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ACT No. 419
Regular Session, 2012
HOUSE BILL NO. 849
BY REPRESENTATIVE TALBOT
AN ACT1
To amend and reenact R.S. 22:651 and 652(2) and (3)(a), relative to reinsurance credits; to2
clarify terms, duties, and obligations; to provide for new accreditation requirements;3
to provide relative to the assumption of insurers' duties and obligations; to provide4
relative to trust requirements; and to provide for related matters.5
Be it enacted by the Legislature of Louisiana:6
Section 1. R.S. 22:651 and 652(2) and (3)(a) are hereby amended and reenacted to7
read as follows: 8
§651. Reinsurance credits9
A. Credit The commissioner shall allow credit for reinsurance shall be10
allowed to a domestic ceding insurer as either an asset or deduction from liability11
when the assuming insurer satisfies the requirements of Subsection B, C, D, or E, or12
F of this Section. If the requirements of Subsection D are satisfied, the requirements13
of Subsection F of this Section shall also be satisfied The commissioner shall allow14
credit under Subsection B or C of this Section pertaining only to cessions of those15
kinds or classes of business that the assuming insurer is licensed or otherwise16
permitted to write or assume in its state of domicile or, in the case of a United States17
branch of an alien assuming insurer, in the state through which it is entered and18
licensed to transact insurance or reinsurance. The commissioner shall allow the19
credit for reinsurance pursuant to Subsection D of this Section only if the assuming20
insurer satisfies the requirements of Subsection G of this Section.21
B. Credit shall be allowed The commissioner shall allow credit for22
reinsurance when the reinsurance is ceded to an assuming insurer which is authorized23 ENROLLEDHB NO. 849
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in this state. An authorized insurer is one that which holds a certificate of authority1
to transact insurance or reinsurance.2
C. Credit shall also be allowed The commissioner shall allow credit for3
reinsurance when the reinsurance is ceded to an assuming insurer which is accredited4
by the commissioner as a reinsurer in this state. An accredited reinsurer shall be5
approved by the Department of Insurance after filing an application for accreditation,6
and: To be eligible for accreditation and to receive the commissioner's approval of7
its application for accreditation, a reinsurer shall complete each of the following:8
(1) Filing File with the Department of Insurance commissioner evidence of9
its submission to the jurisdiction of this state, and as may be set forth by the10
department in regulations.11
(2) Submission of the reinsurer Submit to the authority of the commissioner12
Department of Insurance to examine its books and records of the reinsurer.13
(3) Demonstration by the reinsurer Demonstrate that the reinsurer it is14
licensed or authorized to transact insurance or reinsurance in, or in the case of a15
United States branch of an alien assuming insurer, is entered through, at least one16
state which that employs standards regarding credit for reinsurance equal to or17
exceeding those applicable under this Subpart.18
(4) Annual filing File annually with the commissioner Department of19
Insurance a true copy of its annual statement filed with the insurance department20
regulator of its state of domicile and a copy of its most recent audited financial21
statement.22
(5) Demonstrate to the satisfaction of the commissioner that it has adequate23
financial capacity to meet its reinsurance obligations and is otherwise qualified to24
assume reinsurance from domestic insurers. The commissioner shall deem that an25
assuming insurer meets this requirement as of the time of its application if it26
maintains a surplus as regards policyholders in an amount not less than twenty27
million dollars and the commissioner has not denied it accreditation within ninety28
days after submission of its application.29 ENROLLEDHB NO. 849
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D.(1)(a) Credit shall also be allowed The commissioner shall allow a1
domestic ceding insurer credit for reinsurance under Paragraph (2) of this Subsection2
when the reinsurance is ceded to an assuming insurer which that maintains a trust3
fund in a qualified United States financial institution, as defined in R.S. 22:653(B),4
for the payment of the valid claims of its United States policyholders and ceding5
insurers, their assigns, and successors in interest. The assuming insurer shall report6
and submit annually to the commissioner information substantially the same as that7
required to be reported on the National Association of Insurance Commissioners8
(NAIC) annual statement form by authorized insurers to enable the commissioner to9
determine the sufficiency of the trust fund. The assuming insurer shall submit to10
examination of its books and records by the commissioner and bear the expense of11
examination.12
(b) Any credit for reinsurance shall not be granted under Paragraph (2) of13
this Subsection unless the form of the trust and amendments to the trust have been14
approved by the Department of Insurance. The trust instrument shall provide that15
contested claims shall be valid and enforceable upon the final order of any court of16
competent jurisdiction in the United States. The trust shall vest legal title to its17
