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Statutes > North-dakota > T261 > T261c312

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CHAPTER 26.1-31.2REINSURANCE CREDIT26.1-31.2-01. Credit allowed a domestic ceding insurer. Credit for reinsurance mustbe allowed a domestic ceding insurer as either an asset or a deduction from liability on account<br>of reinsurance ceded only when the reinsurer meets the requirements of either subsection 1, 2,<br>3, 4, or 5. Credit will be allowed under subsection 1, 2, or 3 only with respect to cessions of a<br>kind or class of business that the assuming insurer is licensed or otherwise allowed to write or<br>assume in its state of domicile or, in the case of a United States branch of an alien assuming<br>insurer, in the state through which it is entered and licensed to transact insurance or reinsurance.<br>If meeting the requirements of subsection 3 or 4, the requirements of subsection 6 must also be<br>met.1.Credit must be allowed when the reinsurance is ceded to an assuming insurer or<br>nonprofit health service corporation which is licensed to transact insurance or<br>reinsurance in this state.2.Credit must be allowed when the reinsurance is ceded to an assuming insurer which<br>is accredited as a reinsurer in this state. An accredited reinsurer is one which:a.Files with the commissioner evidence of its submission to this state's<br>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, in the<br>case of a United States branch of an alien assuming insurer, is entered through<br>and licensed to transact insurance or reinsurance in at least one state; andd.Files annually with the commissioner a copy of its annual statement filed with<br>the insurance department of its state of domicile and a copy of its most recent<br>audited financial statement; and either(1)Maintains a surplus as regards policyholders in an amount which is not<br>less than twenty million dollars and whose accreditation has not been<br>denied by the commissioner within ninety days of its submission; or(2)Maintains a surplus as regards policyholders in an amount less than<br>twenty million dollars and whose accreditation has been approved by the<br>commissioner.No credit may be allowed a domestic ceding insurer if the assuming insurer's<br>accreditation has been revoked by the commissioner after notice and hearing.3.Credit must be allowed when the reinsurance is ceded to an assuming insurer which<br>is domiciled and licensed in, or in the case of a United States branch of an alien<br>assuming insurer, is entered through, a state which employs standards regarding<br>credit for reinsurance substantially similar to those applicable under this statute and<br>the assuming insurer or United States branch of an alien assuming insurer:a.Maintains a surplus as regards policyholders in an amount not less than twenty<br>million dollars; andb.Submits to the authority of this state to examine its books and records.Provided, however, that the requirement of subdivision a does not apply to<br>reinsurance ceded and assumed pursuant to pooling arrangements among insurers<br>in the same holding company system.Page No. 14.a.Credit must be allowed when the reinsurance is ceded to an assuming insurer<br>which maintains a trust fund in a qualified United States financial institution, as<br>defined in subsection 2 of section 26.1-31.2-03, for the payment of valid claims<br>of its United States policyholders and ceding insurers, their assigns, and<br>successors in interest.The assuming insurer shall report annually to thecommissioner information substantially the same as that required to be<br>reported on the national association of insurance commissioners annual<br>statement form by licensed insurers to enable the commissioner to determine<br>the sufficiency of the trust fund. In the case of a single assuming insurer, the<br>trust must consist of a trusteed account representing the assuming insurer's<br>liabilities attributable to reinsurance ceded by United States ceding insurers<br>and, in addition, the assuming insurer shall maintain a trusteed surplus of not<br>less than twenty million dollars. In the case of a group, including incorporated<br>and individual unincorporated underwriters, the trust must consist of a trusteed<br>account representing the group's liabilities attributable to business written in the<br>United States and, in addition, the group shall maintain a trusteed surplus of<br>which one hundred million dollars must be held jointly for the benefit of United<br>States ceding insurers of any member of the group for all years of account; the<br>incorporated members of the group may not be engaged in any business other<br>than underwriting as a member of the group and are subject to the same level<br>of solvency regulation and control by the group's domiciliary regulator as are<br>the unincorporated members. Within ninety days after its financial statements<br>are due to be filed with the group's domiciliary regulator, the group shall provide<br>to the commissioner an annual certification of the solvency