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A BILL TO BE ENTITLED
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AN ACT
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relating to credit to certain ceding insurers for reinsurance ceded |
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to certain certified assuming insurers. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 492.102(a), Insurance Code, is amended |
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to read as follows: |
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(a) A ceding insurer may be allowed credit for reinsurance |
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|
ceded, as an asset or as a deduction from liability, only if the |
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|
reinsurance is ceded to an assuming insurer that: |
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(1) is authorized to engage in the business of |
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|
insurance or reinsurance in this state; |
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(2) is accredited as a reinsurer in this state, as |
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|
provided by Section 492.103; [or] |
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(3) subject to Subchapter D, maintains, in a qualified |
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United States financial institution that has been granted the |
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|
authority to operate with fiduciary powers, a trust fund to pay |
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|
valid claims of: |
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(A) the assuming insurer's United States |
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|
policyholders and ceding insurers; and |
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(B) the policyholders' and ceding insurers' |
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assigns and successors in interest; or |
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(4) is determined by the commissioner to meet the |
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requirements of Section 492.1035. |
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SECTION 2. Subchapter C, Chapter 492, Insurance Code, is |
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amended by adding Sections 492.1035, 492.1036, and 492.1037 to read |
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as follows: |
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Sec. 492.1035. CREDIT FOR CERTAIN CERTIFIED REINSURERS. (a) |
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An asset or deduction from liability shall be allowed for |
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reinsurance ceded to an assuming insurer that the commissioner |
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|
certifies as a reinsurer and that secures its obligations in |
|
|
accordance with the requirements of this section. |
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(b) The commissioner may certify an assuming insurer that: |
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(1) is domiciled and licensed to transact insurance or |
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reinsurance in a qualified jurisdiction under Subsections (e)-(g); |
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(2) maintains minimum capital and a surplus in an |
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|
amount the commissioner determines acceptable; |
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|
(3) maintains a financial strength rating from two or |
|
|
more rating agencies the commissioner determines are acceptable; |
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|
(4) submits to this state's jurisdiction; |
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(5) designates the commissioner as an agent for |
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|
service of process in any action, suit, or proceeding instituted in |
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|
this state; |
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(6) provides security for 100 percent of the assuming |
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insurer's liabilities for reinsurance ceded by United States ceding |
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|
insurers if the assuming reinsurer resists enforcement of a valid, |
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|
nonappealable United States judgment; and |
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|
(7) satisfies other requirements for certification |
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the commissioner determines relevant. |
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(c) A ceding insurer or certified reinsurer may apply to the |
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commissioner for a waiver from the requirement of Subsection |
