SB 87: "An Act relating to credit for reinsurance; and providing for an effective date."
00 SENATE BILL NO. 87 01 "An Act relating to credit for reinsurance; and providing for an effective date." 02 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 03 * Section 1. AS 21.12.020(a) is amended to read: 04 (a) Credit for reinsurance transactions is allowed a domestic ceding insurer as 05 either an asset or a deduction from liability because of reinsurance ceded only when 06 the reinsurer meets the requirements of (1) - (7) [(6)] of this subsection. The director 07 may, by regulation adopted under (g)(2) of this section, specify additional 08 requirements relating to, or setting out, the valuation of assets or reserve credits, the 09 amount and forms of security supporting reinsurance arrangements described in (g)(2) 10 of this section, and the circumstances under which credit will be reduced or 11 eliminated. Credit is allowed under (1) - (3) of this subsection with respect to cessions 12 of a kind or class of business that the assuming insurer is licensed or permitted to write 13 or assume in its state of domicile or, in the case of a United States branch of an alien 14 assuming insurer, in the state through which it is entered and licensed to transact 15 insurance or reinsurance. Credit is allowed under (3) or (4) of this subsection only if
01 the applicable requirements in (b) of this section have been satisfied. Credit is allowed 02 when the reinsurance is ceded to an assuming insurer that 03 (1) is licensed to transact insurance or reinsurance in this state; 04 (2) is accredited by the director as a reinsurer in this state; an 05 accredited reinsurer is one that 06 (A) files with the director evidence of submission to this state's 07 jurisdiction, submits to this state's authority to examine its books and records, 08 is licensed to transact insurance or reinsurance in at least one state that is 09 accredited by the National Association of Insurance Commissioners, or, in the 10 case of a United States branch of an alien admitted insurer, is entered through 11 and licensed to transact insurance or reinsurance in at least one state that is 12 accredited by the National Association of Insurance Commissioners; 13 (B) demonstrates to the satisfaction of the director that it has 14 adequate financial capacity to meet its reinsurance obligations and is otherwise 15 qualified to assume reinsurance from domestic insurers; an assuming insurer is 16 considered to meet the requirement at the time of application if the assuming 17 insurer maintains at least $20,000,000 in policyholder surplus and the 18 assuming insurer's accreditation has not been denied by the director within 90 19 days after application to the director; and 20 (C) files annually with the director a copy of the reinsurer's 21 annual statement filed with the insurance supervisory official of the reinsurer's 22 state of domicile and a copy of the reinsurer's most recent audited financial 23 statement; 24 (3) is domiciled in a state or, in the case of a United States branch of 25 an alien assuming insurer, is entered through a state accredited by the National 26 Association of Insurance Commissioners that employs standards regarding credit for 27 reinsurance ceded substantially similar to those applicable under (1) and (2) of this 28 subsection, maintains a policyholder surplus of at least $20,000,000, and submits to 29 the authority of this state to examine its books and records; the surplus requirements in 30 this paragraph do not apply to reinsurance ceded and assumed under a pooling 31 arrangement among insurers in the same holding company system;
01 (4) maintains a trust fund in a qualified United States financial 02 institution for the payment of the valid claims of the assuming insurer's United States 03 domiciled ceding insurers, and their assigns and successors; credit for reinsurance 04 under this paragraph shall be granted only if the following requirements are met: 05 (A) the trust and each amendment to the trust is established in a 06 form approved by the insurance supervisory official of the state where the trust 07 is domiciled or the insurance supervisory official of another state who, under 08 the terms of the trust instrument, has accepted responsibility for regulatory 09 oversight of the trust; the form of the trust and each trust amendment is filed 10 with the insurance supervisory official of every state in which the beneficiaries 11 of the trust are domiciled; the trust instrument provides that contested claims 12 are valid and enforceable upon the final order of any court of competent 13 jurisdiction in the United States; the trust vests legal title to its assets in the 14 trustees of the