assets in the trustees of the trust for its United States ceding insurers, their assigns,18
and successors in interest. The trust shall be subject to examination as determined19
by the department. The trust described herein shall remain in existence for as long20
as the assuming insurer shall have obligations due under the reinsurance agreements21
subject to the trust.22
(c) Not later than the twenty-eighth day of each February, the trustees of the23
trust established under Paragraph (2) of this Subsection shall provide a written24
report to the department setting forth the balance of the trust and listing the25
investments of the trust of the preceding calendar year, and shall certify the date of26
termination of the trust, if so planned, or shall certify that the trust shall not expire27
prior to the succeeding December thirty-first.28 ENROLLEDHB NO. 849
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(2)(a) The commissioner shall not grant credit for reinsurance under this1
Subsection unless the form of the trust and any amendments to the trust receive the2
approval of either of the following:3
(i) The commissioner of the state of domicile of the trust.4
(ii) The commissioner of another state who, pursuant to the terms of the trust5
instrument, accepts principal regulatory oversight of the trust.6
(b) The assuming insurer shall also file the form of the trust and any trust7
amendments with the commissioner of every domiciliary state of the ceding insurer8
beneficiaries of the trust. The trust instrument shall provide that contested claims9
shall be valid and enforceable upon the final order of any court of competent10
jurisdiction in the United States. The trust shall vest legal title to its assets in its11
trustees for the benefit of the assuming insurer's United States ceding insurers, their12
assigns, and successors in interest. The trust and the assuming insurer shall be13
subject to examination as determined by the commissioner.14
(c) The trust shall remain in effect for as long as the assuming insurer has15
outstanding obligations due under the reinsurance agreements subject to the trust.16
No later than the last day of February of each year the trustee of the trust shall report17
to the commissioner in writing the balance of the trust and list the trust's investments18
at the preceding year-end and shall certify the date of termination of the trust, if so19
planned, or certify that the trust will not expire prior to the following thirty-first day20
of December.21
(2)(3)(a) In the case of a single assuming insurer, the trust fund shall consist22
of a trusteed account funds in trust in an amount not less than the assuming insurer's23
liabilities attributable to business written in the United States and, in addition, the24
assuming insurer shall maintain a trusteed surplus of not less than twenty million25
dollars, except as provided in Subparagraph (b) of this Paragraph.26
(b) At any time after the assuming insurer has permanently discontinued27
underwriting new business secured by the trust for at least three full years, the28
commissioner with principal regulatory oversight of the trust may authorize a29
reduction in the required trusteed surplus, but only after a finding, based on an30 ENROLLEDHB NO. 849
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assessment of the risk, that the new required surplus level is adequate for the1
protection of the United States ceding insurers, policyholders, and claimants in light2
of reasonably foreseeable adverse loss development. The risk assessment may3
involve an actuarial review, including an independent analysis of reserves and cash4
flow, and shall consider all material risk factors, including when applicable the lines5
of business involved, the stability of the incurred loss estimates, and the effect of the6
surplus requirements on the assuming insurer's liquidity or solvency. The minimum7
required trusteed surplus may not be reduced to an amount less than thirty percent8
of the assuming insurer's liabilities attributable to reinsurance ceded by United States9
ceding insurers covered by the trust. 10
(b) (c) In the case of a group of assuming insurers that includes incorporated11
and individual unincorporated underwriters, the following provisions apply:, the trust12
shall consist of a trusteed account representing the group's liabilities attributable to13
business written in the United States and, in addition, the group shall maintain a14
trusteed surplus of which one hundred million dollars shall be held jointly for the15
benefit of United States ceding insurers of any member of the group. The group16
shall make available to the commissioner an annual certification of the solvency of17
each underwriter by its domiciliary regulator and its independent public accountants.18
(i) For reinsurance ceded under reinsurance agreements with an inception,19
amendment, or renewal date on or after January 1, 1993, the trust shall consist of a20
trusteed account in an amount not less than the respective underwriters' several21
liabilities attributable to business ceded by United States domiciled ceding insurers22
to any underwriter of the group.23
(ii) For reinsurance ceded under reinsurance agreements with an inception24
date on or before December 31, 1992, and not amended or renewed after that date,25
notwithstanding the other provisions of this Subpart, the trust shall consist of a26
trusteed account in an amount not less than the respective underwriters' several27
