisions (3) and (4) of this subsectionshall not be allowed unless the assuming insurer agrees in the reinsuranceagreements:
a. That if the assuminginsurer fails to perform its obligations under the terms of the reinsuranceagreement, the assuming insurer, at the ceding insurer's request, shall submitto the jurisdiction of any court of competent jurisdiction in any state of theUnited States, shall comply with all requirements necessary to give the courtjurisdiction, and shall abide by the final decision of the court or of anyappellate court if there is an appeal; and
b. To designate theCommissioner or a designated attorney as its true and lawful attorney upon whommay be served any lawful process in any action, suit, or proceeding begun by oron behalf of the ceding company.
Thissubdivision does not affect the obligation of the parties to a reinsuranceagreement to arbitrate their disputes, if the obligation is created in theagreement.
(7) If the assuminginsurer does not meet the requirements of subdivision (1), (2), or (3) of thissubsection, the credit permitted by subdivision (4) of this subsection shallnot be allowed unless the assuming insurer agrees in the trust agreements tothe following conditions:
a. Notwithstanding anyother provisions in the trust instrument, if the trust fund is inadequatebecause it contains an amount less than the amount required by sub‑subdivisionof this subsection, or if the grantor of the trust has been declared insolventor placed into receivership, rehabilitation, liquidation, or similarproceedings under the laws of its state or country of domicile, the trusteeshall comply with an order of the public official with regulatory oversightover the trust or with an order of a court of competent jurisdiction directingthe trustee to transfer to the public official with regulatory oversight all ofthe assets of the trust fund.
b. The assets shall bedistributed by, and claims shall be filed with and valued by, the publicofficial with regulatory oversight in accordance with the laws of the state inwhich the trust is domiciled that are applicable to the liquidation of domesticinsurance companies.
c. If the publicofficial with regulatory oversight determines that the assets of the trust fundor any part thereof are not necessary to satisfy the claims of the UnitedStates ceding insurers of the grantor of the trust, those assets shall bereturned by the public official with regulatory oversight to the trustee fordistribution in accordance with the trust agreement.
d. The grantor shallwaive any right otherwise available to it under United States law that isinconsistent with this provision.
(c) This sectionapplies to all reinsurance cessions made on or after January 1, 1992, underreinsurance agreements that have an inception, anniversary, or renewal date onor after January 1, 1992. (1991, c. 681, s. 22; 1993, c. 452, s. 42; 1993 (Reg.Sess., 1994), c. 678, s. 8; 1995, c. 193, s. 13; c. 360, s. 2(g); 2001‑223,s. 3.1; 2009‑451, s. 21.15(a).)
§ 58‑7‑21. Creditallowed a domestic ceding insurer.
(a) The purpose of thissection and G.S. 58‑7‑26 is to protect the interest of insureds,claimants, ceding insurers, assuming insurers, and the public generally. TheGeneral Assembly declares its intent is to ensure adequate regulation ofinsurers and reinsurers and adequate protection for those to whom they oweobligations. In furtherance of that interest, the General Assembly provides amandate that upon the insolvency of an alien insurer or reinsurer that providessecurity to fund its United States obligations in accordance with this sectionand G.S. 58‑7‑26, the assets representing the security shall bemaintained in the United States and claims shall be filed with and valued bythe state insurance commissioner with regulatory oversight, and the assetsshall be distributed, in accordance with the insurance laws of the state inwhich the trust is domiciled that are applicable to the liquidation of domesticUnited States insurance companies. The General Assembly declares that thematters contained in this section and G.S. 58‑7‑26 are fundamentalto the business of insurance in accordance with 15 U.S.C. §§ 1011‑1012.
(b) Credit forreinsurance shall be allowed a domestic ceding insurer as either an asset or areduction from liability on account of reinsurance ceded only when thereinsurer meets the requirements of subdivisions (1), (2), (3), (4), or (5) ofthis subsection. Credit shall be allowed under subdivision (1), (2), or (3) ofthis subsection only with regard to cessions of those kinds or classes ofbusiness in which the assuming insurer is licensed or otherwise permitted towrite or assume in its state of domicile or, in the case of a United Statesbranch of an alien assuming insurer, in the state through which it is enteredand licensed to transact insurance or reinsurance. Credit shall be allowedunder subdivision (3) or (4) of this subsection only if the applicablerequirements of subdivision (6) of this section have been satisfied.