of each underwriter<br>by the group's domiciliary regulator or if a certification is unavailable, financial<br>statements prepared by each underwriter's independent public accountants.b.In the case of a group of incorporated insurers under common administration<br>which complies with the filing requirements contained in subdivision a, and<br>which has continuously transacted an insurance business outside the United<br>States for at least three years immediately prior to making application for<br>accreditation and submits to this state's authority to examine its books and<br>records and bears the expense of the examination, and which has aggregate<br>policyholders' surplus of ten billion dollars; the trust must be in an amount equal<br>to the group's several liabilities attributable to business ceded by United States<br>ceding insurers to any member of the group pursuant to reinsurance contracts<br>issued in the name of such group plus the group shall maintain a joint trusteed<br>surplus of which one hundred million dollars must be held jointly and<br>exclusively for the benefit of United States ceding insurers of any member of<br>the group as additional security for any such liabilities. Within ninety days after<br>its financial statements are due to be filed with the group's domiciliary regulator,<br>each member of the group shall make available to the commissioner an annual<br>certification of the member's solvency by the member's domiciliary regulator<br>and financial statements of each underwriter member prepared by its<br>independent public accountant.c.The trust and any amendments to the trust must be established in a form<br>approved by the commissioner of the state where the trust is domiciled or the<br>commissioner of another state who, pursuant to the terms of the trust<br>instrument, has accepted principal regulatory oversight of the trust. The form of<br>the trust and any trust amendments also must be filed with the commissioner of<br>every state in which the ceding insurer beneficiaries of the trust are domiciled.<br>The trust instrument must provide that contested claims must be valid and<br>enforceable upon the final order of any court of competent jurisdiction in the<br>United States. The trust must vest legal title to its assets in the trustees of the<br>trust for its United States policyholders and ceding insurers, their assigns, and<br>successors in interest.The trust and the assuming insurer are subject toexamination as determined by the commissioner. The trust described herein<br>must remain in effect for as long as the assuming insurer, or any member orPage No. 2former member of a group of insurers, has outstanding obligations due under<br>the reinsurance agreements subject to the trust.d.No later than February twenty-eighth of each year the trustees of the trust shall<br>report to the commissioner in writing setting forth the balance of the trust and<br>listing the trust's investments at the preceding yearend and shall certify the date<br>of termination of the trust, if so planned, or certify that the trust will not expire<br>prior to the next following December thirty-first.5.Credit must be allowed when the reinsurance is ceded to an assuming insurer not<br>meeting the requirements of subsection 1, 2, 3, or 4 but only with respect to the<br>insurance of risks located in jurisdictions where the reinsurance is required by<br>applicable law or regulation of that jurisdiction.6.If the assuming insurer is not licensed or accredited to transact insurance or<br>reinsurance in this state, the credit permitted by subsections 3 and 4 may not be<br>allowed unless the assuming insurer agrees in the reinsurance agreements:a.In the event of the failure of the assuming insurer to perform its obligations<br>under the terms of the reinsurance agreement, the assuming insurer, at the<br>request of the ceding insurer, shall submit to the jurisdiction of any court of<br>competent jurisdiction in any state of the United States, will comply with all<br>requirements necessary to give such court jurisdiction, and will abide by the<br>final decision of such court or of any appellate court in the event of an appeal;<br>andb.To designate the commissioner or a designated attorney as its true and lawful<br>attorney upon whom may be served any lawful process in any action, suit, or<br>proceeding instituted by or on behalf of the ceding company.This provision is not intended to conflict with or override the obligation of the parties<br>to a reinsurance agreement to arbitrate their disputes, if such an obligation is<br>created in the agreement.26.1-31.2-02. Reduction from liability for reinsurance ceded by a domestic insurerto an assuming insurer. A reduction from liability for the reinsurance ceded by a domestic<br>insurer to an assuming insurer not meeting the requirements of section 26.1-31.2-01 must be<br>allowed in an amount not exceeding the liabilities carried by the ceding insurer and such<br>reduction must be in the amount of funds held by or on behalf of the ceding insurer, including<br>funds held in trust for the