trust for its United States domiciled ceding insurers, their 15 assigns, and successors in interest; the trust and the assuming insurer are 16 subject to examination as determined by the director; the trust remains in effect 17 for so long as the assuming insurer has outstanding liabilities due under the 18 reinsurance agreements subject to the trust; 19 (B) on or before March 1 of each year, the trustees report in 20 writing to the director on the balance of the trust, list the trust's investments at 21 the end of the preceding year, and certify the date of termination of the trust, if 22 so planned, or certify that the trust does not expire before the following 23 December 31; 24 (C) in the case of a single assuming insurer, the trust consists of 25 trust assets not less than the assuming insurer's liabilities attributable to 26 reinsurance ceded by the United States domiciled ceding insurers and, in 27 addition, except as provided in (D) of this paragraph, the assuming insurer 28 maintains a trust surplus of not less than $20,000,000 for the benefit of the 29 United States domiciled ceding insurers as additional security for the liabilities 30 covered by the trust; the single assuming insurer shall make available to the 31 director an annual certification of the insurer's solvency by an independent
01 certified public accountant or an accountant holding a substantially equivalent 02 designation as determined by the director; at any time after the assuming 03 insurer permanently discontinues underwriting new business secured by a trust 04 for not less than three years, the insurance supervisory official with principal 05 regulatory oversight of the trust may authorize a reduction in the required 06 trusteed surplus if, based on an assessment of the risk, the insurance 07 supervisory official finds that the new required surplus level is adequate for the 08 protection of United States domiciled ceding insurers, policyholders, and 09 claimants in light of reasonably foreseeable adverse loss development; the risk 10 assessment may involve an actuarial review, including an independent analysis 11 of reserves and cash flows, and must consider all material risk factors, 12 including, when applicable, the lines of business involved, the stability of the 13 incurred loss estimates, and the effect of the surplus requirements on the 14 assuming insurer's liquidity or solvency; the minimum required trusteed 15 surplus may not be reduced to an amount less than 30 percent of the assuming 16 insurer's liabilities attributable to reinsurance ceded by United States domiciled 17 ceding insurers covered by the trust; 18 (D) in the case of a group, including incorporated and 19 individual unincorporated insurers, 20 (i) the trust consists of, for reinsurance ceded under the 21 reinsurance agreements with an inception, amendment, or renewal date 22 on or after January 1, 1993, a trusteed account in an amount not less 23 than the respective insurers' several liabilities attributable to business 24 ceded by United States domiciled ceding insurers to any insurer of the 25 group, for reinsurance ceded under reinsurance agreements with an 26 inception date on or before December 31, 1992, and not amended or 27 renewed after that date, notwithstanding the other provisions of this 28 section, a trusteed account not less than the respective insurers' several 29 insurance and reinsurance liabilities attributable to business written in 30 the United States, and, in addition to an applicable trust described in 31 this sub-subparagraph, trust assets representing the group's liabilities
01 attributable to business ceded by United States domiciled ceding 02 insurers include a trust surplus not less than $100,000,000 held jointly 03 for the benefit of the United States domiciled ceding insurers of any 04 member of the group for all years of account as additional security for 05 the group's liabilities covered by the trust; and 06 (ii) the incorporated members of the group are not 07 engaged in any business other than underwriting as a member of the 08 group and are subject to the same level of solvency regulation and 09 control by the group's domiciliary regulator as the unincorporated 10 members; within 90 days after the group's financial statements are due 11 to be filed with the group's domiciliary regulator, the group shall make 12 available to the director an annual certification of the solvency of each 13 insurer by the group's domiciliary regulator or, if the certification is 14 unavailable, financial statements, prepared by an independent certified 15 public accountant, or an accountant holding a substantially equivalent 16 designation as determined by the director, for each underwriter member 