(1) Credit shall beallowed when the reinsurance is ceded to an assuming insurer that is licensedto transact insurance or reinsurance in this State.
(2) Credit shall beallowed when the reinsurance is ceded to an assuming insurer that is accreditedas a reinsurer in this State. An accredited reinsurer is one that:
a. Files with theCommissioner evidence of its submission to this State's jurisdiction;
b. Submits to thisState's authority to examine its books and records;
c. Is licensed totransact insurance or reinsurance in at least one state, or in the case of aUnited States branch of an alien assuming insurer is entered through andlicensed to transact insurance or reinsurance in at least one state;
d. Files annually withthe Commissioner a copy of its annual statement filed with the insuranceregulator of its state of domicile, a copy of its most recent audited financialstatement, and a fee of seven hundred fifty dollars ($750.00) and either
1. Maintains apolicyholders' surplus in an amount that is not less than twenty milliondollars ($20,000,000) and whose accreditation has not been denied by theCommissioner within 90 days after its submission; or
2. Maintains apolicyholders' surplus in an amount less than twenty million dollars($20,000,000) and whose accreditation has been approved by the Commissioner.
Creditshall not be allowed a domestic ceding insurer if the assuming insurer'saccreditation has been revoked by the Commissioner after notice and opportunityfor a hearing.
(3) Credit shall beallowed when the reinsurance is ceded to an assuming insurer that is domiciledin, or in the case of a United States branch of an alien assuming insurer isentered through, a state that uses standards regarding credit for reinsurancesubstantially similar to those applicable under this section and the assuminginsurer or United States branch of an alien assuming insurer:
a. Maintains apolicyholders' surplus in an amount not less than twenty million dollars($20,000,000); and
b. Submits to theauthority of this State to examine its books and records.
Therequirement in sub‑subdivision (3)a. of this subsection does not apply toreinsurance ceded and assumed under pooling arrangements among insurers in thesame holding company system.
(4) a. Creditshall be allowed when the reinsurance is ceded to an assuming insurer thatmaintains a trust fund in a qualified United States financial institution, asdefined in G.S. 58‑7‑26(b), for the payment of the valid claims ofits United States ceding insurers, their assigns and successors in interest.The assuming insurer shall report annually to the Commissioner informationsubstantially the same as that required to be reported on the NAIC AnnualStatement form by licensed insurers to enable the Commissioner to determine thesufficiency of the trust fund. The assuming insurer shall submit to examinationof its books and records by the Commissioner and bear the expense ofexamination.
b. Repealed by SessionLaws 2001‑223, s. 3.1. For applicability, see note.
b1. Credit forreinsurance shall not be granted under this subdivision unless the form of thetrust and any amendments to the trust have been approved by:
1. The insuranceregulator of the state where the trust is domiciled; or
2. The insuranceregulator of another state who, pursuant to the terms of the trust instrument,has accepted principal regulatory oversight of the trust.
b2. The form of the trustand any trust amendments also shall be filed with the insurance regulator ofevery state in which the ceding insurer beneficiaries of the trust aredomiciled. 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 its trustees for the benefit of the assuming insurer's United Statesceding insurers, their assigns, and successors in interest. The trust and theassuming insurer shall be subject to examination as determined by theCommissioner.
b3. The trust shallremain in effect for as long as the assuming insurer has outstandingobligations due under the reinsurance agreements subject to the trust. No laterthan February 28 of each year, the trustees of the trust shall report to theCommissioner in writing the balance of the trust, shall list the trust'sinvestments at the end of the preceding year, and shall certify the date oftermination of the trust, if so planned, or shall certify that the trust willnot expire before the following December 31.
c. The followingrequirements apply to the following categories of assuming insurer:
1. The trust fund for asingle assuming insurer shall consist of funds in trust in an amount not lessthan the assuming insurer's liabilities attributable to reinsurance ceded byUnited States ceding insurers, and, in addition, the assuming insurer shallmaintain a surplus in trust of not less than twenty million dollars($20,000,000).
2. In the case of agroup including incorporated and individual unincorporated underwriters:
I. For reinsuranceceded under reinsurance agreements with an inception, amendment, or renewaldate on or after August 1, 1995, the trust shall consist of an account in trustin an amount not less than the group's several liabilities attributable tobusiness ceded by United States domiciled ceding insurers to any member of thegroup.