ceding insurer, under a reinsurance contract with the assuming insurer<br>as security for the payment of obligations thereunder, if the security is held in the United States<br>subject to withdrawal solely by, and under the exclusive control of, the ceding insurer; or, in the<br>case of a trust, held in a qualified United States financial institution, as defined in subsection 2 of<br>section 26.1-31.2-03. This security may be in the form of:1.Cash.2.Securities listed by the securities valuation office of the national association of<br>insurance commissioners and qualifying as admitted assets.3.Clean, irrevocable, unconditional, and evergreen letters of credit issued or confirmed<br>by a qualified United States institution, as defined in subsection 1 of section<br>26.1-31.2-03, effective no later than December thirty-first in respect of the year for<br>which filing is being made, and in the possession of, or in trust for, the ceding<br>company on or before the filing date of its annual statement.Letters of creditmeeting applicable standards of issuer acceptability as of the dates of their issuance<br>or confirmation must, notwithstanding the issuing or confirming institution's<br>subsequent failure to meet applicable standards of issuer acceptability, continue toPage No. 3be acceptable as security until their expiration, extension, renewal, modification, or<br>amendment, whichever first occurs.26.1-31.2-03. Qualified United States financial institutions.1.For purposes of subsection 3 of section 26.1-31.2-02, a &quot;qualified United States<br>financial institution&quot; means an institution that:a.Is organized, or in case of a United States office of a foreign banking<br>organization, is licensed, under the laws of the United States or any state<br>thereof;b.Is regulated, supervised, and examined by United States federal or state<br>authorities having regulatory authority over banks and trust companies;c.Has been determined by either the commissioner, or the securities valuation<br>office of the national association of insurance commissioners, to meet such<br>standards of financial condition and standing as are considered necessary and<br>appropriate to regulate the quality of financial institutions whose letters of credit<br>will be acceptable to the commissioner.2.A &quot;qualified United States financial institution&quot; means, for purposes of those<br>provisions of this chapter specifying those institutions that are eligible to act as a<br>fiduciary of a trust, an institution that:a.Is organized, or in the case of a United States branch or agency office of a<br>foreign banking organization, is licensed, under the laws of the United States or<br>any state thereof and has been granted authority to operate with fiduciary<br>powers; andb.Is regulated, supervised, and examined by federal or state authorities having<br>regulatory authority over banks and trust companies.26.1-31.2-04. Rulemaking authority. The commissioner may adopt reasonable rulesfor the implementation and administration of this chapter.26.1-31.2-05. Reinsurance agreements affected. Sections 26.1-31.2-01, 26.1-31.2-02,26.1-31.2-03, and 26.1-31.2-04 apply to all cessions after July 7, 1991, under reinsurance<br>agreements which have had an inception, anniversary, or renewal date not less than six months<br>after July 7, 1991.Page No. 4Document Outlinechapter 26.1-31.2 reinsurance credit

State Codes and Statutes

Statutes > North-dakota > T261 > T261c312

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CHAPTER 26.1-31.2REINSURANCE CREDIT26.1-31.2-01. Credit allowed a domestic ceding insurer. Credit for reinsurance mustbe allowed a domestic ceding insurer as either an asset or a deduction from liability on account<br>of reinsurance ceded only when the reinsurer meets the requirements of either subsection 1, 2,<br>3, 4, or 5. Credit will be allowed under subsection 1, 2, or 3 only with respect to cessions of a<br>kind or class of business that the assuming insurer is licensed or otherwise allowed to write or<br>assume in its state of domicile or, in the case of a United States branch of an alien assuming<br>insurer, in the state through which it is entered and licensed to transact insurance or reinsurance.<br>If meeting the requirements of subsection 3 or 4, the requirements of subsection 6 must also be<br>met.1.Credit must be allowed when the reinsurance is ceded to an assuming insurer or<br>nonprofit health service corporation which is licensed to transact insurance or<br>reinsurance in this state.2.Credit must be allowed when the reinsurance is ceded to an assuming insurer which<br>is accredited as a reinsurer in this state. An accredited reinsurer is one which:a.Files with the commissioner evidence of its submission to this state's<br>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, in the<br>case of a United States branch of an alien assuming insurer, is entered through<br>and licensed to transact insurance or reinsurance in at least one state; andd.Files annually with the commissioner a copy of its annual statement filed with<br>the