17 of the group; 18 (E) in the case of a group of incorporated insurers under 19 common administration that has continuously transacted an insurance business 20 outside the United States for at least three years immediately before making 21 application for accreditation and that has aggregate policyholders' surplus of 22 $10,000,000,000 or more, the trust consists of trust assets in an amount not less 23 than the group's several liabilities attributable to business ceded by United 24 States domiciled ceding insurers to a member of the group under reinsurance 25 contracts issued in the name of the group, and the group 26 (i) maintains a joint trustee surplus, of which 27 $100,000,000 is held jointly for the benefit of United States domiciled 28 ceding insurers of a member of the group as additional security for the 29 group's liabilities covered by the trust; 30 (ii) not later than 90 days after the group's financial 31 statements are due to be filed with the group's domiciliary regulator,
01 ensures each member of the group makes available to the director an 02 annual certification of the underwriter member's solvency by the 03 member's domiciliary regulator and financial statement of each 04 underwriter member prepared by the member's independent certified 05 public accountant or an accountant holding a substantially equivalent 06 designation as determined by the director; and 07 (iii) submits to examination of its books and records by 08 the director and bears the expense of the examination; 09 (F) the assuming insurer reports annually to the director 10 information substantially the same as that required to be reported on the 11 National Association of Insurance Commissioners' annual statement form by 12 licensed insurers; 13 (5) is eligible for certification by the director as a reinsurer in this state 14 if the assuming insurer secures its obligations under the following requirements: 15 (A) the assuming insurer must 16 (i) be domiciled and licensed to transact insurance or 17 reinsurance in a qualified jurisdiction; 18 (ii) maintain minimum capital and surplus, or its 19 equivalent, in an amount set out in regulations adopted by the director; 20 (iii) maintain financial strength ratings from two or 21 more rating agencies as required under regulations adopted by the 22 director; 23 (iv) agree to submit to the jurisdiction of this state and 24 agree to provide security for 100 percent of the assuming insurer's 25 liabilities attributable to reinsurance ceded by United States domiciled 26 ceding insurers if the assuming insurer resists enforcement of a final 27 United States judgment; 28 (v) agree to meet applicable information filing 29 requirements as determined by the director, both with respect to an 30 initial application for certification and on an ongoing basis; and 31 (vi) satisfy other requirements for certification as
01 required by the director; 02 (B) in addition to satisfying the requirements under (A) of this 03 paragraph, an association, including an incorporated underwriter and an 04 individual unincorporated underwriter, 05 (i) shall satisfy the association's minimum capital and 06 surplus requirements through the capital and surplus equivalents, net of 07 liabilities, of the association and the association's members, which must 08 include a joint central fund that may be applied to any unsatisfied 09 obligation of the association or a member of the association, in an 10 amount determined by the director to provide adequate protection; 11 (ii) may not engage in any business other than 12 underwriting as a member of the association and be subject to the same 13 level of regulation and solvency control by the association's domiciliary 14 regulator as are the unincorporated members; and 15 (iii) shall, not later than 90 days after the association's 16 financial statements are filed with the association's domiciliary 17 regulator, provide to the director an annual certification by the 18 association's domiciliary regulator of the solvency of each underwriter 19 member, or, if a certification is unavailable, financial statements 20 prepared by independent public accountants of each underwriter 21 member of the association; 22 (C) the director shall create and publish a list of qualified 23 jurisdictions under which an assuming insurer licensed and domiciled in a 24 qualifying jurisdiction is eligible to be considered for certification by the 25 director as a certified reinsurer, subject to the following provisions: 26 (i) to determine whether the domiciliary jurisdiction of 27 an alien assuming insurer is eligible to be recognized as a qualified 28 jurisdiction, the director shall evaluate the appropriateness and 29 effectiveness of the reinsurance supervisory system of the jurisdiction, 30 both initially and on an ongoing basis, and consider the rights, benefits, 31 and the extent of reciprocal recognition afforded by the jurisdiction to
