State Codes and Statutes

Statutes > Utah > Title-31a > Chapter-17 > 31a-17-404

31A-17-404. Credit allowed a domestic ceding insurer against reserves forreinsurance.
(1) A domestic ceding insurer is allowed credit for reinsurance as either an asset or areduction from liability for reinsurance ceded only if the reinsurer meets the requirements ofSubsection (3), (4), (5), (6), or (7), subject to the following:
(a) Credit is allowed under Subsection (3), (4), or (5) only with respect to a cession of akind or class of business that the assuming insurer is licensed or otherwise permitted to write orassume:
(i) in its state of domicile; or
(ii) in the case of a United States branch of an alien assuming insurer, in the state throughwhich it is entered and licensed to transact insurance or reinsurance.
(b) Credit is allowed under Subsection (5) or (6) only if the applicable requirements ofSubsection (8) are met.
(2) A domestic ceding insurer is allowed credit for reinsurance ceded:
(a) only if the reinsurance is payable in a manner consistent with Section 31A-22-1201;
(b) only to the extent that the accounting:
(i) is consistent with the terms of the reinsurance contract; and
(ii) clearly reflects:
(A) the amount and nature of risk transferred; and
(B) liability, including contingent liability, of the ceding insurer;
(c) only to the extent the reinsurance contract shifts insurance policy risk from the cedinginsurer to the assuming reinsurer in fact and not merely in form; and
(d) only if the reinsurance contract contains a provision placing on the reinsurer thecredit risk of all dealings with intermediaries regarding the reinsurance contract.
(3) A domestic ceding insurer is allowed a credit if the reinsurance is ceded to anassuming insurer that is licensed to transact insurance or reinsurance in this state.
(4) (a) A domestic ceding insurer is allowed a credit if the reinsurance is ceded to anassuming insurer that is accredited as a reinsurer in this state.
(b) An insurer is accredited as a reinsurer if the insurer:
(i) files with the commissioner evidence of the insurer's submission to this state'sjurisdiction;
(ii) submits to the commissioner's authority to examine the insurer's books and records;
(iii) (A) is licensed to transact insurance or reinsurance in at least one state; or
(B) in the case of a United States branch of an alien assuming insurer, is entered throughand licensed to transact insurance or reinsurance in at least one state;
(iv) files annually with the commissioner a copy of the insurer's:
(A) annual statement filed with the insurance department of its state of domicile; and
(B) most recent audited financial statement; and
(v) (A) (I) has not had its accreditation denied by the commissioner within 90 days of theday on which the insurer submits the information required by this Subsection (4); and
(II) maintains a surplus with regard to policyholders in an amount not less than$20,000,000; or
(B) (I) has its accreditation approved by the commissioner; and
(II) maintains a surplus with regard to policyholders in an amount less than $20,000,000.
(c) Credit may not be allowed a domestic ceding insurer if the assuming insurer's

accreditation is revoked by the commissioner after a notice and hearing.
(5) (a) A domestic ceding insurer is allowed a credit if:
(i) the reinsurance is ceded to an assuming insurer that is:
(A) domiciled in a state meeting the requirements of Subsection (5)(a)(ii); or
(B) in the case of a United States branch of an alien assuming insurer, is entered througha state meeting the requirements of Subsection (5)(a)(ii);
(ii) the state described in Subsection (5)(a)(i) employs standards regarding credit forreinsurance substantially similar to those applicable under this section; and
(iii) the assuming insurer or United States branch of an alien assuming insurer:
(A) maintains a surplus with regard to policyholders in an amount not less than$20,000,000; and
(B) submits to the authority of the commissioner to examine its books and records.
(b) The requirements of Subsections (5)(a)(i) and (ii) do not apply to reinsurance cededand assumed pursuant to a pooling arrangement among insurers in the same holding companysystem.
(6) (a) A domestic ceding insurer is allowed a credit if the reinsurance is ceded to anassuming insurer that maintains a trust fund:
(i) created in accordance with rules made by the commissioner; and
(ii) in a qualified United States financial institution for the payment of a valid claim of:
(A) a United States ceding insurer of the assuming insurer;
(B) an assign of the United States ceding insurer; and
(C) a successor in interest to the United States ceding insurer.
(b) To enable the commissioner to determine the sufficiency of the trust fund describedin Subsection (6)(a), the assuming insurer shall:
(i) report annually to the commissioner information substantially the same as thatrequired to be reported on the National Association of Insurance Commissioners AnnualStatement form by a licensed insurer; and
(ii) (A) submit to examination of its books and records by the commissioner; and
(B) pay the cost of an examination.
(c) (i) Credit for reinsurance may not be granted under this Subsection (6) unless theform of the trust and any amendment to the trust is approved by:
(A) the commissioner of the state where the trust is domiciled; or
(B) the commissioner of another state who, pursuant to the terms of the trust instrument,accepts principal regulatory oversight of the trust.
(ii) The form of the trust and an amendment to the trust shall be filed with thecommissioner of every state in which a ceding insurer beneficiary of the trust is domiciled.
(iii) The trust instrument shall provide that a contested claim is valid and enforceableupon the final order of a court of competent jurisdiction in the United States.
(iv) The trust shall vest legal title to its assets in its one or more trustees for the benefitof:
(A) a United States ceding insurer of the assuming insurer;
(B) an assign of the United States ceding insurer; or
(C) a successor in interest to the United States ceding insurer.
(v) The trust and the assuming insurer are subject to examination as determined by thecommissioner.