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(b)(6). The commissioner may enter an order that grants a waiver |
|
|
from these requirements if the commissioner determines the waiver |
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|
is appropriate in the interests of ensuring market stability. |
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|
(d) The commissioner may certify a group of insurers, |
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|
including incorporated and individual unincorporated underwriters, |
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|
as a certified reinsurer if, in addition to satisfying requirements |
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|
of Subsection (a): |
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(1) the group of insurers satisfies minimum capital |
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|
and surplus requirements in an amount determined by the |
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|
commissioner to provide adequate protection by placing the group |
|
|
and its members' capital and surplus equivalents into a joint |
|
|
central fund that may be applied to an unsatisfied obligation of the |
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|
group or its members; |
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(2) each incorporated member of the group of insurers |
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|
is not engaged as a member of the group in business other than |
|
|
underwriting and is subject to the same level of regulation and |
|
|
solvency control by the group's domiciliary regulator as the |
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|
unincorporated members; and |
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(3) the group of insurers provides to the |
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|
commissioner, not later than the 90th day after the date the group's |
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|
financial statements are due to be filed with the group's |
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|
domiciliary regulator, the annual certification of solvency of |
|
|
each underwriter member by the group's domiciliary regulator, or if |
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|
a certification is unavailable, financial statements prepared by |
|
|
independent public accountants of each underwriter member of the |
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group. |
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(e) The commissioner shall publish a list of qualified |
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|
jurisdictions with respect to which an assuming insurer licensed |
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|
and domiciled in the jurisdiction may be considered for |
|
|
certification by the commissioner as a certified reinsurer. |
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|
(f) To determine whether a jurisdiction of an assuming |
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|
insurer located outside of the United States may be eligible to be a |
|
|
qualified jurisdiction, the commissioner must: |
|
|
(1) evaluate the appropriateness and effectiveness of |
|
|
the reinsurance supervisory system of the jurisdiction, both |
|
|
initially and on an ongoing basis; and |
|
|
(2) consider whether that jurisdiction imposes credit |
|
|
for reinsurance requirements on reinsurers licensed and domiciled |
|
|
in the United States that are at least as favorable as those |
|
|
provided by this section. |
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|
(g) A qualified jurisdiction must share information and |
|
|
cooperate with the commissioner with respect to all certified |
|
|
reinsurers doing business within the jurisdiction. Jurisdictions |
|
|
within the United States that meet the requirement for |
|
|
accreditation under the National Association of Insurance |
|
|
Commissioners' financial standards and accreditation program shall |
|
|
be recognized as qualified jurisdictions. A jurisdiction may not |
|
|
be recognized as a qualified jurisdiction if the commissioner has |
|
|
determined that the jurisdiction does not adequately and promptly |
|
|
enforce final United States judgments and arbitration awards. The |
|
|
commissioner may also: |
|
|
(1) defer to a list of qualified jurisdictions |
|
|
published by the National Association of Insurance Commissioners; |
|
|
and |
|
|
(2) suspend a reinsurer's certification indefinitely, |
|
|
if a certified reinsurer's domiciliary jurisdiction ceases to be a |
|
|
qualified jurisdiction. |
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|
(h) The commissioner shall develop a rating system and |
|
|
assign a rating to each certified reinsurer. The commissioner |
|
|
shall publish a list of each certified reinsurer and the certified |
|
|
reinsurer's rating. In rating certified reinsurers, the |
|
|
commissioner shall consider: |
