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A BILL TO BE ENTITLED
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AN ACT
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relating to credit for reinsurance allowed domestic ceding insurers |
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for reinsurance ceded to unauthorized assuming insurers determined |
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to be acceptable by the Commissioner. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 1. Subchapter C, Chapter 493, Insurance |
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Code is amended to read as follows: |
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Sec. 493.102. CREDIT FOR REINSURANCE GENERALLY. (a) A |
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ceding insurer may be allowed credit for reinsurance ceded, as an |
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asset or as a deduction from liability, only if the reinsurance is |
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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 493.103; [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 493.108. |
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(b) Notwithstanding Subsection (a), a ceding insurer may be |
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allowed credit for reinsurance ceded to an assuming insurer that |
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does not meet the requirements of that subsection, but only with |
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respect to the insurance of risks located in a jurisdiction in which |
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the reinsurance is required by the jurisdiction's law, including |
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regulations, to be ceded to an assuming insurer that does not meet |
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the requirements of that subsection. |
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SECTION 2. Subchapter C, Chapter 493, Insurance Code, is |
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amended by adding Section 493.108 to read as follows: |
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Sec. 493.108. CREDIT ALLOWED FOR CERTAIN APPROVED |
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REINSURERS (a) An asset or deduction from liability shall be |
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allowed for reinsurance ceded to an assuming insurer which holds |
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surplus, or its equivalent, in excess of $250 million and which the |
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Commissioner, in his or her discretion, determines is an acceptable |
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risk. In determining whether credit should be allowed under this |
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subsection, the Commissioner shall consider the following: |
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(1) That the reinsurer has a secure financial strength |
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rating from at least two nationally recognized statistical rating |
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organizations deemed acceptable by the commissioner. The |
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commissioner shall give appropriate consideration to insurer group |
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ratings that have been issued. |
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(2) The structure and authority of the domiciliary |
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regulator with regard to solvency regulation requirements and the |
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financial surveillance of the reinsurer. |
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(3) The substance of financial and operating standards |
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for reinsurers in the domiciliary jurisdiction. |
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(4) The form and substance of financial reports |
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required to be filed by the reinsurers in the domiciliary |
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jurisdiction or other public financial statements filed in |
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accordance with generally accepted accounting principles. |
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(5) The domiciliary regulator's willingness to |
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cooperate with United States regulators in general and the |
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Department of Insurance in particular, including the existence of |
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any memorandum of understanding which the Commissioner believes is |
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required to ensure necessary regulatory cooperation. |
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(6) Whether the domiciliary jurisdiction of the |
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reinsurer imposes credit for reinsurance requirements on US |
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reinsurers that are at least as favorable as those provided by the |
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provisions of Sections 493.101 through 493.108 of the Texas |
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Insurance Code. |
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(7) The history of performance by reinsurers in the |
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domiciliary jurisdiction. |
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(8) Any documented evidence of substantial problems |
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with enforcement of valid United States judgments in the |
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domiciliary jurisdiction. |
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(9) Any other matters deemed relevant by the |
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commissioner. |
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(b) The commissioner may, in lieu of granting full credit |
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under this section, reduce the amount required to be held under |
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Section 493.104. |
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SECTION 3. This Act applies only to a reinsurance contract |
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entered into or renewed on or after September 1, 2011. |
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SECTION 4. This Act takes effect September 1, 2011. |