(vi) The trust shall remain in effect for as long as the assuming insurer has an outstandingobligation due under a reinsurance agreement subject to the trust.
(vii) No later than February 28 of each year, the trustee of the trust shall:
(A) report to the commissioner in writing the balance of the trust;
(B) list the trust's investments at the end of the preceding calendar year; and
(C) (I) certify the date of termination of the trust, if so planned; or
(II) certify that the trust will not expire prior to the following December 31.
(d) The following requirements apply to the following categories of assuming insurer:
(i) For a single assuming insurer:
(A) the trust fund shall consist of funds in trust in an amount not less than the assuminginsurer's liabilities attributable to reinsurance ceded by United States ceding insurers; and
(B) the assuming insurer shall maintain a trusteed surplus of not less than $20,000,000.
(ii) For a group acting as assuming insurer, including incorporated and individualunincorporated underwriters:
(A) for reinsurance ceded under a reinsurance agreement with an inception, amendment,or renewal date on or after August 1, 1995, the trust shall consist of a trusteed account in anamount not less than the group's several liabilities attributable to business ceded by the one ormore United States domiciled ceding insurers to a member of the group;
(B) for reinsurance ceded under a reinsurance agreement with an inception date on orbefore July 31, 1995, and not amended or renewed after July 31, 1995, notwithstanding the otherprovisions of this chapter, the trust shall consist of a trusteed account in an amount not less thanthe group's several insurance and reinsurance liabilities attributable to business written in theUnited States;
(C) in addition to a trust described in Subsection (6)(d)(ii)(A) or (B), the group shallmaintain in trust a trusteed surplus of which $100,000,000 is held jointly for the benefit of theone or more United States domiciled ceding insurers of a member of the group for all years ofaccount;
(D) the incorporated members of the group:
(I) may not be engaged in a business other than underwriting as a member of the group;and
(II) are subject to the same level of regulation and solvency control by the group'sdomiciliary regulator as are the unincorporated members; and
(E) within 90 days after the day on which the group's financial statements are due to befiled with the group's domiciliary regulator, the group shall provide to the commissioner:
(I) an annual certification by the group's domiciliary regulator of the solvency of eachunderwriter member; or
(II) if a certification is unavailable, a financial statement, prepared by an independentpublic accountant, of each underwriter member of the group.
(iii) For a group of incorporated underwriters under common administration, the groupshall:
(A) have continuously transacted an insurance business outside the United States for atleast three years immediately preceding the day on which the group makes application foraccreditation;
(B) maintain aggregate policyholders' surplus of at least $10,000,000,000;
(C) maintain a trust fund in an amount not less than the group's several liabilities