|
|
(1) the certified reinsurer's financial strength |
|
|
ratings assigned by rating agencies recognized by the commissioner; |
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|
and |
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(2) the reinsurer's reputation for promptly paying |
|
|
claims to United States ceding insurers, including cases in which |
|
|
the reinsurer has resisted the enforcement of a final United States |
|
|
judgment. |
|
|
(i) The commissioner shall determine the security a |
|
|
certified reinsurer must maintain on obligations assumed from |
|
|
ceding insurers domiciled in this state at a level consistent with |
|
|
its rating. |
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(j) A domestic ceding insurer may qualify for full financial |
|
|
statement credit for reinsurance ceded to a certified reinsurer if |
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|
the certified reinsurer maintains security: |
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|
(1) in a form acceptable to the commissioner and |
|
|
consistent with the insurance laws of this state; or |
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|
(2) in a trust in accordance with Subchapter D, except |
|
|
as otherwise provided. |
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(k) If a certified reinsurer maintains a trust under |
|
|
Subchapter D to secure its obligations, the certified reinsurer |
|
|
shall maintain separate trust accounts for its obligations incurred |
|
|
under reinsurance agreements issued or renewed as a certified |
|
|
reinsurer with reduced security as permitted by this section or |
|
|
comparable laws of other United States jurisdictions and for its |
|
|
obligations subject to Subchapter D. |
|
|
(l) The minimum trust surplus requirements in Subchapter D |
|
|
are not applicable to a multibeneficiary trust maintained by a |
|
|
certified reinsurer for the purpose of securing obligations |
|
|
incurred under this section. |
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|
(m) If a certified reinsurer insufficiently secures |
|
|
obligations incurred under this section, the commissioner: |
|
|
(1) shall reduce the allowable credit by an amount |
|
|
proportionate to the deficiency; and |
|
|
(2) may impose further reductions in allowable credit |
|
|
if the commissioner determines that there is a material risk the |
|
|
certified reinsurer will not pay its obligations in full when due. |
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|
(n) The commissioner shall require a certified reinsurer |
|
|
whose certification has been terminated under this section to |
|
|
secure 100 percent of its obligations. This subsection does not |
|
|
apply to a certified reinsurer with inactive status or to a |
|
|
reinsurer whose certification has been suspended, even if the |
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|
commissioner assigns a higher rating to that reinsurer. |
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(o) If a jurisdiction accredited by the National |
|
|
Association of Insurance Commissioners certifies an applicant for |
|
|
certification as a reinsurer, the commissioner: |
|
|
(1) may defer to that jurisdiction's certification and |
|
|
the rating assigned by that jurisdiction; and |
|
|
(2) shall consider the assuming insurer a certified |
|
|
reinsurer. |
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|
(p) A certified reinsurer that ceases to assume new business |
|
|
in this state may request to maintain its certification in inactive |
|
|
status in order to continue to qualify for a reduction in security |
|
|
for its in-force business. An inactive certified reinsurer shall |
|
|
continue to comply with all applicable requirements of this section |
|
|
and the commissioner shall assign an applicable rating that |
|
|
describes why the reinsurer is not assuming new business. |
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Sec. 492.1036. SUSPENSION OR REVOCATION OF ACCREDITATION OR |
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CERTIFICATION. The commissioner may suspend or revoke a |
|
|
reinsurer's accreditation or certification if an accredited or |
|
|
certified reinsurer ceases to meet the requirements for |
|
|
accreditation or certification. The commissioner must give the |
|
|
reinsurer notice and opportunity for hearing. The suspension or |
|
|
revocation may not take effect until after the commissioner's order |
|
|
on the hearing, unless: |
|
|
(1) the reinsurer waives its right to a hearing; |
|
|
(2) the suspension or revocation is based on a |
|
|
regulatory action in the reinsurer's domiciliary jurisdiction or |
|
|
United States port of entry, or on the voluntary surrender or |
|
|
termination of the reinsurer's eligibility to transact insurance or |
|
|
reinsurance business in its domiciliary jurisdiction or in its |
|
|
United States port of entry; or |
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|
(3) the commissioner determines that an emergency |
|
|
