HB 401 — An Act relating to insurance; relating to credit for reinsurance; relating to insurance standard valuation; and providing for an effective date.

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"AnRelating Act relating to insurance;

and providing for an effective date."date. CS FOR HOUSE BILL NO.

401(L&C)00Enrolled 01HB "An401 Act01 relatingRelating to insurance;

relating to insurance 02 standard 02 valuation;

and providing for an effective date."date. 03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:

03 _______________ 04 * Section 1.

05 (a) Credit for reinsurance transactions is [SHALL BE] allowed a domestic 06 ceding insurer as either an asset or a deduction from liability because [ON 07 ACCOUNT] of reinsurance ceded only when the reinsurer meets the requirements 08 of (1) - (6) of this subsection.

The director may, by regulation adopted under (m)(2) 09 (m)(2) of this section, specify additional requirements relating to, or setting out, the 10 the valuation of assets or reserve credits, the amount and forms of security 11 supporting reinsurance arrangements described in (m)(2) of this section, and the 12 circumstances under which credit will be reduced or eliminated.

07 (E) [(v)] in the case of a group of incorporated insurers under 08 common administration [THAT COMPLIES WITH THE REPORTING 09 REQUIREMENTS CONTAINED IN (ii) OF THIS SUBPARAGRAPH,] that 10 has continuously transacted an insurance business outside the United States for 11 at least three years immediately before making application for accreditation [, 12 THAT SUBMITS TO THIS STATE'S AUTHORITY TO EXAMINE ITS 13 BOOKS AND RECORDS AND BEARS THE EXPENSE OF THE 14 EXAMINATION,] and that has aggregate policyholders' surplus of 15 $10,000,000,000 or more, the trust consists [SHALL CONSIST] of trust 16 assets in an amount not less than the group's several liabilities attributable to 17 business ceded by United States domiciled ceding insurers to a member of the 18 group under reinsurance contracts issued in the name of the group;group, and the 19 group 20 (i) maintains [SHALL MAINTAIN] a joint trustee 21 surplus, of which $100,000,000 is [SHALL BE] held jointly for the 22 benefit of United States domiciled ceding insurers of a member of the 23 group as additional security for the group's liabilities covered by the 24 trust;

and the 19 group 20 (i) maintains [SHALL MAINTAIN] a joint trustee 21 surplus, of which $100,000,000 is [SHALL BE] held jointly for the 22 benefit of United States domiciled ceding insurers of a member of the 23 group as additional security for the group's liabilities covered by the 24 trust;

26 (i) to determine whether the domiciliary jurisdiction 27 of a an alien assuming insurer is eligible to be recognized as a 28 qualified jurisdiction, the director shall evaluate the 29 appropriateness and effectiveness of the reinsurance supervisory 30 system of the jurisdiction, both initially and on an ongoing basis, 31 and consider the rights, benefits, and the extent of reciprocal recognition afforded by the jurisdiction to reinsurers licensed and 02 domiciled in the United States;

the suspension or revocation may not take 17 effect before the director issues an order on the hearing, unless the 18 (A) the reinsurer waives the right to a hearing;

19 (B) the director's order is based on a regulatory action by the 20 reinsurer's domiciliary jurisdiction or the voluntary surrender or termination of 21 the reinsurer's eligibility to transact insurance or reinsurance business in its 22 domiciliary jurisdiction or in the primary certifying state of the reinsurer under 23 (a)(5)(F) of this section;

or 24 (C) the director finds that an emergency requires immediate 25 action 25 and a court of competent jurisdiction has not stayed the director's action;

26 (2) while a reinsurer's accreditation or certification is suspended, a 27 reinsurance contract issued or renewed by the reinsurer on or after the effective date of 28 the suspension does not qualify for credit, except to the extent that the reinsurer's 29 obligations under the contract are secured under (c) of this section;

16 (A) for all ordinary policies of life insurance issued on the 17 standard basis, excluding disability and accidental death benefits in the policies 18 - the Commissioners [COMMISSIONER'S] 1958 Standard Ordinary 19 Mortality Table, for policies issued before the operative date of 20 AS 21.45.300(w), of the Standard Nonforfeiture Law for Life Insurance as 21 amended, except that, for a category of policies issued on female risks, all 22 modified net premiums and present values, referred to in (2) of this subsectionsubsection, 23 may be calculated according to an age not more than six years younger than 24 the actual age of the insured;

07 (4) if an insurer fails to provide a supporting memorandum as 08 requested by the director within a period specified in the valuation manual or the 09 director determines that the supporting memorandum fails to meet the standards 10 adopted by the valuation manual or is otherwise unacceptable to the director, the 11 director may engage a qualified actuary, at the expense of the insurer, to review the 12 opinion and the basis for the opinion and to prepare a supporting memorandum as 13 required under (c)(3)(C)(3)(C) of this subsection.

(1) quantify the benefits, guarantees, and funding associated with the 02 contracts and their risks at a level of conservatism that reflects conditions that include 03 unfavorable events that have a reasonable probability of occurring during the lifetime 04 of the contracts andand, for policies or contracts with significant tail risk, that reflect 05 conditions appropriately adverse to quantify the tail risk;

and 24 (B) in the case of confidential information specified in (i)(1)(A) 25 and (4)(D) of this section, with the Actuarial Board for Counseling and Discipline 26 or its successor upon request stating that the confidential information is 27 required for the purpose of professional disciplinary proceedings and with 28 state, federal, and international law enforcement officials;

or 29 (B) another state and is required to hold a certificate of 30 authority to write life insurance, accident and health insurance, or depositdeposit-type type 31 contracts in this state;

16 (17) "valuation manual" means the manual of valuation instructions 17 adopted by the National Association of Insurance Commissioners as specified in 18 AS 21.18.112(d)(1)(A).21.18.112(d).

11 (dd) In this section, "operative date of the valuation manual" means the 12 January 1 12 of the first calendar year that the valuation manual described in 13 AS 21.18.112 is 13 effective.