attributable to business ceded by the one or more United States domiciled ceding insurers to amember of the group pursuant to a reinsurance contract issued in the name of the group;
(D) in addition to complying with the other provisions of this Subsection (6)(d)(iii),maintain a joint trusteed surplus of which $100,000,000 is held jointly for the benefit of the oneor more United States domiciled ceding insurers of a member of the group as additional securityfor these liabilities; and
(E) within 90 days after the day on which the group's financial statements are due to befiled with the group's domiciliary regulator, make available to the commissioner:
(I) an annual certification of each underwriter member's solvency by the member'sdomiciliary regulator; and
(II) a financial statement of each underwriter member of the group prepared by anindependent public accountant.
(7) If reinsurance is ceded to an assuming insurer not meeting the requirements ofSubsection (3), (4), (5), or (6), a domestic ceding insurer is allowed credit only as to theinsurance of a risk located in a jurisdiction where the reinsurance is required by applicable law orregulation of that jurisdiction.
(8) Reinsurance credit may not be allowed a domestic ceding insurer unless the assuminginsurer under the reinsurance contract submits to the jurisdiction of Utah courts by:
(a) (i) being an admitted insurer; and
(ii) submitting to jurisdiction under Section 31A-2-309;
(b) having irrevocably appointed the commissioner as the domestic ceding insurer's agentfor service of process in an action arising out of or in connection with the reinsurance, whichappointment is made under Section 31A-2-309; or
(c) agreeing in the reinsurance contract:
(i) that if the assuming insurer fails to perform its obligations under the terms of thereinsurance contract, the assuming insurer, at the request of the ceding insurer, shall:
(A) submit to the jurisdiction of a court of competent jurisdiction in a state of the UnitedStates;
(B) comply with all requirements necessary to give the court jurisdiction; and
(C) abide by the final decision of the court or of an appellate court in the event of anappeal; and
(ii) to designate the commissioner or a specific attorney licensed to practice law in thisstate as its attorney upon whom may be served lawful process in an action, suit, or proceedinginstituted by or on behalf of the ceding company.
(9) Submitting to the jurisdiction of Utah courts under Subsection (8) does not override aduty or right of a party under the reinsurance contract, including a requirement that the partiesarbitrate their disputes.
(10) If an assuming insurer does not meet the requirements of Subsection (3), (4), or (5),the credit permitted by Subsection (6) may not be allowed unless the assuming insurer agrees inthe trust instrument to the following conditions:
(a) (i) Notwithstanding any other provision in the trust instrument, if an event describedin Subsection (10)(a)(ii) occurs the trustee shall comply with:
(A) an order of the commissioner with regulatory oversight over the trust; or
(B) an order of a court of competent jurisdiction directing the trustee to transfer to thecommissioner with regulatory oversight all of the assets of the trust fund.

(ii) This Subsection (10)(a) applies if:
(A) the trust fund is inadequate because the trust contains an amount less than theamount required by Subsection (6)(d); or
(B) the grantor of the trust is:
(I) declared insolvent; or
(II) placed into receivership, rehabilitation, liquidation, or similar proceeding under thelaws of its state or country of domicile.
(b) The assets of a trust fund described in Subsection (10)(a) shall be distributed by and aclaim shall be filed with and valued by the commissioner with regulatory oversight in accordancewith the laws of the state in which the trust is domiciled that are applicable to the liquidation of adomestic insurance company.
(c) If the commissioner with regulatory oversight determines that the assets of the trustfund, or any part of the assets, are not necessary to satisfy the claims of the one or more UnitedStates ceding insurers of the grantor of the trust, the assets, or a part of the assets, shall bereturned by the commissioner with regulatory oversight to the trustee for distribution inaccordance with the trust instrument.
(d) A grantor shall waive any right otherwise available to it under United States law thatis inconsistent with this Subsection (10).

Amended by Chapter 257, 2008 General Session

State Codes and Statutes

Statutes > Utah > Title-31a > Chapter-17 > 31a-17-404

31A-17-404. Credit allowed a domestic ceding insurer against reserves forreinsurance.
(1) A domestic ceding insurer is allowed credit for reinsurance as either an asset or areduction from liability for reinsurance ceded only if the reinsurer meets the requirements ofSubsection (3), (4), (5), (6), or (7), subject to the following:
(a) Credit is allowed under Subsection (3), (4), or (5) only with respect to a cession of akind or class of business that the assuming insurer is licensed or otherwise permitted to write orassume:
(i) in its state of domicile; or
(ii) in the case of a United States branch of an alien assuming insurer, in the state throughwhich it is entered and licensed to transact insurance or reinsurance.
(b) Credit is allowed under Subsection (5) or (6) only if the applicable requirements ofSubsection (8) are met.
(2) A domestic ceding insurer is allowed credit for reinsurance ceded:
(a) only if the reinsurance is payable in a manner consistent with Section 31A-22-1201;
(b) only to the extent that the accounting:
(i) is consistent with the terms of the reinsurance contract; and
(ii) clearly reflects:
(A) the amount and nature of risk transferred; and
(B) liability, including contingent liability, of the ceding insurer;
(c) only to the extent the reinsurance contract shifts insurance policy risk from the cedinginsurer to the assuming reinsurer in fact and not merely in form; and
(d) only if the reinsurance contract contains a provision placing on the reinsurer thecredit risk of all dealings with intermediaries regarding the reinsurance contract.
(3) A domestic ceding insurer is allowed a credit if the reinsurance is ceded to anassuming insurer that is licensed to transact insurance or reinsurance in this state.
(4) (a) A domestic ceding insurer is allowed a credit if the reinsurance is ceded to anassuming insurer that is accredited as a reinsurer in this state.
(b) An insurer is accredited as a reinsurer if the insurer:
(i) files with the commissioner evidence of the insurer's submission to this state'sjurisdiction;
(ii) submits to the commissioner's authority to examine the insurer's books and records;
(iii) (A) is licensed to transact insurance or reinsurance in at least one state; or
(B) in the case of a United States branch of an alien assuming insurer, is entered throughand licensed to transact insurance or reinsurance in at least one state;
(iv) files annually with the commissioner a copy of the insurer's:
(A) annual statement filed with the insurance department of its state of domicile; and
(B) most recent audited financial statement; and
(v) (A) (I) has not had its accreditation denied by the commissioner within 90 days of theday on which the insurer submits the information required by this Subsection (4); and
(II) maintains a surplus with regard to policyholders in an amount not less than$20,000,000; or
(B) (I) has its accreditation approved by the commissioner; and
(II) maintains a surplus with regard to policyholders in an amount less than $20,000,000.
(c) Credit may not be allowed a domestic ceding insurer if the assuming insurer's