01 reinsurers licensed and domiciled in the United States; a qualified 02 jurisdiction shall agree to share information and cooperate with the 03 director with respect to all certified reinsurers domiciled within that 04 jurisdiction; the director may not recognize a jurisdiction as a qualified 05 jurisdiction if the director determines that the jurisdiction does not 06 adequately and promptly enforce final United States judgments and 07 arbitration awards; the director may consider additional factors when 08 making an eligibility determination under this subparagraph; 09 (ii) the director shall consider the list of qualified 10 jurisdictions published through the committee process of the National 11 Association of Insurance Commissioners; if the director approves as 12 qualified a jurisdiction that does not appear on the list of qualified 13 jurisdictions, the director shall provide thoroughly documented 14 justification for the approval under criteria set out in regulations 15 adopted by the director; 16 (iii) the director shall recognize a United States 17 jurisdiction that meets the requirement for accreditation under the 18 National Association of Insurance Commissioners financial standards 19 and accreditation program as a qualified jurisdiction; 20 (iv) the director, in lieu of revocation, may suspend a 21 reinsurer's certification indefinitely if the certified reinsurer's 22 domiciliary jurisdiction ceases to be a qualified jurisdiction; 23 (D) the director shall assign a rating to each certified reinsurer, 24 giving due consideration to the financial strength ratings that have been 25 assigned by rating agencies considered acceptable under regulations adopted 26 by the director; 27 (E) a certified reinsurer shall secure obligations assumed from 28 United States domiciled ceding insurers under this subsection at a level 29 consistent with the reinsurer's rating, as specified under regulations adopted by 30 the director and subject to the following requirements: 31 (i) for a domestic ceding insurer to qualify for full
01 financial statement credit for reinsurance ceded to a certified reinsurer, 02 the certified reinsurer shall maintain security in a form acceptable to the 03 director and consistent with (c) of this section or in a multibeneficiary 04 trust under (4) of this subsection, except as otherwise provided in this 05 paragraph; 06 (ii) if a certified reinsurer maintains a trust to secure 07 fully the reinsurer's obligations subject to (4) of this subsection and 08 chooses to secure its obligations incurred as a certified reinsurer in the 09 form of a multibeneficiary trust, the certified reinsurer shall maintain 10 separate trust accounts for its obligations incurred under reinsurance 11 agreements issued or renewed as a certified reinsurer with reduced 12 security as permitted under this subsection or comparable laws of other 13 United States jurisdictions and for its obligations subject to (4) of this 14 subsection; a certified reinsurer shall, as a condition of the grant of 15 certification under this paragraph, bind itself, by the language of the 16 trust and agreement with the insurance supervisory official with 17 principal regulatory oversight of the trust account, to use the remaining 18 surplus of a terminated trust account for a deficiency in any other trust 19 account of the certified reinsurer; 20 (iii) the minimum trusteed surplus requirements under 21 (4) of this subsection are not applicable to a multibeneficiary trust 22 maintained by a certified reinsurer for the purpose of securing 23 obligations incurred under this subsection, except that the 24 multibeneficiary trust shall maintain a minimum trusteed surplus of 25 $10,000,000; 26 (iv) if the obligations incurred by a certified reinsurer 27 under this subsection are insufficiently secured, the director shall 28 reduce the allowable credit by an amount proportionate to the 29 deficiency and may impose further reductions in allowable credit if the 30 director finds that there is a material risk that the certified reinsurer's 31 obligations will not be paid in full when due;