insurance and reinsurance liabilities attributable to business written in the United28
States.29 ENROLLEDHB NO. 849
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(iii) In addition to these trusts, the group shall maintain in trust a trusteed1
surplus of which one hundred million dollars shall be held jointly for the benefit of2
the United States domiciled ceding insurers or any member of the group for all years3
of account.4
(iv) The incorporated members of the group shall not engage in any business5
other than underwriting as a member of the group and shall be subject to the same6
level of regulation and solvency control by the group's domiciliary regulator as are7
the unincorporated members.8
(v) Within ninety days after its financial statements are due to be filed with9
the group's domiciliary regulator, the group shall provide to the commissioner an10
annual certification by the group's domiciliary regulator of the solvency of each11
underwriter member; or if a certification is unavailable, financial statements,12
prepared by independent public accountants, of each underwriter member of the13
group.14
(c) (d) In the case of a group of incorporated underwriters insurers under15
common administration, the group shall:16
(i) Submit to this state's the commissioner's authority to examine its books17
and records and bear the expense of the any examination.18
(ii) Maintain aggregate policyholders' surplus of ten billion dollars.19
(iii) Maintain a trust fund consisting of a trusteed account in an amount not20
less than the group's several liabilities attributable to business ceded by United States21
ceding insurers to any member of the group.22
(iv) In addition, maintain a joint trusteed surplus of which one hundred23
million dollars shall be held jointly for the benefit of the United States ceding24
insurers of any member of the group as additional security for these liabilities.25
(v) Within ninety days after its financial statements are due to be filed with26
the group's domiciliary regulator make available to the commissioner an annual27
certification of the member's solvency by the member's domiciliary regulator and28
financial statements of each underwriter member of the group audited by29
independent public accountants.30 ENROLLEDHB NO. 849
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E. The commissioner shall allow credit for reinsurance when the assuming1
insurer is certified by the commissioner as a reinsurer in this state and secures its2
obligations in accordance with the requirements of this Subsection.3
(1) To be eligible for certification, the assuming insurer shall meet the4
following requirements:5
(a) The assuming insurer shall be domiciled and licensed to transact6
insurance or reinsurance in a qualified jurisdiction, as determined by the7
commissioner pursuant to Paragraph (3) of this Subsection.8
(b) The assuming insurer shall maintain minimum capital and surplus or its9
equivalent, in an amount to be determined by the commissioner, pursuant to10
regulation.11
(c) The assuming insurer shall maintain financial strength ratings from two12
or more rating agencies deemed acceptable by the commissioner pursuant to13
regulation.14
(d) The assuming insurer shall agree to submit to the jurisdiction of this15
state, appoint the commissioner as its agent for service of process in this state, and16
agree to provide security for one hundred percent of the assuming insurer's liabilities17
attributable to reinsurance ceded by United States ceding insurers if it resists18
enforcement of a final United States judgment.19
(e) The assuming insurer shall agree to meet applicable information filing20
requirements as determined by the commissioner for its initial application for21
certification and for its continual maintenance of certification as a reinsurer.22
(f) The assuming insurer shall satisfy any other requirements for certification23
deemed relevant by the commissioner.24
(2) An association including incorporated and individual unincorporated25
underwriters may be a certified reinsurer. To be eligible for certification, in addition26
to satisfying requirements of Paragraph (1) of this Subsection:27
(a) The association shall satisfy its minimum capital and surplus28
requirements through the capital and surplus equivalents and net of liabilities of the29
association and its members, which shall include a joint central fund that may be30 ENROLLEDHB NO. 849
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applied to any unsatisfied obligation of the association or any of its members, in an1
amount determined by the commissioner to provide adequate protection.2
(b) The incorporated members of the association shall not engage in any3
business other than underwriting as a member of the association and shall be subject4
to the same level of regulation and solvency control to which the unincorporated5
members are subject, pursuant to the authority of the association's domiciliary6
regulator.7
(c) Within ninety days after its financial statements are due to be filed with8
the association's domiciliary regulator, the association shall provide to the9
commissioner an annual certification by the association's domiciliary regulator of the10
solvency of each underwriter member; or, if a certification is unavailable, the11
association shall provide financial statements, prepared by independent public12
accountants, of each underwriter member of the association.13
