Nev. Admin. Code § 681A.440 - Financial statement credit for ceded insurance or reinsurance obligation: Authorization to claim; requirements concerning security; circumstances under which reinsurer may defer posting security
1. The
Commissioner will allow a ceding insurer to claim a financial statement credit
for an insurance or reinsurance obligation ceded by the ceding insurer to an
assuming insurer that has been a certified reinsurer in this State at all times
for which the credit is claimed.
2.
Except as otherwise provided in subsections 4 and 5 and subsection 4 of NAC
681A.460, to qualify for a credit, the security held by or on behalf of the
ceding insurer must:
(a) Be in a form
consistent with the provisions of
NRS
681A.155 to
681A.1557,
inclusive,
681A.180 and 681A.240 and NAC
681A.250 to
681A.380, inclusive;
and
(b) Be in not less than an
amount based on the rating assigned to the certified reinsurer by the
Commissioner pursuant to NRS 681A.1554 and NAC 681A.460 as follows:
(1) For a certified reinsurer rated Secure -
1, 0 percent of the insurance or reinsurance obligation accepted by the
certified reinsurer.
(2) For a
certified reinsurer rated Secure - 2, 10 percent of the insurance or
reinsurance obligation accepted by the certified reinsurer.
(3) For a certified reinsurer rated Secure -
3, 20 percent of the insurance or reinsurance obligation accepted by the
certified reinsurer.
(4) For a
certified reinsurer rated Secure - 4, 50 percent of the insurance or
reinsurance obligation accepted by the certified reinsurer.
(5) For a certified reinsurer rated Secure -
5, 75 percent of the insurance or reinsurance obligation accepted by the
certified reinsurer.
(6) For a
certified reinsurer rated Vulnerable - 6, 100 percent of the insurance or
reinsurance obligation accepted by the certified reinsurer.
3. An insurance or
reinsurance obligation transferred from a ceding insurer to a certified
reinsurer that is affiliated with the ceding insurer is subject to the
requirements relating to security described in subsection 2.
4. Upon the entry of an order of
rehabilitation, liquidation or conservation against the ceding insurer, a
certified reinsurer shall post security for 100 percent of the insurance or
reinsurance obligation accepted by the certified reinsurer for the benefit of
the ceding insurer or its estate.
5. A certified reinsurer may defer posting
security for an amount recoverable due to catastrophe for a period of 1 year
after the date of the first instance of a liability reserve entry by the ceding
insurer as a result of a loss from a catastrophic occurrence as recognized by
the Commissioner. A certified reinsurer may defer posting security pursuant to
this subsection only:
(a) If the certified
reinsurer continues to pay claims in a timely manner during the deferral
period; and
(b) For the following
lines of business, as reported on the annual financial statement filed by the
ceding insurer with the Commissioner and related specifically to the
catastrophic occurrence:
(1) Line 1:
Fire.
(2) Line 2: Allied
lines.
(3) Line 3: Farm owners
multiple peril.
(4) Line 4:
Homeowners multiple peril.
(5) Line
5: Commercial multiple peril.
(6)
Line 9: Inland marine.
(7) Line 12:
Earthquake.
(8) Line 21: Auto
physical damage.
6. The Commissioner will allow a ceding
insurer to claim a financial statement credit for reinsurance ceded by the
ceding insurer to a certified reinsurer only for a reinsurance contract entered
into:
(a) On or after the effective date of
the certification of the certified reinsurer; or
(b) Before the effective date of the
certification of the certified reinsurer which is subsequently amended after
the effective date of the certification of the certified reinsurer, or for
which a new reinsurance contract is entered into covering any risk for which
collateral was provided previously, only for losses incurred and reserves
reported on or after the effective date of the amendment or new
contract.
7. Nothing in
this section shall be construed to prohibit the parties to a reinsurance
contract from agreeing to provisions that establish security requirements which
exceed the requirements established in paragraph (b) of subsection 2.
Notes
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