requires immediate action and a court of competent jurisdiction has |
|
|
not stayed the commissioner's action. |
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Sec. 492.1037. CONTINUED CREDIT FOLLOWING CHANGE OR |
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WITHDRAWAL IN RATING, ACCREDITATION, OR CERTIFICATION. |
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Notwithstanding the change or withdrawal of a reinsurer's rating, |
|
|
accreditation, or certification, on request by the ceding insurer, |
|
|
the commissioner may, in the interest of ensuring market stability |
|
|
and the solvency of the ceding insurer, authorize the ceding |
|
|
insurer to continue to take credit for all or part of the |
|
|
recoverable reinsurance that relates to the change or withdrawal |
|
|
for a specified period following the change or withdrawal. |
|
|
SECTION 3. Section 492.151, Insurance Code, is amended to |
|
|
read as follows: |
|
|
Sec. 492.151. APPLICABILITY OF SUBCHAPTER. This subchapter |
|
|
applies to: |
|
|
(1) a trust that is used to qualify for a reinsurance |
|
|
credit under Section 492.102(a)(3) and as described by Sections |
|
|
492.1035(j) and (k); and |
|
|
(2) [to] the assuming insurer that maintains the trust |
|
|
fund. |
|
|
SECTION 4. Section 492.152, Insurance Code, is amended by |
|
|
adding Subsection (c) to read as follows: |
|
|
(c) The commissioner may, after assessing the risk and |
|
|
determining that the new required surplus level is adequate for the |
|
|
protection of United States ceding insurers, policyholders, and |
|
|
claimants in light of reasonably foreseeable adverse loss |
|
|
development, authorize a reduction in the required trusteed surplus |
|
|
under Subsection (a)(2) if the assuming insurer has discontinued |
|
|
underwriting new business secured by the trust for more than three |
|
|
years. The risk assessment may involve an actuarial review, |
|
|
including an independent analysis of reserves and cash flows, and |
|
|
must consider all material risk factors, including, if applicable, |
|
|
the lines of business involved, the stability of the incurred loss |
|
|
estimates, and the effect of the surplus requirements on the |
|
|
assuming insurer's liquidity or solvency. The minimum required |
|
|
trusteed surplus may not be reduced to an amount less than 30 |
|
|
percent of the assuming insurer's liabilities attributable to |
|
|
reinsurance ceded by United States ceding insurers. |
|
|
SECTION 5. Section 492.155(b), Insurance Code, is amended |
|
|
to read as follows: |
|
|
(b) To enable the commissioner to determine the sufficiency |
|
|
of the trust fund under Section 492.102(a)(3) and for purposes of |
|
|
Sections 492.1035(j) and (k), the assuming insurer shall report to |
|
|
the department not later than March 1 of each year information |
|
|
substantially the same as the information required to be reported |
|
|
by an authorized insurer on the National Association of Insurance |
|
|
Commissioners' Annual Statement form. |
|
|
SECTION 6. Section 492.156(a), Insurance Code, is amended |
|
|
to read as follows: |
|
|
(a) A ceding insurer may not be allowed credit under Section |
|
|
492.102(a)(3) for reinsurance ceded to an assuming insurer that is |
|
|
not authorized, [or] accredited, or certified to engage in the |
|
|
business of insurance or reinsurance in this state unless the |
|
|
assuming insurer agrees in the reinsurance contract: |
|
|
(1) that, if the assuming insurer fails to perform the |
|
|
assuming insurer's obligations under the reinsurance contract, the |
|
|
assuming insurer, at the request of the ceding insurer, will: |
|
|
(A) submit to the jurisdiction of a court in any |
|
|
state of the United States; |
|
|
(B) comply with all requirements necessary to |
|
|
give the court jurisdiction; and |
|
|
(C) abide by the final decision of that court or, |
|
|
if the court's decision is appealed, of the appellate court; and |
|
|
(2) to designate the commissioner or an attorney as an |
|
|
agent for service of process in any action, suit, or proceeding |
|
|
instituted by or on behalf of the ceding insurer. |
|
|
SECTION 7. Section 493.102(a), Insurance Code, is amended |
|
|
to read as follows: |
|
|
(a) A ceding insurer may be allowed credit for reinsurance |
|
|
ceded, as an asset or as a deduction from liability, only if the |
|
|
reinsurance is ceded to an assuming insurer that: |
|
|
(1) is authorized to engage in the business of |
|
|
insurance or reinsurance in this state; |
|
|
(2) is accredited as a reinsurer in this state, as |
|
|
provided by Section 493.103; [or] |
|
|
(3) subject to Subchapter D, maintains, in a qualified |
|
|
United States financial institution that has been granted the |
|
|
authority to operate with fiduciary powers, a trust fund to pay |
|
|
valid claims of: |
|
|
(A) the assuming insurer's United States |
|
|
policyholders and ceding insurers; and |
|
|
(B) the policyholders' and ceding insurers' |
|
|
assigns and successors in interest; or |
|
|
(4) the commissioner determines meets the |
