Bill Text: MI SB0638 | 2017-2018 | 99th Legislature | Engrossed
Bill Title: Insurance; reinsurance; eligibility credit for reinsurance; modify. Amends secs. 1103 & 1105 of 1956 PA 218 (MCL 500.1103 & 500.1105) & adds sec. 1106.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Passed) 2018-04-10 - Assigned Pa 0091'18 With Immediate Effect [SB0638 Detail]
Download: Michigan-2017-SB0638-Engrossed.html
SB-0638, As Passed House, March 1, 2018
HOUSE SUBSTITUTE FOR
SENATE BILL NO. 638
A bill to amend 1956 PA 218, entitled
"The insurance code of 1956,"
by amending sections 1103 and 1105 (MCL 500.1103 and 500.1105), as
amended by 2000 PA 283, and by adding section 1106.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec.
1103. (1) A ceding insurer shall be is allowed credit for
reinsurance as either an asset or a reduction from liability on
account of reinsurance ceded only if the reinsurance is ceded to an
assuming insurer that is authorized to transact insurance or
reinsurance in this state or that meets the requirements of
subsection
(2), (3), or (4), (5), or
(6). In addition, credit for
reinsurance is allowed under this section only to the extent that
it is consistent with any rules promulgated by the director under
section 1106 regarding the valuation of reserve credits or assets,
the amount and forms of security supporting reinsurance agreements,
or the circumstances under which credit will be reduced or
eliminated. For an assuming insurer that is licensed to transact
insurance or reinsurance in this state or that meets the
requirements
of subsection (2), or (3), credit shall be is allowed
only for cessions of those kinds or classes of business that the
assuming insurer is licensed or otherwise permitted to write or
assume in its state of domicile or, for a United States branch of
an alien insurer, in the state through which it is entered and is
licensed to transact insurance or reinsurance.
(2)
A ceding insurer shall be is
allowed credit for
reinsurance ceded as either an asset or a reduction from liability
on account of reinsurance ceded if the reinsurance is ceded to an
assuming insurer that is accredited as a reinsurer in this state.
Credit
for reinsurance ceded is not allowed if the assuming
insurer's
accreditation has been revoked by the commissioner after
notice
and hearing. An accredited
reinsurer under this subsection
is a reinsurer that meets all of the following requirements:
(a)
Files with the commissioner director
evidence of the
reinsurer's submission to this state's jurisdiction.
(b) Submits to this state's authority to examine its books and
records and bears the expense of the examination.
(c) Is licensed to transact insurance or reinsurance in at
least 1 state or for a United States branch of an alien assuming
insurer is entered through and licensed to transact insurance or
reinsurance in at least 1 state.
(d)
Files annually with the commissioner director a copy of
its annual statement filed with the insurance department of its
state of domicile and a copy of its most recent audited financial
statement. and
meets 1 of the following:
(i) Maintains a surplus as regards policyholders of
$20,000,000.00
or more and whose accreditation has not been denied
by
the commissioner within 90 days of its submission.
(ii) Maintains a surplus as regards policyholders of
less than
$20,000,000.00
and whose accreditation has been approved by the
commissioner.
(e) Demonstrates to the satisfaction of the director that it
has adequate financial capacity to meet its reinsurance obligations
and is otherwise qualified to assume reinsurance from domestic
insurers. An assuming insurer meets the requirement of this
subdivision as of the time of its application if it maintains a
surplus as regards policyholders in an amount not less than
$20,000,000.00 and its accreditation has not been denied by the
director within 90 days after submission of its application.
(3) A ceding insurer is allowed credit for reinsurance as
either an asset or a reduction from liability on account of
reinsurance ceded if the reinsurance is ceded to an assuming
insurer that is domiciled in, or for a United States branch of an
alien assuming insurer is entered through, a state that employs
standards regarding credit for reinsurance substantially similar to
those applicable under this chapter and the assuming insurer or
United States branch of an alien assuming insurer meets both of the
following requirements:
(a) Except for reinsurance ceded and assumed pursuant to
pooling arrangements among insurers in the same holding company
system, maintains a surplus as regards policyholders in an amount
not less than $20,000,000.00.
(b) Submits to this state's authority to examine its books and
records and bears the expense of the examination.
