SB 87 — An Act relating to credit for reinsurance; and providing for an effective date.

32-GS1584\ALAWS SENATEOF BILLALASKA NO.Source Chapter No.

SB 87 IN_______ THEAN LEGISLATUREACT OFRelating THEto STATEcredit OFfor ALASKAreinsurance; THIRTY-SECOND LEGISLATURE - FIRST SESSION BY THE SENATE RULES COMMITTEE BY REQUEST OF THE GOVERNOR Introduced:

2/22/21and Referred:providing for an effective date.

Labor_______________ &BE CommerceIT AENACTED BILLBY FORTHE ANLEGISLATURE ACTOF ENTITLEDTHE "AnSTATE ActOF relatingALASKA: to credit for reinsurance;

andTHE providingACT forFOLLOWS anON effectivePAGE date."1 BEEnrolled ITSB ENACTED87 BYAN THEACT LEGISLATURERelating OFto THEcredit STATEfor OFreinsurance; ALASKA:

*and Sectionproviding 1.for an effective date.

_______________ * Section 1.

(a) Credit for reinsurance transactions is allowed a domestic ceding insurer as either an asset or a deduction from liability because of reinsurance ceded only when the reinsurer meets the requirements of (1) - (7) [(6)][(1) - (6)] of this subsection.

Credit is allowed under (3) or (4) of this subsection only if SB0087A -1- Enrolled SB 87 New Text Underlined [DELETED TEXT BRACKETED] 32-GS1584\A the applicable requirements in (b) of this section have been satisfied.

Enrolled SB 87 -2- SB0087A New Text Underlined [DELETED TEXT BRACKETED] 32-GS1584\A (4) maintains a trust fund in a qualified United States financial institution for the payment of the valid claims of the assuming insurer's United States domiciled ceding insurers, and their assigns and successors;

the single assuming insurer shall make available to the director an annual certification of the insurer's solvency by an independent SB0087A -3- Enrolled SB 87 New Text Underlined [DELETED TEXT BRACKETED] 32-GS1584\A certified public accountant or an accountant holding a substantially equivalent designation as determined by the director;

(D) in the case of a group, including incorporated and individual unincorporated insurers, (i) the trust consists of, for reinsurance ceded under the reinsurance agreements with an inception, amendment, or renewal date on or after January 1, 1993, a trusteed account in an amount not less than the respective insurers' several liabilities attributable to business ceded by United States domiciled ceding insurers to any insurer of the group, for reinsurance ceded under reinsurance agreements with an inception date on or before December 31, 1992, and not amended or renewed after that date, notwithstanding the other provisions of this section, a trusteed account not less than the respective insurers' several insurance and reinsurance liabilities attributable to business written in the United States, and, in addition to an applicable trust described in this sub-subparagraph, trust assets representing the group's liabilities Enrolled SB 87 -4- SB0087A New Text Underlined [DELETED TEXT BRACKETED] 32-GS1584\A attributable to business ceded by United States domiciled ceding insurers include a trust surplus not less than $100,000,000 held jointly for the benefit of the United States domiciled ceding insurers of any member of the group for all years of account as additional security for the group's liabilities covered by the trust;

(ii) not later than 90 days after the group's financial statements are due to be filed with the group's domiciliary regulator, SB0087A -5- Enrolled SB 87 New Text Underlined [DELETED TEXT BRACKETED] 32-GS1584\A ensures each member of the group makes 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 the member's independent certified public accountant or an accountant holding a substantially equivalent designation as determined by the director;

and (vi) satisfy other requirements for certification as Enrolled SB 87 -6- SB0087A New Text Underlined [DELETED TEXT BRACKETED] 32-GS1584\A required by the director;

(i) to determine whether the domiciliary jurisdiction of an alien 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 the extent of reciprocal recognition afforded by the jurisdiction to SB0087A -7- Enrolled SB 87 New Text Underlined [DELETED TEXT BRACKETED] 32-GS1584\A reinsurers licensed and domiciled in the United States;

(i) for a domestic ceding insurer to qualify for full Enrolled SB 87 -8- SB0087A New Text Underlined [DELETED TEXT BRACKETED] 32-GS1584\A financial statement credit for reinsurance ceded to a certified reinsurer, the certified reinsurer shall maintain security in a form acceptable to the director and consistent with (c) of this section or in a multibeneficiary trust under (4) of this subsection, except as otherwise provided in this paragraph;

SB0087A -9- Enrolled SB 87 New Text Underlined [DELETED TEXT BRACKETED] 32-GS1584\A (v) for purposes of this subparagraph, a certified reinsurer whose certification is terminated for any reason is considered to be a certified reinsurer that is required to secure 100 percent of the reinsurer's obligations;

if the assuming insurer is an association, including incorporated and individual unincorporated underwriters, the assuming insurer shall have and maintain on an ongoing basis minimum capital and Enrolled SB 87 -10- SB0087A New Text Underlined [DELETED TEXT BRACKETED] 32-GS1584\A surplus, net of liabilities, calculated according to the methodology of its domiciliary jurisdiction, and a central fund containing a balance in an amount set out in regulation;

(iii) the assuming insurer shall consent in writing to pay all final judgments, wherever enforcement is sought, obtained by a ceding insurer or its legal successor, that have been declared SB0087A -11- Enrolled SB 87 New Text Underlined [DELETED TEXT BRACKETED] 32-GS1584\A enforceable in the jurisdiction where the judgment was obtained;

Enrolled SB 87 -12- SB0087A New Text Underlined [DELETED TEXT BRACKETED] 32-GS1584\A (H) nothing in this paragraph precludes an assuming insurer from providing the director with information on a voluntary basis;

(7) does not meet the requirements of (1) - (6) [(5)][(1) - (5)] 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.

in this subparagraph, "treaty" means a contract in which a reinsurance company agrees to accept and an insurance company agrees to cede all of a particular SB0087A -13- Enrolled SB 87 New Text Underlined [DELETED TEXT BRACKETED] 32-GS1584\A type of risk within a specific class of insurance policies;

(3) "reciprocal jurisdiction" means a jurisdiction that is (A) is not a United States jurisdiction that is subject to an in-forcein- force covered agreement with the United States, each within its legal authority, or in the case of a covered agreement between the United States and the European Union, is a member state of the European Union;

forin purposes of this subparagraph, a"covered coveredagreement" agreement is an agreement entered into under 31 U.S.C.

313 - 314 (Dodd-Frank Wall Street Reform and Consumer Protection Act) that is currently in effect or in a period of provisional application and addresses the elimination, under specified conditions, of collateral requirements as a condition for entering into any reinsurance agreement with a Enrolled SB 87 -14- SB0087A New Text Underlined [DELETED TEXT BRACKETED] 32-GS1584\A ceding insurer domiciled in this state or for allowing the ceding insurer to recognize;

(B) is a United States jurisdiction that meets the requirements for accreditation under the National Association of Insurance Commissioners financial standards and accreditation program;

or (C) is a qualified jurisdiction, as determined by the director under (a)(5)(C) of this section, that is not otherwise described in (A) and (B) of this paragraph and that meets certain additional requirements, consistent with the terms and conditions of in-force covered agreements, as specified by the director in regulation.

If the director determines that an assuming insurer no longer meets one or more of the requirements of (a)(6) of this section, the director may revoke or suspend hethe eligibility of the SB0087A -15- Enrolled SB 87 New Text Underlined [DELETED TEXT BRACKETED] 32-GS1584\A assuming insurer under (a)(6) of this section in accordance with procedures set out in regulation.

TRANSITON;TRANSITION:

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