(3) The commissioner shall create and publish a list of qualified14
jurisdictions.15
(a) To determine the eligibility of the domiciliary jurisdiction of a non-16
United States assuming insurer for recognition as a qualified jurisdiction, the17
commissioner shall evaluate the appropriateness and effectiveness of the reinsurance18
supervisory system of the jurisdiction, both initially and continually thereafter, and19
consider the rights, benefits, and the extent of reciprocal recognition afforded by the20
non-United States jurisdiction to reinsurers licensed and domiciled in the United21
States. A qualified jurisdiction shall agree to share information and cooperate with22
the commissioner with respect to all certified reinsurers domiciled within that23
jurisdiction. The commissioner may not recognize a jurisdiction as a qualified24
jurisdiction if the commissioner determines that it does not adequately and promptly25
enforce final United States judgments and arbitration awards. The commissioner26
may consider additional factors in determining qualified jurisdictions.27
(b) The commissioner shall consider the list of qualified jurisdictions28
published by the NAIC through the NAIC committee process in determining29
qualified jurisdictions. If the commissioner approves a jurisdiction as qualified that30 ENROLLEDHB NO. 849
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does not appear on the list of qualified jurisdictions, the commissioner shall provide1
thoroughly documented justification in accordance with criteria to be developed2
pursuant to regulations.3
(c) The commissioner shall recognize as qualified jurisdictions those United4
States jurisdictions that meet the requirements for accreditation under the NAIC5
financial standards and accreditation program.6
(d) If a certified reinsurer's domiciliary jurisdiction ceases to be a qualified7
jurisdiction, the commissioner has the discretion to suspend the reinsurer's8
certification indefinitely, in lieu of revocation.9
(4) The commissioner shall publish a list of all certified reinsurers and their10
ratings assigned by the commissioner giving due consideration to the financial11
strength ratings assigned by rating agencies acceptable to the commissioner pursuant12
to regulation.13
(5) A certified reinsurer shall secure obligations assumed from United States14
ceding insurers under this Subsection at a level consistent with its rating, as specified15
in regulations promulgated by the commissioner.16
(a) For a domestic ceding insurer to qualify for full financial statement credit17
for reinsurance ceded to a certified reinsurer, the certified reinsurer shall maintain18
security in a form acceptable to the commissioner and consistent with the provisions19
of R.S. 22:652, or in a multi-beneficiary trust in accordance with Subsection D of20
this Section, except as otherwise provided in this Subsection.21
(b) If a certified reinsurer maintains a trust to fully secure its obligations22
subject to Subsection D of this Section, and chooses to secure its obligations incurred23
as a certified reinsurer in the form of a multi-beneficiary trust, the certified reinsurer24
shall maintain separate trust accounts for its obligations incurred under reinsurance25
agreements issued or renewed as a certified reinsurer with reduced security as26
permitted by this Subsection or comparable laws of other United States jurisdictions27
and for its obligations subject to this Subsection. It shall be a condition to the grant28
of certification pursuant to this Subsection that the certified reinsurer shall have29
bound itself, by the language of the trust and agreement with the commissioner with30 ENROLLEDHB NO. 849
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principal regulatory oversight of each such trust account, to fund, upon termination1
of any such trust account, out of the remaining surplus of such trust any deficiency2
of any other such trust account.3
(c) The minimum trusteed surplus requirements provided in Subsection D4
of this Section are not applicable with respect to a multi-beneficiary trust maintained5
by a certified reinsurer for the purpose of securing obligations incurred pursuant to6
this Subsection, except that such trust shall maintain a minimum trusteed surplus of7
ten million dollars.8
(d) With respect to obligations incurred by a certified reinsurer pursuant to9
this Subsection, if the security is insufficient, the commissioner shall reduce the10
allowable credit by an amount proportionate to the deficiency, and has the discretion11
to impose further reductions in allowable credit upon finding that there is a material12
risk that the certified reinsurer's obligations will not be paid in full when due.13
(e) For purposes of this Subsection, a certified reinsurer whose certification14
has been terminated for any reason shall be treated as a certified reinsurer required15
to secure one hundred percent of its obligations.16
(i) As used in this Subsection, the term "terminated" refers to revocation,17
suspension, voluntary surrender, and inactive status.18
(ii) If the commissioner continues to assign a higher rating as permitted by19
other provisions of this Section, this requirement does not apply to a certified20
reinsurer in inactive status or to a reinsurer whose certification has been suspended.21
(6) The commissioner may certify a reinsurer in this state based on the22