(4) (3)
A Subject to subsection (7),
a ceding insurer shall be
is allowed credit for reinsurance ceded as either an asset or a
reduction from liability on account of reinsurance ceded if the
reinsurance is ceded to an assuming insurer that maintains a trust
fund in a qualified United States financial institution for the
payment of the valid claims of its United States ceding insurers,
their assigns, and successors in interest, the trust agreement
complies
with subsection (7), (9), and the assuming insurer submits
to
the commissioner's director's
authority to examine its books and
records and bears the expense of the examination. The assuming
insurer
shall report annually to the commissioner director
information
substantially the same as that required to be reported
by
an authorized insurers pursuant to insurer is required to report
under
section 438 to enable the commissioner
director to determine
the
sufficiency of the trust fund. The trust fund shall must meet
all of the following requirements:
(a)
For a single assuming insurer, the all of the following
apply:
(i) The trust
shall must consist of a trusteed account
representing the assuming insurer's liabilities attributable to
reinsurance ceded by United States ceding insurers and, in
addition, the assuming insurer shall maintain a trusteed surplus of
an
amount sufficient in the opinion of the commissioner director to
maintain compliance with section 403 as respects reinsurance ceded
by United States ceding insurers but not less than $20,000,000.00.
(ii) Except as otherwise provided in this subparagraph and
subparagraph (iii), after the assuming insurer has permanently
discontinued underwriting new business secured by the trust for at
least 3 full years, the commissioner with principal regulatory
oversight of the trust may authorize a reduction in the required
trusteed surplus. The commissioner with principal regulatory
oversight of the trust shall not authorize a reduction in the
required trusteed surplus unless the commissioner with principal
regulatory oversight of the trust determines, based on an
assessment of the risk, 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. 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,
when 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.
(iii) The minimum required trusteed surplus shall not be
reduced to an amount less than 30% of the assuming insurer's
liabilities attributable to reinsurance ceded by United States
ceding insurers covered by the trust.
(b) For a group including incorporated and individual
unincorporated underwriters, all of the following apply:
(i) For reinsurance ceded under reinsurance agreements with an
inception
date, amendment, or renewal date on or after August 1,
1995,
January 1, 1993, the trust shall must consist
of a trusteed
account
in an amount not less than the group's respective
underwriters' several liabilities attributable to business ceded by
United States domiciled ceding insurers to any underwriter of the
group. member.
(ii) For reinsurance ceded under reinsurance agreements with
an
inception date on or before July 31, 1995, December 31, 1992,
and
not amended or renewed after that date, notwithstanding any
other
provision of this section, the
trust shall must consist of a
trusteed
account in an amount not less than the group's respective
underwriters' several insurance and reinsurance liabilities
attributable to business written in the United States.
(iii) In addition to subparagraphs (i) and (ii), the group
shall maintain a trusteed surplus of which an amount sufficient in
the
opinion of the commissioner director
to maintain compliance
with section 403 as respects reinsurance ceded by United States
domiciled ceding insurers but not less than $100,000,000.00 shall
be held jointly for the benefit of United States domiciled ceding
insurers of any member of the group for all years of account. The
incorporated
members of the group shall not be engaged engage in
any business other than underwriting as a member of the group and
are subject to the same level of regulation and solvency 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
provide
the commissioner director with an annual certification of
the solvency of each underwriter member by the group's domiciliary
regulator or if certification is unavailable, financial statements
prepared by independent public accountants for each underwriter
group member.
(c) For a group of incorporated underwriters under common
administration, all of the following apply:
(i) The group must have continuously transacted an insurance
business outside the United States for at least 3 years immediately
before applying for accreditation.
(ii) The group must maintain an aggregate policyholders'
surplus of not less than $10,000,000,000.00.
(iii) The group must maintain a trust fund in an amount not
less than the group's several liabilities attributable to business
ceded by United States domiciled ceding insurers to any member of
the group pursuant to reinsurance contracts issued in the name of
the group.
(iv) In addition to subparagraph (iii), the group must
maintain a joint trusteed surplus of which $100,000,000.00 is held
jointly for the benefit of United States domiciled ceding insurers
of any member of the group as additional security for those
liabilities.
(v) Within 90 days after its financial statements are due to
be filed with the group's domiciliary regulator, the group shall
provide to the director an annual certification of each underwriter
member's solvency by the member's domiciliary regulator and
financial statements of each underwriter member of the group
prepared by its independent public accountant.
