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- Alaska Statutes.
- Title 21. Insurance
- Chapter 12. Kinds of Insurance, Limits of Risk, and Reinsurance
- Section 20. Reinsurance Credit Allowed a Domestic Ceding Insurer.
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Section 10. Limit of Risk.
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Section 25. Assumption Reinsurance.
AS 21.12.020. Reinsurance Credit Allowed a Domestic Ceding Insurer.
- (a) Credit for reinsurance transactions shall be allowed a domestic ceding insurer as either an asset or a deduction from
liability on account of reinsurance ceded only with respect to cessions of a kind or class of business that the
assuming insurer is licensed or permitted to write or assume in its state of domicile or, in the case of a United
States branch of an alien assuming insurer, in the state through which it is entered and licensed to transact insurance
or reinsurance and only if the reinsurance is ceded to an
- (1) assuming insurer that is licensed to transact insurance or reinsurance in this state;
- (2) assuming insurer that is accredited as a reinsurer in this state; an accredited reinsurer is one that
- (A) files evidence of submission to this state's jurisdiction, submits to this state's authority to examine its books and
records under AS 21.06.120
, is licensed to transact insurance or reinsurance in at least one state that is accredited by the National Association
of Insurance Commissioners, or, in the case of a United States branch of an alien admitted insurer, is entered through
and licensed to transact insurance or reinsurance in at least one state that is accredited by the National Association
of Insurance Commissioners;
- (B) maintains at least $20,000,000 in policyholder surplus and whose accreditation has not been denied by the director
within 90 days after application to the director, or maintains less than $20,000,000 in policyholder surplus and whose
application for accreditation has been approved by the director; and
- (C) files annually with the director a copy of the reinsurer's annual financial statement filed with the insurance
department of the reinsurer's state of domicile or state of entry and a copy of the reinsurer's most recent audited
financial statement;
- (3) assuming insurer that is domiciled in a state, or, in the case of a United States branch of an alien assuming insurer,
is entered through a state accredited by the National Association of Insurance Commissioners that employs standards
regarding credit for reinsurance ceded substantially similar to those applicable under (1) and (2) of this subsection,
the assuming insurer maintains a policyholder surplus of at least $20,000,000, and the assuming insurer submits to the
authority of this state to examine its books and records; the surplus requirements in this paragraph do not apply to
reinsurance ceded and assumed under a pooling arrangement among insurers in the same holding company system;
- (4) assuming alien insurer that
- (A) maintains a trust fund in a qualified United States financial institution for the payment of the valid claims of its
United States policyholders and ceding insurers, and their assigns and successors in interest, that conforms to the
following requirements:
- (i) the trust and each amendment to the trust shall be established in a form approved by the insurance supervisory
official of the state where the trust is domiciled or the insurance supervisory official of another state who, under
the terms of the trust instrument, has accepted responsibility for regulatory oversight of the trust; the form of the
trust and each trust amendment shall be filed with the insurance supervisory official of every state in which the
beneficiaries of the trust are domiciled; the trust instrument must provide that contested claims are valid and
enforceable upon the final order of any court of competent jurisdiction in the United States; the trust shall vest
legal title to its assets in the trustees of the trust for its United States policyholders and ceding insurers, their
assigns, and successors in interest; the trust and the assuming insurer are subject to examination as determined by the
director, and the assuming insurer shall submit to examination of its books and records by the director and bear the
expense of examination; the trust must remain in effect for so long as the assuming insurer has outstanding liabilities
due under the reinsurance agreements subject to the trust;
- (ii) on or before March 1 of each year the trustees shall report in writing to the director on the balance of the trust and
list the trust's investments at the end of the preceding year, and shall certify the date of termination of the trust,
if so planned, or certify that the trust does not expire before the following December 31;
- (iii) in the case of a single assuming insurer, the trust shall consist of trust money representing the assuming insurer's
liabilities attributable to business written in the United States and, in addition, include a trust surplus of not less
than $20,000,000; the single assuming insurer shall make available to the director an annual certification of the
insurer's solvency by an independent certified public accountant or an accountant holding a substantially equivalent
designation as determined by the director;
- (iv) in the case of a group, including incorporated and individual unincorporated insurers, the trust shall consist of
trust money representing the group's liabilities attributable to business ceded by the United States domiciled ceding
insurers and, in addition, include a trust surplus not less than $100,000,000 held jointly for the benefit of the
United States domiciled ceding insurers or any member of the group for all years of account; the incorporated members
of the group may not be engaged in any business other than underwriting as a member of the group and are subject to the
same level of solvency regulation and control by the group's domiciliary regulator as are the unincorporated members;
within 90 days after its financial statements are due to be filed with the group's domiciliary regulator, the group
shall make available to the director an annual certification of the solvency of each insurer by the group's domiciliary
regulator or, if the certification is unavailable, financial statements, prepared by an independent certified public
accountant, or an accountant holding a substantially equivalent designation as determined by the director, for each
underwriter member of the group;
- (v) in the case of a group of incorporated insurers under common administration that complies with the reporting
requirements contained in (ii) of this subparagraph, that has continuously transacted an insurance business outside the
United States for at least three years immediately before making application for accreditation, that submits to this
state's authority to examine its books and records and bears the expense of the examination, and that has aggregate
policyholders' surplus of $10,000,000,000, the trust shall be in an amount equal to the group's several liabilities
attributable to business ceded by United States domiciled ceding insurers to a member of the group under reinsurance
contracts issued in the name of the group, and the group shall maintain a joint trustee surplus, of which $100,000,000
shall be held jointly for the benefit of United States domiciled ceding insurers of a member of the group as additional
security for the group's liabilities, and, within 90 days after its financial statements are due to be filed with the
group's domiciliary regulator, each member of the group shall make available to the director an annual certification of
the underwriter member's solvency by the member's domiciliary regulator and financial statement of each underwriter
member prepared by its independent certified public accountant, or an accountant holding a substantially equivalent
designation as determined by the director; and
- (B) reports annually to the director information substantially the same as that required to be reported on the National
Association of Insurance Commissioners' annual statement form by licensed insurers to enable the director to determine
the sufficiency of the trust fund;
- (5) assuming insurer that does not meet the requirements of (1) - (4) of this subsection, but only with respect to the
insurance of risks located in jurisdictions where the reinsurance is required by applicable law or regulation of that
jurisdiction.