|
|
requirements of Section 493.1035. |
|
|
SECTION 8. Subchapter C, Chapter 493, Insurance Code, is |
|
|
amended by adding Sections 493.1035, 493.1036, and 493.1037 to read |
|
|
as follows: |
|
|
Sec. 493.1035. CREDIT FOR CERTAIN CERTIFIED REINSURERS. |
|
|
(a) An asset or deduction from liability shall be allowed for |
|
|
reinsurance ceded to an assuming insurer that the commissioner |
|
|
certifies as a reinsurer and that secures its obligations in |
|
|
accordance with the requirements of this section. |
|
|
(b) The commissioner may certify an assuming insurer that: |
|
|
(1) is domiciled and licensed to transact insurance or |
|
|
reinsurance in a qualified jurisdiction under Subsections (e)-(g); |
|
|
(2) maintains minimum capital and a surplus in an |
|
|
amount the commissioner determines acceptable; |
|
|
(3) maintains a financial strength rating from two or |
|
|
more rating agencies the commissioner determines are acceptable; |
|
|
(4) submits to this state's jurisdiction; |
|
|
(5) designates the commissioner as an agent for |
|
|
service of process in any action, suit, or proceeding instituted in |
|
|
this state; |
|
|
(6) provides security for 100 percent of the assuming |
|
|
insurer's liabilities for reinsurance ceded by United States ceding |
|
|
insurers if the assuming reinsurer resists enforcement of a valid, |
|
|
nonappealable United States judgment; and |
|
|
(7) satisfies other requirements for certification |
|
|
the commissioner determines relevant. |
|
|
(c) A ceding insurer or certified reinsurer may apply to the |
|
|
commissioner for a waiver from the requirement of Subsection |
|
|
(b)(6). The commissioner may enter an order that grants a waiver |
|
|
from these requirements if the commissioner determines the waiver |
|
|
is appropriate in the interests of ensuring market stability. |
|
|
(d) The commissioner may certify a group of insurers, |
|
|
including incorporated and individual unincorporated underwriters, |
|
|
as a certified reinsurer if, in addition to satisfying requirements |
|
|
of Subsection (a): |
|
|
(1) the group of insurers satisfies minimum capital |
|
|
and surplus requirements in an amount determined by the |
|
|
commissioner to provide adequate protection by placing the group |
|
|
and its members' capital and surplus equivalents into a joint |
|
|
central fund that may be applied to an unsatisfied obligation of the |
|
|
group or its members; |
|
|
(2) each incorporated member of the group of insurers |
|
|
is not engaged as a member of the group in business other than |
|
|
underwriting and is subject to the same level of regulation and |
|
|
solvency control by the group's domiciliary regulator as the |
|
|
unincorporated members; and |
|
|
(3) the group of insurers provides to the |
|
|
commissioner, not later than the 90th day after the date the group's |
|
|
financial statements are due to be filed with the group's |
|
|
domiciliary regulator, the annual certification of solvency of |
|
|
each underwriter member by the group's domiciliary regulator, or if |
|
|
a certification is unavailable, financial statements prepared by |
|
|
independent public accountants of each underwriter member of the |
|
|
group. |
|
|
(e) The commissioner shall publish a list of qualified |
|
|
jurisdictions with respect to which an assuming insurer licensed |
|
|
and domiciled in the jurisdiction may be considered for |
|
|
certification by the commissioner as a certified reinsurer. |
|
|
(f) To determine whether a jurisdiction of an assuming |
|
|
insurer located outside of the United States may be eligible to be a |
|
|
qualified jurisdiction, the commissioner must: |
|
|
(1) evaluate the appropriateness and effectiveness of |
|
|
the reinsurance supervisory system of the jurisdiction, both |
|
|
initially and on an ongoing basis; and |
|
|
(2) consider whether that jurisdiction imposes credit |
|
|
for reinsurance requirements on reinsurers licensed and domiciled |
|
|
in the United States that are at least as favorable as those |
|
|
provided by this section. |
|
|
(g) A qualified jurisdiction must share information and |
|
|
cooperate with the commissioner with respect to all certified |
|
|
reinsurers doing business within the jurisdiction. Jurisdictions |
|
|
within the United States that meet the requirement for |
|
|
accreditation under the National Association of Insurance |
|
|
Commissioners' financial standards and accreditation program shall |
|
|
be recognized as qualified jurisdictions. A jurisdiction may not |
|
|
be recognized as a qualified jurisdiction if the commissioner has |
|
|
determined that the jurisdiction does not adequately and promptly |
|
|
enforce final United States judgments and arbitration awards. The |
|
|
commissioner may also: |
|
|
(1) defer to a list of qualified jurisdictions |
|
|
published by the National Association of Insurance Commissioners; |
|
|
and |
|
|
(2) suspend a reinsurer's certification indefinitely, |
|
|
if a certified reinsurer's domiciliary jurisdiction ceases to be a |
|
|