insurance department of its state of domicile and a copy of its most recent<br>audited financial statement; and either(1)Maintains a surplus as regards policyholders in an amount which is not<br>less than twenty million dollars and whose accreditation has not been<br>denied by the commissioner within ninety days of its submission; or(2)Maintains a surplus as regards policyholders in an amount less than<br>twenty million dollars and whose accreditation has been approved by the<br>commissioner.No credit may be allowed a domestic ceding insurer if the assuming insurer's<br>accreditation has been revoked by the commissioner after notice and hearing.3.Credit must be allowed when the reinsurance is ceded to an assuming insurer which<br>is domiciled and licensed in, or in the case of a United States branch of an alien<br>assuming insurer, is entered through, a state which employs standards regarding<br>credit for reinsurance substantially similar to those applicable under this statute and<br>the assuming insurer or United States branch of an alien assuming insurer:a.Maintains a surplus as regards policyholders in an amount not less than twenty<br>million dollars; andb.Submits to the authority of this state to examine its books and records.Provided, however, that the requirement of subdivision a does not apply to<br>reinsurance ceded and assumed pursuant to pooling arrangements among insurers<br>in the same holding company system.Page No. 14.a.Credit must be allowed when the reinsurance is ceded to an assuming insurer<br>which maintains a trust fund in a qualified United States financial institution, as<br>defined in subsection 2 of section 26.1-31.2-03, for the payment of valid claims<br>of its United States policyholders and ceding insurers, their assigns, and<br>successors in interest.The assuming insurer shall report annually to thecommissioner information substantially the same as that required to be<br>reported on the national association of insurance commissioners annual<br>statement form by licensed insurers to enable the commissioner to determine<br>the sufficiency of the trust fund. In the case of a single assuming insurer, the<br>trust must consist of a trusteed account representing the assuming insurer's<br>liabilities attributable to reinsurance ceded by United States ceding insurers<br>and, in addition, the assuming insurer shall maintain a trusteed surplus of not<br>less than twenty million dollars. In the case of a group, including incorporated<br>and individual unincorporated underwriters, the trust must consist of a trusteed<br>account representing the group's liabilities attributable to business written in the<br>United States and, in addition, the group shall maintain a trusteed surplus of<br>which one hundred million dollars must be held jointly for the benefit of United<br>States ceding insurers of any member of the group for all years of account; the<br>incorporated members of the group may not be engaged in any business other<br>than underwriting as a member of the group and are subject to the same level<br>of solvency regulation and control by the group's domiciliary regulator as are<br>the unincorporated members. Within ninety days after its financial statements<br>are due to be filed with the group's domiciliary regulator, the group shall provide<br>to the commissioner an annual certification of the solvency of each underwriter<br>by the group's domiciliary regulator or if a certification is unavailable, financial<br>statements prepared by each underwriter's independent public accountants.b.In the case of a group of incorporated insurers under common administration<br>which complies with the filing requirements contained in subdivision a, and<br>which has continuously transacted an insurance business outside the United<br>States for at least three years immediately prior to making application for<br>accreditation and submits to this state's authority to examine its books and<br>records and bears the expense of the examination, and which has aggregate<br>policyholders' surplus of ten billion dollars; the trust must be in an amount equal<br>to the group's several liabilities attributable to business ceded by United States<br>ceding insurers to any member of the group pursuant to reinsurance contracts<br>issued in the name of such group plus the group shall maintain a joint trusteed<br>surplus of which one hundred million dollars must be held jointly and<br>exclusively for the benefit of United States ceding insurers of any member of<br>the group as additional security for any such liabilities. Within ninety days after<br>its financial statements are due to be filed with the group's domiciliary regulator,<br>each member of the group shall make available to the commissioner an annual<br>certification of the member's solvency by the member's domiciliary regulator<br>and financial statements of each underwriter member prepared by its<br>independent public accountant.c.The trust and any amendments to the trust must be established in a form<br>approved by the commissioner of the state where the trust is domiciled or the<br>commissioner of another state who, pursuant to the terms of the trust<br>instrument, has accepted principal regulatory oversight of the trust. The form of<br>the trust and any trust amendments also must be filed with the commissioner of<br>every state in which the ceding insurer beneficiaries of the trust are domiciled.