accreditation is revoked by the commissioner after a notice and hearing.
(5) (a) A domestic ceding insurer is allowed a credit if:
(i) the reinsurance is ceded to an assuming insurer that is:
(A) domiciled in a state meeting the requirements of Subsection (5)(a)(ii); or
(B) in the case of a United States branch of an alien assuming insurer, is entered througha state meeting the requirements of Subsection (5)(a)(ii);
(ii) the state described in Subsection (5)(a)(i) employs standards regarding credit forreinsurance substantially similar to those applicable under this section; and
(iii) the assuming insurer or United States branch of an alien assuming insurer:
(A) maintains a surplus with regard to policyholders in an amount not less than$20,000,000; and
(B) submits to the authority of the commissioner to examine its books and records.
(b) The requirements of Subsections (5)(a)(i) and (ii) do not apply to reinsurance cededand assumed pursuant to a pooling arrangement among insurers in the same holding companysystem.
(6) (a) A domestic ceding insurer is allowed a credit if the reinsurance is ceded to anassuming insurer that maintains a trust fund:
(i) created in accordance with rules made by the commissioner; and
(ii) in a qualified United States financial institution for the payment of a valid claim of:
(A) a United States ceding insurer of the assuming insurer;
(B) an assign of the United States ceding insurer; and
(C) a successor in interest to the United States ceding insurer.
(b) To enable the commissioner to determine the sufficiency of the trust fund describedin Subsection (6)(a), the assuming insurer shall:
(i) report annually to the commissioner information substantially the same as thatrequired to be reported on the National Association of Insurance Commissioners AnnualStatement form by a licensed insurer; and
(ii) (A) submit to examination of its books and records by the commissioner; and
(B) pay the cost of an examination.
(c) (i) Credit for reinsurance may not be granted under this Subsection (6) unless theform of the trust and any amendment to the trust is approved by:
(A) the commissioner of the state where the trust is domiciled; or
(B) the commissioner of another state who, pursuant to the terms of the trust instrument,accepts principal regulatory oversight of the trust.
(ii) The form of the trust and an amendment to the trust shall be filed with thecommissioner of every state in which a ceding insurer beneficiary of the trust is domiciled.
(iii) The trust instrument shall provide that a contested claim is valid and enforceableupon the final order of a court of competent jurisdiction in the United States.
(iv) The trust shall vest legal title to its assets in its one or more trustees for the benefitof:
(A) a United States ceding insurer of the assuming insurer;
(B) an assign of the United States ceding insurer; or
(C) a successor in interest to the United States ceding insurer.
(v) The trust and the assuming insurer are subject to examination as determined by thecommissioner.