(d) (c)
The trust and any amendments to the
trust shall must
be established in a form approved by the commissioner of the state
where the trust is domiciled or the commissioner of another state
who
pursuant to under the trust instrument terms has accepted
principal regulatory oversight of the trust. The trust instrument
shall
must provide that contested claims shall be are valid
and
enforceable
upon on the final order of any a court
of competent
jurisdiction
in the United States. The trust shall must vest legal
title to its assets in the trustees of the trust for its United
States ceding insurers and their assigns and successors in
interest. The trust and the assuming insurer are subject to
examination
as determined by the commissioner, director, and the
assuming
insurer shall bear the expense of the
examination. shall
be
borne by the assuming insurer. The
trust shall must remain in
effect
for as long as while the assuming insurer has outstanding
obligations due under the reinsurance agreements subject to the
trust.
(e) (d)
No later than February 28 of each
year, the trustees
of
the trust shall report to the commissioner director in
writing
the balance of the trust and listing the trust's investments at the
preceding year end and shall certify the date of termination of the
trust,
if so a termination is planned, or certify that the trust
does
not expire prior to before
the following December 31.
(5) (4)
A ceding insurer shall be is allowed
credit for
reinsurance ceded as either an asset or a reduction from liability
on account of reinsurance ceded if reinsurance is ceded to an
assuming
insurer not meeting that
does not meet the requirements of
this section but only for the insurance of risks located in
jurisdictions where the reinsurance is required by applicable law
or regulation of that jurisdiction.
(6) A ceding insurer is allowed credit for reinsurance ceded
as either an asset or a reduction from liability on account of
reinsurance if the reinsurance is ceded to an assuming insurer that
has been certified by the director as a certified reinsurer in this
state and secures its obligations as required under this
subsection. Certification requirements include all of the
following:
(a) The director shall not certify an assuming insurer as a
certified reinsurer unless the assuming insurer meets all of the
following requirements:
(i) The assuming insurer is domiciled and licensed to transact
insurance or reinsurance in a qualified jurisdiction, as determined
by the director under subdivision (c).
(ii) The assuming insurer maintains minimum capital and
surplus, or its equivalent, in an amount determined by the director
pursuant to rule.
(iii) The assuming insurer maintains financial strength
ratings from 2 or more rating agencies considered acceptable by the
director pursuant to rule.
(iv) The assuming insurer agrees to submit to the jurisdiction
of this state.
(v) The assuming insurer agrees to appoint the director as its
agent for service of process in this state.
(vi) The assuming insurer agrees to provide security for 100%
of the assuming insurer's liabilities attributable to reinsurance
ceded by United States ceding insurers if it resists enforcement of
a final United States judgment.
(vii) The assuming insurer agrees to meet applicable
information filing requirements as determined by the director, both
with respect to an initial application for certification and on an
ongoing basis.
(viii) The assuming insurer satisfies any other requirements
for certification that the director considers relevant.
(b) The director may certify an association including
incorporated and individual unincorporated underwriters as a
certified reinsurer if the association meets all of the following
requirements:
(i) The association meets the requirements of subdivision (a).
(ii) The association satisfies its minimum capital and surplus
requirements through the capital and surplus equivalents, net of
liabilities, of the association and its members, that include a
joint central fund that may be applied to an unsatisfied obligation
of the association or any of its members, in an amount determined
by the director to provide adequate protection.
(iii) The incorporated members of the association are not
engaged in any business other than underwriting as a member of the
association. The incorporated members are subject to the same level
of regulation and solvency control by the association's domiciliary
regulator as the unincorporated members.
(iv) Within 90 days after its financial statements are due to
be filed with the association's domiciliary regulator, the
association provides to the director an annual certification by the
association's domiciliary regulator of the solvency of each
underwriter member; or if a certification is unavailable, financial
statements, prepared by independent public accountants, of each
underwriter member of the association.