qualified jurisdiction. |
|
|
(h) The commissioner shall develop a rating system and |
|
|
assign a rating to each certified reinsurer. The commissioner |
|
|
shall publish a list of each certified reinsurer and the certified |
|
|
reinsurer's rating. In rating certified reinsurers, the |
|
|
commissioner shall consider: |
|
|
(1) the certified reinsurer's financial strength |
|
|
ratings assigned by rating agencies recognized by the commissioner; |
|
|
and |
|
|
(2) the reinsurer's reputation for promptly paying |
|
|
claims to United States ceding insurers, including cases in which |
|
|
the reinsurer has resisted the enforcement of a final United States |
|
|
judgment. |
|
|
(i) The commissioner shall determine the security a |
|
|
certified reinsurer must maintain on obligations assumed from |
|
|
ceding insurers domiciled in this state at a level consistent with |
|
|
its rating. |
|
|
(j) A domestic ceding insurer may qualify for full financial |
|
|
statement credit for reinsurance ceded to a certified reinsurer if |
|
|
the certified reinsurer maintains security: |
|
|
(1) in a form acceptable to the commissioner and |
|
|
consistent with the insurance laws of this state; or |
|
|
(2) in a trust in accordance with Subchapter D, except |
|
|
as otherwise provided. |
|
|
(k) If a certified reinsurer maintains a trust under |
|
|
Subchapter D to secure its obligations, the certified reinsurer |
|
|
shall maintain separate trust accounts for its obligations incurred |
|
|
under reinsurance agreements issued or renewed as a certified |
|
|
reinsurer with reduced security as permitted by this section or |
|
|
comparable laws of other United States jurisdictions and for its |
|
|
obligations subject to Subchapter D. |
|
|
(l) The minimum trust surplus requirements in Subchapter D |
|
|
are not applicable to a multibeneficiary trust maintained by a |
|
|
certified reinsurer for the purpose of securing obligations |
|
|
incurred under this section. |
|
|
(m) If a certified reinsurer insufficiently secures |
|
|
obligations incurred under this section, the commissioner: |
|
|
(1) shall reduce the allowable credit by an amount |
|
|
proportionate to the deficiency; and |
|
|
(2) may impose further reductions in allowable credit |
|
|
if the commissioner determines that there is a material risk the |
|
|
certified reinsurer will not pay its obligations in full when due. |
|
|
(n) The commissioner shall require a certified reinsurer |
|
|
whose certification has been terminated under this section to |
|
|
secure 100 percent of its obligations. This subsection does not |
|
|
apply to a certified reinsurer with inactive status or to a |
|
|
reinsurer whose certification has been suspended, even if the |
|
|
commissioner assigns a higher rating to that reinsurer. |
|
|
(o) If a jurisdiction accredited by the National |
|
|
Association of Insurance Commissioners certifies an applicant for |
|
|
certification as a reinsurer, the commissioner: |
|
|
(1) may defer to that jurisdiction's certification and |
|
|
the rating assigned by that jurisdiction; and |
|
|
(2) shall consider the assuming insurer a certified |
|
|
reinsurer. |
|
|
(p) A certified reinsurer that ceases to assume new business |
|
|
in this state may request to maintain its certification in inactive |
|
|
status in order to continue to qualify for a reduction in security |
|
|
for its in-force business. An inactive certified reinsurer shall |
|
|
continue to comply with all applicable requirements of this section |
|
|
and the commissioner shall assign an applicable rating that |
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describes why the reinsurer is not assuming new business. |
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Sec. 493.1036. SUSPENSION OR REVOCATION OF ACCREDITATION OR |
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|
CERTIFICATION. The commissioner may suspend or revoke a |
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|
reinsurer's accreditation or certification if an accredited or |
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|
certified reinsurer ceases to meet the requirements for |
|
|
accreditation or certification. The commissioner must give the |
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|
reinsurer notice and opportunity for hearing. The suspension or |
|
|
revocation may not take effect until after the commissioner's order |
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|
on the hearing, unless: |
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|
(1) the reinsurer waives its right to a hearing; |
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|
(2) the suspension or revocation is based on a |
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|
regulatory action in the reinsurer's domiciliary jurisdiction or |
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|
United States port of entry, or on the voluntary surrender or |
|
|
termination of the reinsurer's eligibility to transact insurance or |
|
|
reinsurance business in its domiciliary jurisdiction or in its |