01 (v) for purposes of this subparagraph, a certified 02 reinsurer whose certification is terminated for any reason is considered 03 to be a certified reinsurer that is required to secure 100 percent of the 04 reinsurer's obligations; however, if the director continues to assign a 05 higher rating as permitted under other provisions of this section, the 06 requirement to secure 100 percent of the reinsurer's obligations does 07 not apply to a certified reinsurer in inactive status or to a reinsurer 08 whose certification has been suspended; in this sub-subparagraph, 09 "terminated" means revoked, suspended, voluntarily surrendered, or in 10 inactive status; 11 (F) if an applicant for certification is certified as a reinsurer in a 12 jurisdiction accredited by the National Association of Insurance 13 Commissioners, the director may defer to that jurisdiction's certification and to 14 the rating assigned to the applicant by the jurisdiction; the assuming insurer 15 shall be considered to be a certified reinsurer in this state; 16 (G) a certified reinsurer that ceases to assume new business in 17 this state may request to maintain its certification in inactive status in order to 18 continue to qualify for a reduction in security for its in-force business; an 19 inactive certified reinsurer shall continue to comply with all applicable 20 requirements of this subsection, and the director shall assign a rating that takes 21 into account, if relevant, the reasons the reinsurer is not assuming new 22 business; 23 (6) meets the following conditions: 24 (A) the assuming insurer shall have its head office or be 25 domiciled in a reciprocal jurisdiction; 26 (B) the assuming insurer shall have and maintain on an 27 ongoing basis minimum capital and surplus, or its equivalent, calculated 28 according to the methodology of its domiciliary jurisdiction, in an amount 29 set out in regulation; if the assuming insurer is an association, including 30 incorporated and individual unincorporated underwriters, the assuming 31 insurer shall have and maintain on an ongoing basis minimum capital and
01 surplus, net of liabilities, calculated according to the methodology of its 02 domiciliary jurisdiction, and a central fund containing a balance in an 03 amount set out in regulation; 04 (C) the assuming insurer shall have and maintain on an 05 ongoing basis a minimum solvency or capital ratio in an amount set out in 06 regulation; if the assuming insurer is an association, including 07 incorporated and individual unincorporated underwriters, the assuming 08 insurer shall have and maintain on an ongoing basis a minimum solvency 09 or capital ratio in the reciprocal jurisdiction where the assuming insurer 10 has its head office or is domiciled and licensed; 11 (D) the assuming insurer shall agree to and provide 12 adequate assurance to the director in a form specified by the director in 13 regulation as follows: 14 (i) the assuming insurer shall provide prompt 15 written notice and explanation to the director if it falls below the 16 minimum requirements described in (B) or (C) of this paragraph, 17 or if any regulatory action is taken against it for serious 18 noncompliance with applicable law; 19 (ii) the assuming insurer shall consent in writing to 20 the jurisdiction of the courts of this state and to the appointment of 21 the director as agent for service of process; the director may 22 require that consent for service of process be provided to the 23 director and included in each reinsurance agreement; nothing in 24 this sub-subparagraph shall limit or in any way alter the capacity 25 of parties to a reinsurance agreement to agree to alternative 26 dispute resolution mechanisms, except to the extent the agreements 27 are unenforceable under applicable insolvency or delinquency 28 laws; 29 (iii) the assuming insurer shall consent in writing to 30 pay all final judgments, wherever enforcement is sought, obtained 31 by a ceding insurer or its legal successor, that have been declared
01 enforceable in the jurisdiction where the judgment was obtained; 02 (iv) each reinsurance agreement must include a 03 provision requiring the assuming insurer to provide security in an 04 amount equal to 100 percent of the assuming insurer's liabilities 05 attributable to reinsurance ceded under that agreement if the 06 assuming insurer resists enforcement of a final judgment that is 07 enforceable under the law of the jurisdiction in which it was 08 obtained or a properly enforceable arbitration award, whether 09 obtained by the ceding insurer or by its legal successor on behalf of 10 its resolution estate; and 11 (v) the assuming insurer shall confirm that it is not 12 presently participating in any solvent scheme of arrangement that 13 involves this state's ceding insurers and agree to notify the ceding 14 insurer and the director and to provide security in an amount 15 equal to 100 percent of the assuming insurer's liabilities to the 16 ceding insurer, should the assuming insurer enter into a solvent 17 scheme of arrangement; a security must be in a form consistent 18 with the provisions of (5) of this subsection and (c) of this