(c) The director shall create and publish a list of qualified
jurisdictions under which an assuming insurer licensed and
domiciled in a qualified jurisdiction is eligible to be considered
for certification by the director as a certified reinsurer. All of
the following apply to the list of qualified jurisdictions:
(i) To determine if the domiciliary jurisdiction of a non-
United States assuming insurer is eligible to be recognized as a
qualified jurisdiction, the director shall evaluate the
appropriateness and effectiveness of the reinsurance supervisory
system of the jurisdiction, both initially and on an ongoing basis,
and consider the rights, benefits, and extent of reciprocal
recognition afforded by the non-United States jurisdiction to
reinsurers licensed and domiciled in the United States. A qualified
jurisdiction shall agree to share information and cooperate with
the director with respect to all certified reinsurers domiciled
within that jurisdiction. The director shall not recognize a
jurisdiction as a qualified jurisdiction if the director determines
that the jurisdiction does not adequately and promptly enforce
final United States judgments and arbitration awards. The director
may consider additional factors to determine if the domiciliary is
eligible to be recognized as a qualified jurisdiction.
(ii) In determining whether a jurisdiction is a qualified
jurisdiction, the director shall consider a list of qualified
jurisdictions published by the NAIC committee process. If the
director approves a jurisdiction as qualified that does not appear
on the list of qualified jurisdictions, the director shall provide
thoroughly documented justification to the NAIC in accordance with
criteria required pursuant to rules.
(iii) The director shall recognize a United States
jurisdiction that meets the requirement for accreditation under the
NAIC financial standards and accreditation program as a qualified
jurisdiction.
(iv) If a certified reinsurer's domiciliary jurisdiction
ceases to be a qualified jurisdiction, the director may suspend the
reinsurer's certification indefinitely, instead of revoking it.
(d) The director shall assign a rating to each certified
reinsurer, giving consideration to the financial strength ratings
that have been assigned by rating agencies considered acceptable to
the director pursuant to rule. The director shall publish a list of
all certified reinsurers and their ratings.
(e) A certified reinsurer shall secure obligations assumed
from United States ceding insurers under this subsection at a level
consistent with its rating, as specified in rules promulgated by
the director. All of the following apply to a certified reinsurer
securing its obligations:
(i) Except as otherwise provided in this subsection, a
domestic ceding insurer does not qualify for full financial
statement credit for reinsurance ceded to a certified reinsurer
unless the certified reinsurer maintains security in a form
acceptable to the director and consistent with section 1105, or in
a multibeneficiary trust in accordance with subsection (4).
(ii) If a certified reinsurer maintains a trust to fully
secure its obligations described in subsection (4), and chooses to
secure its obligations incurred as a certified reinsurer in the
form of a multibeneficiary trust, 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 provided under this subsection or comparable
laws of other United States jurisdictions and for its obligations
described under subsection (4). The director shall not certify a
reinsurer under this subsection unless the reinsurer binds itself,
by the language of the trust and agreement with the commissioner
with principal regulatory oversight of each trust account, to fund,
on termination of a trust account, out of the remaining surplus of
the trust any deficiency of any other trust account.
(iii) The minimum trusteed surplus requirements provided in
subsection (4) are not applicable with respect to a
multibeneficiary trust maintained by a certified reinsurer for the
purpose of securing obligations incurred under this subsection,
except that the trust must maintain a minimum trusteed surplus of
$10,000,000.00.
(iv) With respect to obligations incurred by a certified
reinsurer under this subsection, if the security is insufficient,
the director shall reduce the allowable credit by an amount
proportionate to the deficiency, and may impose further reductions
in allowable credit on finding that there is a material risk that
the certified reinsurer's obligations will not be paid in full when
due.
(v) For purposes of this subsection, a certified reinsurer
whose certification has been terminated for any reason is
considered a certified reinsurer required to secure 100% of its
obligations. If the director continues to assign a higher rating
under this section, the requirement under this subparagraph does
not apply to a certified reinsurer in inactive status or to a
reinsurer whose certification has been suspended. As used in this
subparagraph, "terminated" means revoked, suspended, voluntarily
surrendered, or placed in inactive status.
(f) If an applicant for certification has been certified as a
reinsurer in an NAIC-accredited jurisdiction, the director may
defer to that jurisdiction's certification, and may defer to the
rating assigned by that jurisdiction, and the applicant is
considered a certified reinsurer in this state.
(g) A certified reinsurer that ceases to assume new business
in this state may request to maintain its certification in inactive
status 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 subsection, and
the director shall assign a rating that takes into account, if
relevant, the reasons why the reinsurer is not assuming new
business.