II. For reinsuranceceded under reinsurance agreements with an inception date on or before July 31,1995, and not amended or renewed after that date, notwithstanding the otherprovisions of this section and G.S. 58‑7‑26, the trust shallconsist of an account in trust in an amount not less than the group's severalinsurance and reinsurance liabilities attributable to business written in theUnited States.
Inaddition to these trusts, the group shall maintain in trust a surplus of whichone hundred million dollars ($100,000,000) shall be held jointly for thebenefit of the United States domiciled ceding insurers of any member of thegroup for all years of account. Each incorporated member of the group shall notbe engaged in any business other than underwriting as a member of the group andshall be subject to the same level of regulation and solvency control by thegroup's domiciliary insurance regulator as are the unincorporated members.Within 90 days after its financial statements are due to be filed with thegroup's domiciliary insurance regulator, the group shall provide to theCommissioner an annual certification by the group's domiciliary insuranceregulator of the solvency of each underwriter member or, if a certification isunavailable, financial statements prepared by independent public accountants ofeach underwriter member of the group.
d. Repealed by SessionLaws 2001‑223, s. 3.1. For applicability, see note.
(5) Credit shall beallowed when the reinsurance is ceded to an assuming insurer not meeting therequirements of subdivisions (1), (2), (3), or (4) of this subsection, but onlywith respect to the insurance of risks located in jurisdictions where thereinsurance is required by applicable law or regulation of that jurisdiction.
(6) If the assuminginsurer is not licensed or accredited to transact insurance or reinsurance inthis State, the credit permitted by subdivisions (3) and (4) of this subsectionshall not be allowed unless the assuming insurer agrees in the reinsuranceagreements:
a. That if the assuminginsurer fails to perform its obligations under the terms of the reinsuranceagreement, the assuming insurer, at the ceding insurer's request, shall submitto the jurisdiction of any court of competent jurisdiction in any state of theUnited States, shall comply with all requirements necessary to give the courtjurisdiction, and shall abide by the final decision of the court or of anyappellate court if there is an appeal; and
b. To designate theCommissioner or a designated attorney as its true and lawful attorney upon whommay be served any lawful process in any action, suit, or proceeding begun by oron behalf of the ceding company.
Thissubdivision does not affect the obligation of the parties to a reinsuranceagreement to arbitrate their disputes, if the obligation is created in theagreement.
(7) If the assuminginsurer does not meet the requirements of subdivision (1), (2), or (3) of thissubsection, the credit permitted by subdivision (4) of this subsection shallnot be allowed unless the assuming insurer agrees in the trust agreements tothe following conditions:
a. Notwithstanding anyother provisions in the trust instrument, if the trust fund is inadequatebecause it contains an amount less than the amount required by sub‑subdivisionof this subsection, or if the grantor of the trust has been declared insolventor placed into receivership, rehabilitation, liquidation, or similarproceedings under the laws of its state or country of domicile, the trusteeshall comply with an order of the public official with regulatory oversightover the trust or with an order of a court of competent jurisdiction directingthe trustee to transfer to the public official with regulatory oversight all ofthe assets of the trust fund.
b. The assets shall bedistributed by, and claims shall be filed with and valued by, the publicofficial with regulatory oversight in accordance with the laws of the state inwhich the trust is domiciled that are applicable to the liquidation of domesticinsurance companies.
c. If the publicofficial with regulatory oversight determines that the assets of the trust fundor any part thereof are not necessary to satisfy the claims of the UnitedStates ceding insurers of the grantor of the trust, those assets shall bereturned by the public official with regulatory oversight to the trustee fordistribution in accordance with the trust agreement.
d. The grantor shallwaive any right otherwise available to it under United States law that isinconsistent with this provision.
(c) This sectionapplies to all reinsurance cessions made on or after January 1, 1992, underreinsurance agreements that have an inception, anniversary, or renewal date onor after January 1, 1992. (1991, c. 681, s. 22; 1993, c. 452, s. 42; 1993 (Reg.Sess., 1994), c. 678, s. 8; 1995, c. 193, s. 13; c. 360, s. 2(g); 2001‑223,s. 3.1; 2009‑451, s. 21.15(a).)