<br>The trust instrument must provide that contested claims must be valid and<br>enforceable upon the final order of any court of competent jurisdiction in the<br>United States. The trust must vest legal title to its assets in the trustees of the<br>trust for its United States policyholders and ceding insurers, their assigns, and<br>successors in interest.The trust and the assuming insurer are subject toexamination as determined by the commissioner. The trust described herein<br>must remain in effect for as long as the assuming insurer, or any member orPage No. 2former member of a group of insurers, has outstanding obligations due under<br>the reinsurance agreements subject to the trust.d.No later than February twenty-eighth of each year the trustees of the trust shall<br>report to the commissioner in writing setting forth the balance of the trust and<br>listing the trust's investments at the preceding yearend and shall certify the date<br>of termination of the trust, if so planned, or certify that the trust will not expire<br>prior to the next following December thirty-first.5.Credit must be allowed when the reinsurance is ceded to an assuming insurer not<br>meeting the requirements of subsection 1, 2, 3, or 4 but only with respect to the<br>insurance of risks located in jurisdictions where the reinsurance is required by<br>applicable law or regulation of that jurisdiction.6.If the assuming insurer is not licensed or accredited to transact insurance or<br>reinsurance in this state, the credit permitted by subsections 3 and 4 may not be<br>allowed unless the assuming insurer agrees in the reinsurance agreements:a.In the event of the failure of the assuming insurer to perform its obligations<br>under the terms of the reinsurance agreement, the assuming insurer, at the<br>request of the ceding insurer, shall submit to the jurisdiction of any court of<br>competent jurisdiction in any state of the United States, will comply with all<br>requirements necessary to give such court jurisdiction, and will abide by the<br>final decision of such court or of any appellate court in the event of an appeal;<br>andb.To designate the commissioner or a designated attorney as its true and lawful<br>attorney upon whom may be served any lawful process in any action, suit, or<br>proceeding instituted by or on behalf of the ceding company.This provision is not intended to conflict with or override the obligation of the parties<br>to a reinsurance agreement to arbitrate their disputes, if such an obligation is<br>created in the agreement.26.1-31.2-02. Reduction from liability for reinsurance ceded by a domestic insurerto an assuming insurer. A reduction from liability for the reinsurance ceded by a domestic<br>insurer to an assuming insurer not meeting the requirements of section 26.1-31.2-01 must be<br>allowed in an amount not exceeding the liabilities carried by the ceding insurer and such<br>reduction must be in the amount of funds held by or on behalf of the ceding insurer, including<br>funds held in trust for the ceding insurer, under a reinsurance contract with the assuming insurer<br>as security for the payment of obligations thereunder, if the security is held in the United States<br>subject to withdrawal solely by, and under the exclusive control of, the ceding insurer; or, in the<br>case of a trust, held in a qualified United States financial institution, as defined in subsection 2 of<br>section 26.1-31.2-03. This security may be in the form of:1.Cash.2.Securities listed by the securities valuation office of the national association of<br>insurance commissioners and qualifying as admitted assets.3.Clean, irrevocable, unconditional, and evergreen letters of credit issued or confirmed<br>by a qualified United States institution, as defined in subsection 1 of section<br>26.1-31.2-03, effective no later than December thirty-first in respect of the year for<br>which filing is being made, and in the possession of, or in trust for, the ceding<br>company on or before the filing date of its annual statement.Letters of creditmeeting applicable standards of issuer acceptability as of the dates of their issuance<br>or confirmation must, notwithstanding the issuing or confirming institution's<br>subsequent failure to meet applicable standards of issuer acceptability, continue toPage No. 3be acceptable as security until their expiration, extension, renewal, modification, or<br>amendment, whichever first occurs.26.1-31.2-03. Qualified United States financial institutions.1.For purposes of subsection 3 of section 26.1-31.2-02, a &quot;qualified United States<br>financial institution&quot; means an institution that:a.Is organized, or in case of a United States office of a foreign banking<br>organization, is