(7) (5)
If the assuming insurer is not
licensed, or
accredited, or certified to transact insurance or reinsurance in
this
state, the credit permitted by under
subsection (3) shall (4)
is
not be allowed unless the
assuming insurer agrees in the
reinsurance agreements to both of the following:
(a) That if the assuming insurer fails to perform its
obligations under the terms of the reinsurance agreement, the
assuming
insurer, at the request of the ceding insurer, shall will
submit to the jurisdiction of any 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 any appellate court if
there is an appeal.
(b)
To designate the commissioner director
or a designated
attorney
as its true and lawful attorney upon on whom may be served
any
lawful process in any an action, suit, or proceeding instituted
by or on behalf of the ceding insurer.
(8) (6)
The provisions of subsection (5) are Subsection (7) is
not intended to conflict with or override the obligation of the
parties to a reinsurance agreement to arbitrate their disputes, if
such
an the obligation is created in the agreement.
(9) (7)
The credit permitted by under subsection
(3) shall (4)
or
(6) is not be allowed unless the
assuming insurer agrees in the
trust agreement to all of the following:
(a) Notwithstanding any other provisions in the trust
instrument, if the trust fund is inadequate because it contains an
amount
less than the amount required by subsection (3), (4) or (6),
or if the trust grantor has been declared or placed into
receivership, rehabilitation, liquidation, or similar proceedings
under the laws of its state or country of domicile, the trustee
shall
will comply with an order of the commissioner with
regulatory
oversight over the trust or with an order of a court of competent
jurisdiction directing the trustee to transfer to the commissioner
with regulatory oversight all of the assets of the trust fund.
(b)
The assets shall will be distributed by and claims shall
will be filed with and valued by the commissioner with regulatory
oversight in accordance with the laws of the state in which the
trust is domiciled that are applicable to the liquidation of
domestic insurance companies.
(c) If the commissioner with regulatory oversight determines
that the trust fund assets or any part of the trust fund assets is
not necessary to satisfy the claims of the United States ceding
insurers of the trust grantor, the trust fund assets or any part of
the
trust fund assets shall will
be returned by the commissioner
with regulatory oversight to the trustee for distribution in
accordance with the trust agreement.
(d) The trust grantor waives any right otherwise available
under United States laws inconsistent with subdivisions (a) to (c).
(10) If an accredited or certified reinsurer ceases to meet
the requirements for accreditation or certification, the director
may suspend or revoke the reinsurer's accreditation or
certification. The director shall give the reinsurer notice and
opportunity for hearing. The suspension or revocation shall not
take effect until after the director's order on hearing, unless 1
of the following occurs:
(a) The reinsurer waives its right to hearing.
(b) The director's order is based on regulatory action by the
reinsurer's domiciliary jurisdiction or the voluntary surrender or
termination of the reinsurer's eligibility to transact insurance or
reinsurance business in its domiciliary jurisdiction or in the
primary certifying state of the reinsurer under subsection (6)(f).
(c) The director finds that an emergency requires immediate
action and a court of competent jurisdiction has not stayed the
director's action.
(11) While a reinsurer's accreditation or certification is
suspended, a reinsurance contract issued or renewed after the
effective date of the suspension does not qualify for credit except
to the extent that the reinsurer's obligations under the contract
are secured under section 1105. If a reinsurer's accreditation or
certification is revoked, credit for reinsurance may not be granted
after the effective date of the revocation except to the extent
that the reinsurer's obligations under the contract are secured
under subsection (6)(e) or section 1105.
(12) A ceding insurer shall take steps to manage its
reinsurance recoverable assets proportionate to its own book of
business. A domestic ceding insurer shall notify the director
within 30 days after reinsurance recoverable assets from any single
assuming insurer, or group of affiliated assuming insurers, exceeds
50% of the domestic ceding insurer's last reported surplus to
policyholders, or after it has determined that reinsurance
recoverable assets from any single assuming insurer, or group of
affiliated assuming insurers, is likely to exceed this limit. The
notification must demonstrate that the exposure is safely managed
by the domestic ceding insurer.
(13) A ceding insurer shall take steps to diversify its
reinsurance program. A domestic ceding insurer shall notify the
director within 30 days after ceding to any single assuming
insurer, or group of affiliated assuming insurers, more than 20% of
the ceding insurer's gross written premium in the prior calendar
year, or after it has determined that the reinsurance ceded to any
single assuming insurer, or group of affiliated assuming insurers,
is likely to exceed this limit. The notification must demonstrate
that the exposure is safely managed by the domestic ceding insurer.