section 19 and as specified by the director in regulation; 20 (E) the assuming insurer or its legal successor shall provide, 21 if requested by the director, on behalf of itself and any legal predecessors, 22 certain documentation to the director as specified by the director in 23 regulation; 24 (F) the assuming insurer shall maintain a practice of 25 prompt payment of claims under reinsurance agreements under criteria 26 set out in regulation; 27 (G) the assuming insurer's supervisory authority shall 28 confirm to the director on an annual basis as of December 31 of the 29 preceding year or at the annual date otherwise statutorily reported to the 30 reciprocal jurisdiction, that the assuming insurer complies with the 31 requirements in (B) and (C) of this paragraph;
01 (H) nothing in this paragraph precludes an assuming 02 insurer from providing the director with information on a voluntary 03 basis; 04 (7) does not meet the requirements of (1) - (6) [(5)] of this subsection, 05 but only with respect to the insurance of risks located in jurisdictions where the 06 reinsurance is required by applicable law or regulation of that jurisdiction. 07 * Sec. 2. AS 21.12.020(g) is amended to read: 08 (g) The director may adopt regulations 09 (1) to implement this section; and 10 (2) relating to reinsurance arrangements, subject to the following 11 provisions: 12 (A) a regulation adopted under this paragraph may apply only 13 to reinsurance relating to 14 (i) a life insurance policy with guaranteed nonlevel 15 gross premiums or guaranteed nonlevel benefits; 16 (ii) a universal life insurance policy with provisions 17 resulting in the ability of a policyholder to keep a policy in force over a 18 secondary guaranteed period; 19 (iii) a variable annuity with guaranteed death or living 20 benefits; 21 (iv) a long-term care insurance policy; or 22 (v) other life insurance, health insurance, and annuity 23 products for which the National Association of Insurance 24 Commissioners adopts model regulatory requirements with respect to 25 credit for reinsurance; 26 (B) a regulation adopted under (A)(i) or (ii) of this paragraph 27 applies to a treaty containing a policy issued (i) on or after January 1, 2015, 28 and (ii) before January 1, 2015, if the risk pertaining to the policy is ceded, in 29 whole or in part, in connection with the treaty on or after January 1, 2015; in 30 this subparagraph, "treaty" means a contract in which a reinsurance company 31 agrees to accept and an insurance company agrees to cede all of a particular
01 type of risk within a specific class of insurance policies; 02 (C) the director may adopt a regulation under this paragraph to 03 require a ceding insurer, in calculating the amounts or forms of security 04 required to be held under regulations adopted under the authority of this 05 paragraph, to use the edition of the valuation manual adopted by the National 06 Association of Insurance Commissioners in effect on the date on which the 07 calculation is made, to the extent applicable; 08 (D) a regulation adopted under this paragraph does not apply to 09 cessions to an assuming insurer that is certified in this state, meets the 10 conditions set out in (a)(6) of this section, or meets the following criteria: 11 (i) maintains at least $250,000,000 in capital and 12 surplus as determined under the most recent edition of the National 13 Association of Insurance Commissioners Accounting Practices and 14 Procedures Manual, including the effect of any permitted or prescribed 15 practices; and 16 (ii) is licensed in not fewer than 26 states, or licensed in 17 not fewer than 10 states and licensed or accredited in a total of not 18 fewer than 35 states; 19 (E) nothing in this paragraph limits the director's authority to 20 adopt regulations under (1) of this subsection. 21 * Sec. 3. AS 21.12.020(h) is amended by adding a new paragraph to read: 22 (3) "reciprocal jurisdiction" means a jurisdiction that is 23 (A) not a United States jurisdiction that is subject to an in-force 24 covered agreement with the United States, each within its legal authority, or in 25 the case of a covered agreement between the United States and the European 26 Union, is a member state of the European Union; for purposes of this 27 subparagraph, a covered agreement is an agreement entered into under 31 28 U.S.C. 313 - 314 (Dodd-Frank Wall Street Reform and Consumer Protection 29 Act) that is currently in effect or in a period of provisional application and 30 addresses the elimination, under specified conditions, of collateral 31 requirements as a condition for entering into any reinsurance agreement with a