licensed, under the laws of the United States or any state<br>thereof;b.Is regulated, supervised, and examined by United States federal or state<br>authorities having regulatory authority over banks and trust companies;c.Has been determined by either the commissioner, or the securities valuation<br>office of the national association of insurance commissioners, to meet such<br>standards of financial condition and standing as are considered necessary and<br>appropriate to regulate the quality of financial institutions whose letters of credit<br>will be acceptable to the commissioner.2.A &quot;qualified United States financial institution&quot; means, for purposes of those<br>provisions of this chapter specifying those institutions that are eligible to act as a<br>fiduciary of a trust, an institution that:a.Is organized, or in the case of a United States branch or agency office of a<br>foreign banking organization, is licensed, under the laws of the United States or<br>any state thereof and has been granted authority to operate with fiduciary<br>powers; andb.Is regulated, supervised, and examined by federal or state authorities having<br>regulatory authority over banks and trust companies.26.1-31.2-04. Rulemaking authority. The commissioner may adopt reasonable rulesfor the implementation and administration of this chapter.26.1-31.2-05. Reinsurance agreements affected. Sections 26.1-31.2-01, 26.1-31.2-02,26.1-31.2-03, and 26.1-31.2-04 apply to all cessions after July 7, 1991, under reinsurance<br>agreements which have had an inception, anniversary, or renewal date not less than six months<br>after July 7, 1991.Page No. 4Document Outlinechapter 26.1-31.2 reinsurance credit

State Codes and Statutes

State Codes and Statutes

Statutes > North-dakota > T261 > T261c312

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CHAPTER 26.1-31.2REINSURANCE CREDIT26.1-31.2-01. Credit allowed a domestic ceding insurer. Credit for reinsurance mustbe allowed a domestic ceding insurer as either an asset or a deduction from liability on account<br>of reinsurance ceded only when the reinsurer meets the requirements of either subsection 1, 2,<br>3, 4, or 5. Credit will be allowed under subsection 1, 2, or 3 only with respect to cessions of a<br>kind or class of business that the assuming insurer is licensed or otherwise allowed to write or<br>assume in its state of domicile or, in the case of a United States branch of an alien assuming<br>insurer, in the state through which it is entered and licensed to transact insurance or reinsurance.<br>If meeting the requirements of subsection 3 or 4, the requirements of subsection 6 must also be<br>met.1.Credit must be allowed when the reinsurance is ceded to an assuming insurer or<br>nonprofit health service corporation which is licensed to transact insurance or<br>reinsurance in this state.2.Credit must be allowed when the reinsurance is ceded to an assuming insurer which<br>is accredited as a reinsurer in this state. An accredited reinsurer is one which:a.Files with the commissioner evidence of its submission to this state's<br>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, in the<br>case of a United States branch of an alien assuming insurer, is entered through<br>and licensed to transact insurance or reinsurance in at least one state; andd.Files annually with the commissioner a copy of its annual statement filed with<br>the insurance department of its state of domicile and a copy of its most recent<br>audited financial statement; and either(1)Maintains a surplus as regards policyholders in an amount which is not<br>less than twenty million dollars and whose accreditation has not been<br>denied by the commissioner within ninety days of its submission; or(2)Maintains a surplus as regards policyholders in an amount less than<br>twenty million dollars and whose accreditation has been approved by the<br>commissioner.No credit may be allowed a domestic ceding insurer if the assuming insurer's<br>accreditation has been revoked by the commissioner after notice and hearing.3.Credit must be allowed when the reinsurance is ceded to an assuming insurer which<br>is domiciled and licensed in, or in the case of a United States branch of an alien<br>assuming insurer, is entered through, a state which employs standards regarding<br>credit for reinsurance substantially similar to those applicable under this statute and<br>the assuming insurer or United States branch of an alien assuming insurer:a.Maintains a surplus as regards policyholders in an amount not less than twenty<br>million dollars; andb.Submits to the authority of this state to examine its books and records.Provided, however, that the requirement of subdivision a does not apply to<br>reinsurance ceded and assumed pursuant to pooling arrangements among insurers<br>in the same holding company system.Page No. 14.a.Credit must be allowed when the reinsurance is ceded to an assuming insurer<br>which maintains a trust fund in a qualified United States financial institution, as<br>defined in subsection 2 of section 26.1-31.2-03, for the payment of