(vi) The trust shall remain in effect for as long as the assuming insurer has an outstandingobligation due under a reinsurance agreement subject to the trust.
(vii) No later than February 28 of each year, the trustee of the trust shall:
(A) report to the commissioner in writing the balance of the trust;
(B) list the trust's investments at the end of the preceding calendar year; and
(C) (I) certify the date of termination of the trust, if so planned; or
(II) certify that the trust will not expire prior to the following December 31.
(d) The following requirements apply to the following categories of assuming insurer:
(i) For a single assuming insurer:
(A) the trust fund shall consist of funds in trust in an amount not less than the assuminginsurer's liabilities attributable to reinsurance ceded by United States ceding insurers; and
(B) the assuming insurer shall maintain a trusteed surplus of not less than $20,000,000.
(ii) For a group acting as assuming insurer, including incorporated and individualunincorporated underwriters:
(A) for reinsurance ceded under a reinsurance agreement with an inception, amendment,or renewal date on or after August 1, 1995, the trust shall consist of a trusteed account in anamount not less than the group's several liabilities attributable to business ceded by the one ormore United States domiciled ceding insurers to a member of the group;
(B) for reinsurance ceded under a reinsurance agreement with an inception date on orbefore July 31, 1995, and not amended or renewed after July 31, 1995, notwithstanding the otherprovisions of this chapter, the trust shall consist of a trusteed account in an amount not less thanthe group's several insurance and reinsurance liabilities attributable to business written in theUnited States;
(C) in addition to a trust described in Subsection (6)(d)(ii)(A) or (B), the group shallmaintain in trust a trusteed surplus of which $100,000,000 is held jointly for the benefit of theone or more United States domiciled ceding insurers of a member of the group for all years ofaccount;
(D) the incorporated members of the group:
(I) may not be engaged in a business other than underwriting as a member of the group;and
(II) are subject to the same level of regulation and solvency control by the group'sdomiciliary regulator as are the unincorporated members; and
(E) within 90 days after the day on which the group's financial statements are due to befiled with the group's domiciliary regulator, the group shall provide to the commissioner:
(I) an annual certification by the group's domiciliary regulator of the solvency of eachunderwriter member; or
(II) if a certification is unavailable, a financial statement, prepared by an independentpublic accountant, of each underwriter member of the group.
(iii) For a group of incorporated underwriters under common administration, the groupshall:
(A) have continuously transacted an insurance business outside the United States for atleast three years immediately preceding the day on which the group makes application foraccreditation;
(B) maintain aggregate policyholders' surplus of at least $10,000,000,000;
(C) maintain a trust fund in an amount not less than the group's several liabilities

attributable to business ceded by the one or more United States domiciled ceding insurers to amember of the group pursuant to a reinsurance contract issued in the name of the group;
(D) in addition to complying with the other provisions of this Subsection (6)(d)(iii),maintain a joint trusteed surplus of which $100,000,000 is held jointly for the benefit of the oneor more United States domiciled ceding insurers of a member of the group as additional securityfor these liabilities; and
(E) within 90 days after the day on which the group's financial statements are due to befiled with the group's domiciliary regulator, make available to the commissioner:
(I) an annual certification of each underwriter member's solvency by the member'sdomiciliary regulator; and
(II) a financial statement of each underwriter member of the group prepared by anindependent public accountant.
(7) If reinsurance is ceded to an assuming insurer not meeting the requirements ofSubsection (3), (4), (5), or (6), a domestic ceding insurer is allowed credit only as to theinsurance of a risk located in a jurisdiction where the reinsurance is required by applicable law orregulation of that jurisdiction.
(8) Reinsurance credit may not be allowed a domestic ceding insurer unless the assuminginsurer under the reinsurance contract submits to the jurisdiction of Utah courts by:
(a) (i) being an admitted insurer; and
(ii) submitting to jurisdiction under Section 31A-2-309;
(b) having irrevocably appointed the commissioner as the domestic ceding insurer's agentfor service of process in an action arising out of or in connection with the reinsurance, whichappointment is made under Section 31A-2-309; or
(c) agreeing in the reinsurance contract:
(i) that if the assuming insurer fails to perform its obligations under the terms of thereinsurance contract, the assuming insurer, at the request of the ceding insurer, shall:
(A) submit to the jurisdiction of a court of competent jurisdiction in a state of the UnitedStates;
(B) comply with all requirements necessary to give the court jurisdiction; and
(C) abide by the final decision of the court or of an appellate court in the event of anappeal; and
(ii) to designate the commissioner or a specific attorney licensed to practice law in thisstate as its attorney upon whom may be served lawful process in an action, suit, or proceedinginstituted by or on behalf of the ceding company.
(9) Submitting to the jurisdiction of Utah courts under Subsection (8) does not override aduty or right of a party under the reinsurance contract, including a requirement that the partiesarbitrate their disputes.
(10) If an assuming insurer does not meet the requirements of Subsection (3), (4), or (5),the credit permitted by Subsection (6) may not be allowed unless the assuming insurer agrees inthe trust instrument to the following conditions:
(a) (i) Notwithstanding any other provision in the trust instrument, if an event describedin Subsection (10)(a)(ii) occurs the trustee shall comply with:
(A) an order of the commissioner with regulatory oversight over the trust; or
(B) an order of a court of competent jurisdiction directing the trustee to transfer to thecommissioner with regulatory oversight all of the assets of the trust fund.