- (b) If the assuming insurer is not licensed or accredited to transact insurance or reinsurance in this state, the credit
permitted by (a)(1) - (4) of this section may not be allowed unless the assuming insurer agrees in the reinsurance
agreements
- (1) that in the event of the failure of the assuming insurer to perform its obligations under the terms of the reinsurance
agreement, the assuming insurer, at the request of the ceding insurer, shall submit to the jurisdiction of a court of
competent jurisdiction in any state of the United States, will comply with all requirements necessary to give the court
jurisdiction and will abide by the final decision of the court or of an appellate court in the event of an appeal; this
provision is not intended to conflict with or override the obligation of the parties to a reinsurance agreement to
arbitrate their disputes, if such an obligation is created in the reinsurance agreement; and
- (2) to designate the director or an attorney resident in the United States as its true and lawful attorney upon whom may
be served lawful process in an action, suit, or proceeding instituted by or on behalf of the ceding insurer.
- (c) A reduction from liability, for reinsurance ceded to an assuming insurer not meeting the requirements of (a) of this
section, shall be allowed in an amount not exceeding the liabilities carried by the ceding insurer. The reduction shall
be equal to the amount of money held by or on behalf of the ceding insurer, including money held in trust for the
ceding insurer, under a reinsurance contract with the assuming insurer as security for the payment of obligations under
it, if the security is held in the United States subject to withdrawal solely by, and under the exclusive control of,
the ceding insurer, or, in the case of a trust, held in a qualified United States financial institution. The security
must be in the form of
- (1) cash;
- (2) securities listed by the Securities Valuation Office of the National Association of Insurance Commissioners that
qualify as admitted assets under AS 21.21;
- (3) clean, irrevocable, unconditional letters of credit that contain an evergreen clause issued or confirmed by a
qualified United States financial institution not later than December 31 in the year for which filing is made, and in
the possession of, or in trust for, the ceding insurer on or before the filing date of the ceding insurer's annual
statement; letters of credit meeting applicable standards of issuer acceptability as of the dates of their issuance or
confirmation shall, notwithstanding the issuing or confirming institution's subsequent failure to meet applicable
standards of issuer acceptability, continue to be acceptable as security until their expiration, extension, renewal,
modification, or amendment, whichever occurs first; or
- (4) other security acceptable to and approved in advance by the director.
- (d) Notwithstanding the other provisions of this section, credit may not be allowed a domestic ceding insurer unless the
reinsurance contract provides for payment by the assuming insurer on the basis of the liability of the ceding domestic
insurer under the insurance contracts reinsured without diminution because of the insolvency of the ceding domestic
insurer.
- (e) Upon request of the director, an insurer shall promptly inform the director, in writing, of the cancellation or other
material change in any of its reinsurance contracts or arrangements.
- (f) In this section, "qualified United States financial institution" means an institution that,
- (1) for the purposes of (c)(3) of this section,
- (A) is organized or, in the case of a United States office of a foreign banking organization, is licensed under the laws
of the United States or a state of the United States;
- (B) is regulated, supervised, and examined by United States federal or state authorities having regulatory authority over
banks and trust companies; and
- (C) has been determined by either the director or the Securities Valuation Office of the National Association of Insurance
Commissioners to meet the standards of financial condition and standing that are considered necessary and appropriate
to regulate the quality of financial institutions whose letters of credit are acceptable to the director;
- (2) for the purposes of the provisions of this section other than (c)(3) of this section, an institution that
- (A) is organized or, in the case of a United States branch or agency office of a foreign banking organization, licensed
under the laws of the United States or a state of the United States, and has been granted authority to operate with
fiduciary powers; and
- (B) is regulated, supervised, and examined by United States federal or state authorities having regulatory authority over
banks and trust companies.
- (g) An insurer may receive credit for reinsurance transactions if the reinsurance agreement meets all applicable
requirements established by the director.
- (h) A domestic ceding insurer may not be allowed credit if the assuming insurer's accreditation has been revoked by the
director.
- (i) In this section, a "reinsurance transaction" means a transaction stemming from a contract by which the assuming
insurer agrees to indemnify the ceding insurer in whole or in part against liability or losses that the ceding insurer
might incur under a separate contract of insurance with its insured.
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