(14) A ceding insurer that is a member of the catastrophic
claims association created under section 3104 is exempt from
subsections (12) and (13) for purposes of cessions to the
catastrophic claims association.
(15) As used in this section, "NAIC" means the National
Association of Insurance Commissioners.
Sec. 1105. An asset or a reduction from liability for the
reinsurance ceded by a ceding insurer to an assuming insurer that
does
not meeting meet the
requirements of section 1103 shall be is
allowed
in an amount not exceeding to
exceed the liabilities
carried
by the ceding insurer. , and the In addition, any asset or
reduction from liability for reinsurance ceded is allowed under
this section only to the extent that it is consistent with any
rules promulgated by the director under section 1106 regarding the
valuation of reserve credits or assets, the amount and forms of
security supporting reinsurance agreements, or the circumstances
under which credit will be reduced or eliminated. The reduction
shall
must be in the amount of funds held by or on behalf of
the
ceding insurer, including funds held in trust for the ceding
insurer, under a reinsurance contract with the assuming insurer as
security
for the payment of obligations thereunder, under the
reinsurance contract, if the security is held in the United States
subject to withdrawal solely by, and under the exclusive control
of, the ceding insurer and, for a trust, held in a qualified United
States financial institution. This security may be in the form of
any of the following:
(a) Cash.
(b)
Securities that may be valued by the commissioner in
accordance
with director under sections 841 and 842 and are
approved for investment by insurers under chapter 9, including
those considered exempt from filing as defined by the purposes and
procedures manual of the Securities Valuation Office of the
National Association of Insurance Commissioners.
(c) Clean, irrevocable, unconditional letters of credit,
issued or confirmed by a qualified United States financial
institution no later than December 31 of the year for which filing
is being made, and in the possession of the ceding insurer on or
before the filing date of its annual statement. Letters of credit
meeting
that meet applicable standards of issuer acceptability as
of
on the dates of their issuance or confirmation
shall, date the
letters of credit are issued or confirmed are, 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.
(d) Any other form of security acceptable to the
commissioner.director.
Sec. 1106. (1) Subject to subsections (2) and (3), the
director may promulgate rules pursuant to the administrative
procedures act of 1969, 1969 PA 306, MCL 24.201 to 24.328, with
regard to reinsurance agreements concerning any of the following:
(a) Life insurance policies with guaranteed nonlevel gross
premiums or guaranteed nonlevel benefits, if the reinsurance treaty
meets either of the following criteria:
(i) Contains policies issued after December 31, 2014.
(ii) Contains policies issued before January 1, 2015, if the
risk pertaining to the policies is ceded, in whole or in part, in
connection with the treaty, after December 31, 2014.
(b) Universal life insurance policies with provisions
resulting in the ability of a policyholder to keep a policy in
force over a secondary guarantee period, if the reinsurance treaty
meets either of the following criteria:
(i) Contains policies issued after December 31, 2014.
(ii) Contains policies issued before January 1, 2015, if the
risk pertaining to the policies is ceded, in whole or in part, in
connection with the treaty, after December 31, 2014.
(c) Variable annuities with guaranteed death or living
benefits.
(d) Long-term care insurance policies.
(e) Other life and health insurance and annuity products as
the director considers necessary for the administration of sections
1103 and 1105.
(2) A rule promulgated under subsection (1) may require a
ceding insurer to use the valuation manual adopted by the NAIC
under section 11b(1) of the NAIC standard valuation law when
calculating amounts or forms of security required to be held under
law.
(3) A rule promulgated pursuant to subsection (1) does not
apply to cessions to an assuming insurer that meets either of the
following criteria:
(a) The assuming insurer is certified as a reinsurer in this
state.
(b) The assuming insurer maintains at least $250,000,000.00 in
capital and surplus when determined in accordance with the NAIC
accounting practices and procedures manual and meets either of the
following criteria:
(i) The assuming insurer is licensed to transact insurance or
reinsurance in at least 26 states.
(ii) The assuming insurer is licensed to transact insurance or
reinsurance in at least 10 states, and is licensed to transact
insurance or reinsurance or accredited as a reinsurer in a total of
at least 35 states.
(4) As used in this section, "NAIC" means the National
Association of Insurance Commissioners.
Enacting section 1. This amendatory act takes effect 90 days
after the date it is enacted into law.