(ii) This Subsection (10)(a) applies if:
(A) the trust fund is inadequate because the trust contains an amount less than theamount required by Subsection (6)(d); or
(B) the grantor of the trust is:
(I) declared insolvent; or
(II) placed into receivership, rehabilitation, liquidation, or similar proceeding under thelaws of its state or country of domicile.
(b) The assets of a trust fund described in Subsection (10)(a) shall be distributed by and aclaim shall be filed with and valued by the commissioner with regulatory oversight in accordancewith the laws of the state in which the trust is domiciled that are applicable to the liquidation of adomestic insurance company.
(c) If the commissioner with regulatory oversight determines that the assets of the trustfund, or any part of the assets, are not necessary to satisfy the claims of the one or more UnitedStates ceding insurers of the grantor of the trust, the assets, or a part of the assets, shall bereturned by the commissioner with regulatory oversight to the trustee for distribution inaccordance with the trust instrument.
(d) A grantor shall waive any right otherwise available to it under United States law thatis inconsistent with this Subsection (10).

Amended by Chapter 257, 2008 General Session


State Codes and Statutes


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State Codes and Statutes

Statutes > Utah > Title-31a > Chapter-17 > 31a-17-404

31A-17-404. Credit allowed a domestic ceding insurer against reserves forreinsurance.
(1) A domestic ceding insurer is allowed credit for reinsurance as either an asset or areduction from liability for reinsurance ceded only if the reinsurer meets the requirements ofSubsection (3), (4), (5), (6), or (7), subject to the following:
(a) Credit is allowed under Subsection (3), (4), or (5) only with respect to a cession of akind or class of business that the assuming insurer is licensed or otherwise permitted to write orassume:
(i) in its state of domicile; or
(ii) in the case of a United States branch of an alien assuming insurer, in the state throughwhich it is entered and licensed to transact insurance or reinsurance.
(b) Credit is allowed under Subsection (5) or (6) only if the applicable requirements ofSubsection (8) are met.
(2) A domestic ceding insurer is allowed credit for reinsurance ceded:
(a) only if the reinsurance is payable in a manner consistent with Section 31A-22-1201;
(b) only to the extent that the accounting:
(i) is consistent with the terms of the reinsurance contract; and
(ii) clearly reflects:
(A) the amount and nature of risk transferred; and
(B) liability, including contingent liability, of the ceding insurer;
(c) only to the extent the reinsurance contract shifts insurance policy risk from the cedinginsurer to the assuming reinsurer in fact and not merely in form; and
(d) only if the reinsurance contract contains a provision placing on the reinsurer thecredit risk of all dealings with intermediaries regarding the reinsurance contract.
(3) A domestic ceding insurer is allowed a credit if the reinsurance is ceded to anassuming insurer that is licensed to transact insurance or reinsurance in this state.
(4) (a) A domestic ceding insurer is allowed a credit if the reinsurance is ceded to anassuming insurer that is accredited as a reinsurer in this state.
(b) An insurer is accredited as a reinsurer if the insurer:
(i) files with the commissioner evidence of the insurer's submission to this state'sjurisdiction;
(ii) submits to the commissioner's authority to examine the insurer's books and records;
(iii) (A) is licensed to transact insurance or reinsurance in at least one state; or
(B) in the case of a United States branch of an alien assuming insurer, is entered throughand licensed to transact insurance or reinsurance in at least one state;
(iv) files annually with the commissioner a copy of the insurer's:
(A) annual statement filed with the insurance department of its state of domicile; and
(B) most recent audited financial statement; and
(v) (A) (I) has not had its accreditation denied by the commissioner within 90 days of theday on which the insurer submits the information required by this Subsection (4); and
(II) maintains a surplus with regard to policyholders in an amount not less than$20,000,000; or
(B) (I) has its accreditation approved by the commissioner; and
(II) maintains a surplus with regard to policyholders in an amount less than $20,000,000.
(c) Credit may not be allowed a domestic ceding insurer if the assuming insurer's