certification and assigned rating granted to that reinsurer by another NAIC accredited23
jurisdiction.24
(7) A certified reinsurer that ceases to assume new business in this state may25
request to maintain its certification in inactive status in order to continue to qualify26
for a reduction in security for its in-force business. An inactive certified reinsurer27
shall continue to comply with all applicable requirements of this Subsection, and the28
commissioner shall assign a rating that takes into account, if relevant, the reasons29
why the reinsurer is not assuming new business.30 ENROLLEDHB NO. 849
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E. F. Any credit for reinsurance shall also be allowed when the reinsurance1
is ceded to an assuming insurer not meeting the requirements of Subsection B, C, or2
D, or E of this Section, only as to the insurance of risks located in jurisdictions where3
the reinsurance is required by applicable law of that jurisdiction.4
F. G. If the assuming insurer is not authorized, or accredited, or certified to5
transact insurance or reinsurance in this state, the commissioner shall not allow the6
credit permitted by Subsection D shall not be allowed unless each of the following7
criteria are met:8
(1)(a) The assuming insurer provides the following in all reinsurance9
agreements:10
(a) (i) That in the event of the failure of the assuming insurer to perform its11
obligations under the terms of the reinsurance agreement, the assuming insurer, at12
the request of the ceding insurer, shall submit to the jurisdiction of any court of13
competent jurisdiction in any state of the United States, comply with all requirements14
necessary to give such court jurisdiction, and abide by the final decision of the15
district court or appellate court.16
(b) (ii) To designate the commissioner as its true and lawful attorney, who17
may be served any lawful service of process in any action, suit, or proceeding18
instituted by or on behalf of the ceding insurer.19
(c) The provisions of Subparagraphs (a) and (b) of this Paragraph (b) The20
provisions of Items (a)(i) and (ii) of this Paragraph shall not be construed to conflict21
with or override the obligation of the parties to a reinsurance agreement to arbitrate22
their disputes, if such an obligation is created in the reinsurance agreement.23
(2) The assuming insurer files with the department commissioner a list24
identifying its officers and directors, or similar principals, along with biographical25
information for each and provides an annual update of this information.26
(3) The assuming insurer agrees to allow the department commissioner to27
examine its books and records and to waive any protection it has under any secrecy28
laws of its domiciliary jurisdiction of the reinsurer, except that any examination shall29 ENROLLEDHB NO. 849
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only take place only upon showing of good cause by the department commissioner1
for concern about the financial soundness or solvency of the subject entity.2
G. H. The ceding insurer may take credit for the reserves on such ceded risks3
to the extent reinsured, except that:4
(1) No credit The ceding insurer shall not be taken take credit for such5
reserves unless the insurer accepting the reinsurance meets the requirements set forth6
in this Section as valid assuming insurers.7
(2) No credit The commissioner shall be not allow credit allowed to any8
ceding insurer for reinsurance, as an admitted asset or as a deduction from liability,9
unless the reinsurance shall be payable, in the event of insolvency of the ceding10
insurer, to its liquidator or receiver on the basis of the claim or claims allowed11
against the insolvent ceding insurer by any court of competent jurisdiction or any12
justice or judge thereof, or by any receiver or liquidator having authority to13
determine and allow such claims, except either where the reinsurance contract with14
the consent of the direct insured or insureds specifically provides another payee of15
such reinsurance in the event of the insolvency of the ceding insurer, or when the16
assuming insurer with the consent of the direct insured or insureds has assumed such17
policy obligations of the ceding insurer as direct obligations of the assuming insurer18
to the payees under such policies and in substitution for the obligations of the ceding19
insurer to such payees.20
(3) No The commissioner shall not permit credit for reinsurance shall be21
permitted unless the assuming insurer has been doing business in its country of22
domicile for at least three years, or is an affiliate of an insurer or reinsurer which that23
has been doing business in its country of domicile for at least three years, unless the24
department commissioner, for good cause shown, waives this three-year operating25
requirement by rule or regulation.26
I. If the assuming insurer does not meet the requirements of Subsection B or27
C of this Section, the credit permitted by Subsection D or E of this Section shall not28
be allowed unless the assuming insurer agrees in the trust agreements to each of the29
following conditions:30 ENROLLEDHB NO. 849
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(1) Notwithstanding any other provisions in the trust instrument, if the trust1
fund is inadequate because it contains an amount less than the amount required by2
Paragraph (D)(3) of this Section, or if the grantor of the trust has been declared3