01 ceding insurer domiciled in this state or for allowing the ceding insurer to 02 recognize; 03 (B) a United States jurisdiction that meets the requirements for 04 accreditation under the National Association of Insurance Commissioners 05 financial standards and accreditation program; or 06 (C) a qualified jurisdiction, as determined by the director under 07 (a)(5)(C) of this section, that is not otherwise described in (A) and (B) of this 08 paragraph and that meets certain additional requirements, consistent with the 09 terms and conditions of in-force covered agreements, as specified by the 10 director in regulation. 11 * Sec. 4. AS 21.12.020 is amended by adding a new subsection to read: 12 (i) The director shall consider the list of reciprocal jurisdictions published 13 through the National Association of Insurance Commissioners committee process in 14 determining a reciprocal jurisdiction and has the discretion to defer to the list. The 15 director may approve a jurisdiction not on the list in accordance with criteria 16 developed under regulations adopted by the director. The director may remove a 17 jurisdiction from the list of reciprocal jurisdictions upon determination that the 18 jurisdiction no longer meets the requirements of a reciprocal jurisdiction in accordance 19 with a process set out in regulation by the director. Upon removal of a reciprocal 20 jurisdiction from the list, credit for reinsurance ceded to an assuming insurer that has a 21 home office or is domiciled in that jurisdiction shall be allowed if otherwise allowed 22 under this section. The director shall timely create and publish a list of assuming 23 insurers that have satisfied the conditions set out in this subsection and to which 24 cessions shall be granted credit in accordance with (a) of this section. The director 25 may add an assuming insurer to a list if a National Association of Insurance 26 Commissioners accredited jurisdiction has added the assuming insurer to a list of 27 assuming insurers or, if upon initial eligibility, the assuming insurer submits the 28 information to the director as required under (a)(6)(D) of this section and complies 29 with any additional requirements the director may impose by regulation. If the director 30 determines that an assuming insurer no longer meets one or more of the requirements 31 of (a)(6) of this section, the director may revoke or suspend the eligibility of the
01 assuming insurer under (a)(6) of this section in accordance with procedures set out in 02 regulation. While an assuming insurer's eligibility is suspended, a reinsurance 03 agreement issued, amended, or renewed after the effective date of the suspension does 04 not qualify for credit except to the extent that the assuming insurer's obligations under 05 the contract are secured in accordance with (c) of this section. If an assuming insurer's 06 eligibility is revoked, a credit for reinsurance may not be granted after the effective 07 date of the revocation with respect to any reinsurance agreement entered into by the 08 assuming insurer, including a reinsurance agreement entered into before the date of 09 revocation, except to the extent that the assuming insurer's obligations under the 10 contract are secured in a form acceptable to the director and consistent with (c) of this 11 section. Upon entry of an order of rehabilitation, liquidation, or conservation against 12 the ceding insurer, the supervising court shall require an assuming insurer under (a)(6) 13 of this section to post 100 percent security for the benefit of the ceding insurer or its 14 estate. Nothing in this subsection shall limit or in any way alter the capacity of parties 15 to a reinsurance agreement to agree on requirements for security or other terms in that 16 reinsurance agreement consistent with this section. Credit under (a)(6) of this section 17 may be taken only for reinsurance agreements entered into, renewed, or amended on 18 or after the date the director has determined that the assuming insurer is eligible for 19 credit, and may not be taken for reinsurance of losses incurred or reserves reported 20 before that date. Credit under (a)(6) of this section may not apply to reinsurance 21 agreements entered into, to losses incurred, or to reserves posted before application 22 under (a)(6) of this section. 23 * Sec. 5. The uncodified law of the State of Alaska is amended by adding a new section to 24 read: 25 TRANSITON; REGULATIONS. The director of the division of insurance may adopt 26 regulations necessary to implement the changes made by this Act. The regulations take effect 27 under AS 44.62 (Administrative Procedure Act), but not before the effective date of the law 28 implemented by the regulation. 29 * Sec. 6. Section 5 of this Act takes effect immediately under AS 01.10.070(c).