accreditation is revoked by the commissioner after a notice and hearing.
(5) (a) A domestic ceding insurer is allowed a credit if:
(i) the reinsurance is ceded to an assuming insurer that is:
(A) domiciled in a state meeting the requirements of Subsection (5)(a)(ii); or
(B) in the case of a United States branch of an alien assuming insurer, is entered througha state meeting the requirements of Subsection (5)(a)(ii);
(ii) the state described in Subsection (5)(a)(i) employs standards regarding credit forreinsurance substantially similar to those applicable under this section; and
(iii) the assuming insurer or United States branch of an alien assuming insurer:
(A) maintains a surplus with regard to policyholders in an amount not less than$20,000,000; and
(B) submits to the authority of the commissioner to examine its books and records.
(b) The requirements of Subsections (5)(a)(i) and (ii) do not apply to reinsurance cededand assumed pursuant to a pooling arrangement among insurers in the same holding companysystem.
(6) (a) A domestic ceding insurer is allowed a credit if the reinsurance is ceded to anassuming insurer that maintains a trust fund:
(i) created in accordance with rules made by the commissioner; and
(ii) in a qualified United States financial institution for the payment of a valid claim of:
(A) a United States ceding insurer of the assuming insurer;
(B) an assign of the United States ceding insurer; and
(C) a successor in interest to the United States ceding insurer.
(b) To enable the commissioner to determine the sufficiency of the trust fund describedin Subsection (6)(a), the assuming insurer shall:
(i) report annually to the commissioner information substantially the same as thatrequired to be reported on the National Association of Insurance Commissioners AnnualStatement form by a licensed insurer; and
(ii) (A) submit to examination of its books and records by the commissioner; and
(B) pay the cost of an examination.
(c) (i) Credit for reinsurance may not be granted under this Subsection (6) unless theform of the trust and any amendment to the trust is approved by:
(A) the commissioner of the state where the trust is domiciled; or
(B) the commissioner of another state who, pursuant to the terms of the trust instrument,accepts principal regulatory oversight of the trust.
(ii) The form of the trust and an amendment to the trust shall be filed with thecommissioner of every state in which a ceding insurer beneficiary of the trust is domiciled.
(iii) The trust instrument shall provide that a contested claim is valid and enforceableupon the final order of a court of competent jurisdiction in the United States.
(iv) The trust shall vest legal title to its assets in its one or more trustees for the benefitof:
(A) a United States ceding insurer of the assuming insurer;
(B) an assign of the United States ceding insurer; or
(C) a successor in interest to the United States ceding insurer.
(v) The trust and the assuming insurer are subject to examination as determined by thecommissioner.

(vi) The trust shall remain in effect for as long as the assuming insurer has an outstandingobligation due under a reinsurance agreement subject to the trust.
(vii) No later than February 28 of each year, the trustee of the trust shall:
(A) report to the commissioner in writing the balance of the trust;
(B) list the trust's investments at the end of the preceding calendar year; and
(C) (I) certify the date of termination of the trust, if so planned; or
(II) certify that the trust will not expire prior to the following December 31.
(d) The following requirements apply to the following categories of assuming insurer:
(i) For a single assuming insurer:
(A) the trust fund shall consist of funds in trust in an amount not less than the assuminginsurer's liabilities attributable to reinsurance ceded by United States ceding insurers; and
(B) the assuming insurer shall maintain a trusteed surplus of not less than $20,000,000.
(ii) For a group acting as assuming insurer, including incorporated and individualunincorporated underwriters:
(A) for reinsurance ceded under a reinsurance agreement with an inception, amendment,or renewal date on or after August 1, 1995, the trust shall consist of a trusteed account in anamount not less than the group's several liabilities attributable to business ceded by the one ormore United States domiciled ceding insurers to a member of the group;
(B) for reinsurance ceded under a reinsurance agreement with an inception date on orbefore July 31, 1995, and not amended or renewed after July 31, 1995, notwithstanding the otherprovisions of this chapter, the trust shall consist of a trusteed account in an amount not less thanthe group's several insurance and reinsurance liabilities attributable to business written in theUnited States;
(C) in addition to a trust described in Subsection (6)(d)(ii)(A) or (B), the group shallmaintain in trust a trusteed surplus of which $100,000,000 is held jointly for the benefit of theone or more United States domiciled ceding insurers of a member of the group for all years ofaccount;
(D) the incorporated members of the group:
(I) may not be engaged in a business other than underwriting as a member of the group;and
(II) are subject to the same level of regulation and solvency control by the group'sdomiciliary regulator as are the unincorporated members; and
(E) within 90 days after the day on which the group's financial statements are due to befiled with the group's domiciliary regulator, the group shall provide to the commissioner:
(I) an annual certification by the group's domiciliary regulator of the solvency of eachunderwriter member; or
(II) if a certification is unavailable, a financial statement, prepared by an independentpublic accountant, of each underwriter member of the group.
(iii) For a group of incorporated underwriters under common administration, the groupshall:
(A) have continuously transacted an insurance business outside the United States for atleast three years immediately preceding the day on which the group makes application foraccreditation;
(B) maintain aggregate policyholders' surplus of at least $10,000,000,000;
(C) maintain a trust fund in an amount not less than the group's several liabilities