|
|
United States port of entry; or |
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|
(3) the commissioner determines that an emergency |
|
|
requires immediate action and a court of competent jurisdiction has |
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|
not stayed the commissioner's action. |
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|
Sec. 493.1037. CONTINUED CREDIT FOLLOWING CHANGE OR |
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|
WITHDRAWAL IN RATING, ACCREDITATION, OR CERTIFICATION. |
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|
Notwithstanding the change or withdrawal of a reinsurer's rating, |
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|
accreditation, or certification, on request by the ceding insurer, |
|
|
the commissioner may, in the interest of ensuring market stability |
|
|
and the solvency of the ceding insurer, authorize the ceding |
|
|
insurer to continue to take credit for all or part of the |
|
|
recoverable reinsurance that relates to the change or withdrawal |
|
|
for a specified period following the change or withdrawal. |
|
|
SECTION 9. Section 493.151, Insurance Code, is amended to |
|
|
read as follows: |
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|
Sec. 493.151. APPLICABILITY OF SUBCHAPTER. This subchapter |
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|
applies to: |
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|
(1) a trust that is used to qualify for a reinsurance |
|
|
credit under Section 493.102(a)(3) and as described by Sections |
|
|
493.1035(j) and (k); and |
|
|
(2) [to] the assuming insurer that maintains the trust |
|
|
fund. |
|
|
SECTION 10. Section 493.152, Insurance Code, is amended by |
|
|
adding Subsection (d) to read as follows: |
|
|
(d) The commissioner may, after assessing the risk and |
|
|
determining that the new required surplus level is adequate for the |
|
|
protection of United States ceding insurers, policyholders, and |
|
|
claimants in light of reasonably foreseeable adverse loss |
|
|
development, authorize a reduction in the required trusteed surplus |
|
|
under Subsection (a)(2) if the assuming insurer has discontinued |
|
|
underwriting new business secured by the trust for more than three |
|
|
years. The risk assessment may involve an actuarial review, |
|
|
including an independent analysis of reserves and cash flows, and |
|
|
must consider all material risk factors, including, if applicable, |
|
|
the lines of business involved, the stability of the incurred loss |
|
|
estimates, and the effect of the surplus requirements on the |
|
|
assuming insurer's liquidity or solvency. The minimum required |
|
|
trusteed surplus may not be reduced to an amount less than 30 |
|
|
percent of the assuming insurer's liabilities attributable to |
|
|
reinsurance ceded by United States ceding insurers. |
|
|
SECTION 11. Section 493.155(b), Insurance Code, is amended |
|
|
to read as follows: |
|
|
(b) To enable the commissioner to determine the sufficiency |
|
|
of the trust fund under Section 493.102(a)(3) and for purposes of |
|
|
Sections 493.1035(j) and (k), the assuming insurer shall report to |
|
|
the department not later than March 1 of each year information |
|
|
substantially the same as the information required to be reported |
|
|
by an authorized insurer on the National Association of Insurance |
|
|
Commissioners' Annual Statement form. |
|
|
SECTION 12. Section 493.156(a), Insurance Code, is amended |
|
|
to read as follows: |
|
|
(a) A ceding insurer may not be allowed credit under Section |
|
|
493.102(a)(3) for reinsurance ceded to an assuming insurer that is |
|
|
not authorized, [or] accredited, or certified to engage in the |
|
|
business of insurance or reinsurance in this state unless the |
|
|
assuming insurer agrees in the reinsurance contract: |
|
|
(1) that, if the assuming insurer fails to perform the |
|
|
assuming insurer's obligations under the reinsurance contract, the |
|
|
assuming insurer, at the request of the ceding insurer, will: |
|
|
(A) submit to the jurisdiction of a court in any |
|
|
state of the United States; |
|
|
(B) comply with all requirements necessary to |
|
|
give the court jurisdiction; and |
|
|
(C) abide by the final decision of that court or, |
|
|
if the court's decision is appealed, of the appellate court; and |
|
|
(2) to designate the commissioner or an attorney as an |
|
|
agent for service of process in any action, suit, or proceeding |
|
|
instituted by or on behalf of the ceding insurer. |
|
|
SECTION 13. This Act applies only to a reinsurance contract |
|
|
that is entered into or renewed on or after January 1, 2012. A |
|
|
reinsurance contract that is entered into or renewed before January |
|
|
1, 2012, is governed by the law as it existed immediately before the |
|
|
effective date of this Act, and that law is continued in effect for |
|
|
that purpose. |
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|
SECTION 14. This Act takes effect September 1, 2011. |