valid claims<br>of its United States policyholders and ceding insurers, their assigns, and<br>successors in interest.The assuming insurer shall report annually to thecommissioner information substantially the same as that required to be<br>reported on the national association of insurance commissioners annual<br>statement form by licensed insurers to enable the commissioner to determine<br>the sufficiency of the trust fund. In the case of a single assuming insurer, the<br>trust must consist of a trusteed account representing the assuming insurer's<br>liabilities attributable to reinsurance ceded by United States ceding insurers<br>and, in addition, the assuming insurer shall maintain a trusteed surplus of not<br>less than twenty million dollars. In the case of a group, including incorporated<br>and individual unincorporated underwriters, the trust must consist of a trusteed<br>account representing the group's liabilities attributable to business written in the<br>United States and, in addition, the group shall maintain a trusteed surplus of<br>which one hundred million dollars must be held jointly for the benefit of United<br>States ceding insurers of any member of the group for all years of account; the<br>incorporated members of the group may not be engaged in any business other<br>than underwriting as a member of the group and are subject to the same level<br>of solvency regulation and control by the group's domiciliary regulator as are<br>the unincorporated members. Within ninety days after its financial statements<br>are due to be filed with the group's domiciliary regulator, the group shall provide<br>to the commissioner an annual certification of the solvency of each underwriter<br>by the group's domiciliary regulator or if a certification is unavailable, financial<br>statements prepared by each underwriter's independent public accountants.b.In the case of a group of incorporated insurers under common administration<br>which complies with the filing requirements contained in subdivision a, and<br>which has continuously transacted an insurance business outside the United<br>States for at least three years immediately prior to making application for<br>accreditation and submits to this state's authority to examine its books and<br>records and bears the expense of the examination, and which has aggregate<br>policyholders' surplus of ten billion dollars; the trust must be in an amount equal<br>to the group's several liabilities attributable to business ceded by United States<br>ceding insurers to any member of the group pursuant to reinsurance contracts<br>issued in the name of such group plus the group shall maintain a joint trusteed<br>surplus of which one hundred million dollars must be held jointly and<br>exclusively for the benefit of United States ceding insurers of any member of<br>the group as additional security for any such liabilities. Within ninety days after<br>its financial statements are due to be filed with the group's domiciliary regulator,<br>each member of the group shall make available to the commissioner an annual<br>certification of the member's solvency by the member's domiciliary regulator<br>and financial statements of each underwriter member prepared by its<br>independent public accountant.c.The trust and any amendments to the trust must be established in a form<br>approved by the commissioner of the state where the trust is domiciled or the<br>commissioner of another state who, pursuant to the terms of the trust<br>instrument, has accepted principal regulatory oversight of the trust. The form of<br>the trust and any trust amendments also must be filed with the commissioner of<br>every state in which the ceding insurer beneficiaries of the trust are domiciled.<br>The trust instrument must provide that contested claims must be valid and<br>enforceable upon the final order of any court of competent jurisdiction in the<br>United States. The trust must vest legal title to its assets in the trustees of the<br>trust for its United States policyholders and ceding insurers, their assigns, and<br>successors in interest.The trust and the assuming insurer are subject toexamination as determined by the commissioner. The trust described herein<br>must remain in effect for as long as the assuming insurer, or any member orPage No. 2former member of a group of insurers, has outstanding obligations due under<br>the reinsurance agreements subject to the trust.d.No later than February twenty-eighth of each year the trustees of the trust shall<br>report to the commissioner in writing setting forth the balance of the trust and<br>listing the trust's investments at the preceding yearend and shall certify the date<br>of termination of the trust, if so planned, or certify that the trust will not expire<br>prior to the next following December thirty-first.5.Credit must be allowed when the reinsurance is ceded to an assuming insurer not<br>meeting the requirements of subsection 1, 2, 3, or 4 but only with respect to the<br>insurance of risks located in jurisdictions where the reinsurance is required by<br>applicable