attributable to business ceded by the one or more United States domiciled ceding insurers to amember of the group pursuant to a reinsurance contract issued in the name of the group;
(D) in addition to complying with the other provisions of this Subsection (6)(d)(iii),maintain a joint trusteed surplus of which $100,000,000 is held jointly for the benefit of the oneor more United States domiciled ceding insurers of a member of the group as additional securityfor these liabilities; and
(E) within 90 days after the day on which the group's financial statements are due to befiled with the group's domiciliary regulator, make available to the commissioner:
(I) an annual certification of each underwriter member's solvency by the member'sdomiciliary regulator; and
(II) a financial statement of each underwriter member of the group prepared by anindependent public accountant.
(7) If reinsurance is ceded to an assuming insurer not meeting the requirements ofSubsection (3), (4), (5), or (6), a domestic ceding insurer is allowed credit only as to theinsurance of a risk located in a jurisdiction where the reinsurance is required by applicable law orregulation of that jurisdiction.
(8) Reinsurance credit may not be allowed a domestic ceding insurer unless the assuminginsurer under the reinsurance contract submits to the jurisdiction of Utah courts by:
(a) (i) being an admitted insurer; and
(ii) submitting to jurisdiction under Section 31A-2-309;
(b) having irrevocably appointed the commissioner as the domestic ceding insurer's agentfor service of process in an action arising out of or in connection with the reinsurance, whichappointment is made under Section 31A-2-309; or
(c) agreeing in the reinsurance contract:
(i) that if the assuming insurer fails to perform its obligations under the terms of thereinsurance contract, the assuming insurer, at the request of the ceding insurer, shall:
(A) submit to the jurisdiction of a court of competent jurisdiction in a state of the UnitedStates;
(B) comply with all requirements necessary to give the court jurisdiction; and
(C) abide by the final decision of the court or of an appellate court in the event of anappeal; and
(ii) to designate the commissioner or a specific attorney licensed to practice law in thisstate as its attorney upon whom may be served lawful process in an action, suit, or proceedinginstituted by or on behalf of the ceding company.
(9) Submitting to the jurisdiction of Utah courts under Subsection (8) does not override aduty or right of a party under the reinsurance contract, including a requirement that the partiesarbitrate their disputes.
(10) If an assuming insurer does not meet the requirements of Subsection (3), (4), or (5),the credit permitted by Subsection (6) may not be allowed unless the assuming insurer agrees inthe trust instrument to the following conditions:
(a) (i) Notwithstanding any other provision in the trust instrument, if an event describedin Subsection (10)(a)(ii) occurs the trustee shall comply with:
(A) an order of the commissioner with regulatory oversight over the trust; or
(B) an order of a court of competent jurisdiction directing the trustee to transfer to thecommissioner with regulatory oversight all of the assets of the trust fund.

(ii) This Subsection (10)(a) applies if:
(A) the trust fund is inadequate because the trust contains an amount less than theamount required by Subsection (6)(d); or
(B) the grantor of the trust is:
(I) declared insolvent; or
(II) placed into receivership, rehabilitation, liquidation, or similar proceeding under thelaws of its state or country of domicile.
(b) The assets of a trust fund described in Subsection (10)(a) shall be distributed by and aclaim shall be filed with and valued by the commissioner with regulatory oversight in accordancewith the laws of the state in which the trust is domiciled that are applicable to the liquidation of adomestic insurance company.
(c) If the commissioner with regulatory oversight determines that the assets of the trustfund, or any part of the assets, are not necessary to satisfy the claims of the one or more UnitedStates ceding insurers of the grantor of the trust, the assets, or a part of the assets, shall bereturned by the commissioner with regulatory oversight to the trustee for distribution inaccordance with the trust instrument.
(d) A grantor shall waive any right otherwise available to it under United States law thatis inconsistent with this Subsection (10).

Amended by Chapter 257, 2008 General Session


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