law or regulation of that jurisdiction.6.If the assuming insurer is not licensed or accredited to transact insurance or<br>reinsurance in this state, the credit permitted by subsections 3 and 4 may not be<br>allowed unless the assuming insurer agrees in the reinsurance agreements:a.In the event of the failure of the assuming insurer to perform its obligations<br>under the terms of the reinsurance agreement, the assuming insurer, at the<br>request of the ceding insurer, shall submit to the jurisdiction of any court of<br>competent jurisdiction in any state of the United States, will comply with all<br>requirements necessary to give such court jurisdiction, and will abide by the<br>final decision of such court or of any appellate court in the event of an appeal;<br>andb.To designate the commissioner or a designated attorney as its true and lawful<br>attorney upon whom may be served any lawful process in any action, suit, or<br>proceeding instituted by or on behalf of the ceding company.This provision is not intended to conflict with or override the obligation of the parties<br>to a reinsurance agreement to arbitrate their disputes, if such an obligation is<br>created in the agreement.26.1-31.2-02. Reduction from liability for reinsurance ceded by a domestic insurerto an assuming insurer. A reduction from liability for the reinsurance ceded by a domestic<br>insurer to an assuming insurer not meeting the requirements of section 26.1-31.2-01 must be<br>allowed in an amount not exceeding the liabilities carried by the ceding insurer and such<br>reduction must be in the amount of funds held by or on behalf of the ceding insurer, including<br>funds held in trust for the ceding insurer, under a reinsurance contract with the assuming insurer<br>as security for the payment of obligations thereunder, if the security is held in the United States<br>subject to withdrawal solely by, and under the exclusive control of, the ceding insurer; or, in the<br>case of a trust, held in a qualified United States financial institution, as defined in subsection 2 of<br>section 26.1-31.2-03. This security may be in the form of:1.Cash.2.Securities listed by the securities valuation office of the national association of<br>insurance commissioners and qualifying as admitted assets.3.Clean, irrevocable, unconditional, and evergreen letters of credit issued or confirmed<br>by a qualified United States institution, as defined in subsection 1 of section<br>26.1-31.2-03, effective no later than December thirty-first in respect of the year for<br>which filing is being made, and in the possession of, or in trust for, the ceding<br>company on or before the filing date of its annual statement.Letters of creditmeeting applicable standards of issuer acceptability as of the dates of their issuance<br>or confirmation must, notwithstanding the issuing or confirming institution's<br>subsequent failure to meet applicable standards of issuer acceptability, continue toPage No. 3be acceptable as security until their expiration, extension, renewal, modification, or<br>amendment, whichever first occurs.26.1-31.2-03. Qualified United States financial institutions.1.For purposes of subsection 3 of section 26.1-31.2-02, a &quot;qualified United States<br>financial institution&quot; means an institution that:a.Is organized, or in case of a United States office of a foreign banking<br>organization, is licensed, under the laws of the United States or any state<br>thereof;b.Is regulated, supervised, and examined by United States federal or state<br>authorities having regulatory authority over banks and trust companies;c.Has been determined by either the commissioner, or the securities valuation<br>office of the national association of insurance commissioners, to meet such<br>standards of financial condition and standing as are considered necessary and<br>appropriate to regulate the quality of financial institutions whose letters of credit<br>will be acceptable to the commissioner.2.A &quot;qualified United States financial institution&quot; means, for purposes of those<br>provisions of this chapter specifying those institutions that are eligible to act as a<br>fiduciary of a trust, an institution that:a.Is organized, or in the case of a United States branch or agency office of a<br>foreign banking organization, is licensed, under the laws of the United States or<br>any state thereof and has been granted authority to operate with fiduciary<br>powers; andb.Is regulated, supervised, and examined by federal or state authorities having<br>regulatory authority over banks and trust companies.26.1-31.2-04. Rulemaking authority. The commissioner may adopt reasonable rulesfor the implementation and administration of this chapter.26.1-31.2-05. Reinsurance agreements affected. Sections 26.1-31.2-01, 26.1-31.2-02,26.1-31.2-03, and 26.1-31.2-04 apply to all cessions after July 7, 1991, under reinsurance<br>agreements which have had an inception, anniversary, or renewal date not less than six months<br>after July 7, 1991.Page No. 4Document Outlinechapter 26.1-31.2 reinsurance credit