insolvent or placed into receivership, rehabilitation, liquidation, or similar4
proceedings under the laws of its state or country of domicile, the trustee shall5
comply with an order of the commissioner with regulatory oversight over the trust6
or with an order of a court of competent jurisdiction directing the trustee to transfer7
to the commissioner with regulatory oversight all of the assets of the trust fund.8
(2) The commissioner with regulatory oversight, according to the laws9
relative to the liquidation of domestic insurance companies of the state in which the10
trust is domiciled, shall distribute the assets and shall value claims. Claims shall11
also be directed to the commissioner with the regulatory oversight as provided in this12
Paragraph.13
(3) If the commissioner with regulatory oversight determines that the assets14
of the trust fund or any part thereof are not necessary to satisfy the claims of the15
United States ceding insurers of the grantor of the trust, the assets or part thereof16
shall be returned by the commissioner with regulatory oversight to the trustee for17
distribution in accordance with the trust agreement.18
(4) The grantor shall waive any right otherwise available to it under United19
States law that is inconsistent with this provision.20
J. If an accredited or certified reinsurer ceases to meet the requirements for21
accreditation or certification, the commissioner may suspend or revoke the22
reinsurer's accreditation or certification.23
(1) The commissioner shall give the reinsurer notice and opportunity for a24
hearing. The suspension or revocation may not take effect until after the25
commissioner's order upon a hearing unless one of the following circumstances are26
present:27
(a) The reinsurer waives its right to a hearing.28
(b) The commissioner's order is based upon regulatory action by the29
reinsurer's domiciliary jurisdiction or upon the voluntary surrender or termination of30 ENROLLEDHB NO. 849
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the reinsurer's eligibility to transact insurance or reinsurance business in its1
domiciliary jurisdiction or in the primary certifying state of the reinsurer under2
Paragraph (E)(6) of this Section.3
(c) The commissioner finds that an emergency requires immediate action and4
a court of competent jurisdiction has not stayed the commissioner's action.5
(2) While a reinsurer's accreditation or certification is suspended, no6
reinsurance contract issued or renewed after the effective date of the suspension7
qualifies for credit except to the extent that the reinsurer's obligations under the8
contract are secured in accordance with R.S. 22:652. If a reinsurer's accreditation9
or certification is revoked, no credit for reinsurance may be granted after the10
effective date of the revocation, except to the extent that the reinsurer's obligations11
under the contract are secured in accordance with the provisions of Paragraph (E)(5)12
of this Section or in accordance with R.S. 22:652.13
K.(1) A ceding insurer shall take steps to manage its reinsurance14
recoverables proportionate to its own book of business. A domestic ceding insurer15
shall notify the commissioner within thirty days after reinsurance recoverables from16
any single assuming insurer, or group of affiliated insurers, exceeds fifty percent of17
the domestic ceding insurer's last reported surplus to policyholders, or after it is18
determined that reinsurance recoverables from any single assuming insurer, or group19
of affiliated assuming insurers, is likely to exceed this limit. The notification shall20
demonstrate that the exposure is safely managed by the domestic ceding insurer.21
(2) A ceding insurer shall take steps to diversify its reinsurance program. A22
domestic ceding insurer shall notify the commissioner within thirty days after ceding23
to any single assuming insurer, or group of affiliated assuming insurers, more than24
twenty percent of the ceding insurer's gross written premium in the prior calendar25
year, or after it has determined that the reinsurance ceded to any single assuming26
insurer, or group of affiliated assuming insurers, is likely to exceed this limit. The27
notification shall demonstrate that the exposure is safely managed by the domestic28
ceding insurer.29 ENROLLEDHB NO. 849
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§652. Reduction from liability for ceded reinsurance1
A reduction from liability for the reinsurance ceded by a domestic insurer to2
an assuming insurer that fails to satisfy the requirements of R.S. 22:651 shall be3
allowed in an amount not exceeding the liabilities carried by the ceding insurer, and4
such a reduction shall be in the amount of funds held by or on behalf of the ceding5
insurer, including funds held in trust in this state for the ceding insurer, under a6
reinsurance contract with such assuming insurer as security for the payment of7
obligations thereunder, if such security is held in this state subject to withdrawal8
solely by, and under the exclusive control of, the ceding insurer, or, in the case of a9
trust, held in a qualified United States financial institution, as defined in R.S.10
22:653(B). The security may be in the form of:11
* * *12
(2) Securities listed by the Securities Valuation Office of the National13
Association of Insurance Commissioners (NAIC) , including those deemed exempt14
from filing as defined by the Purposes and Procedures Manual of the NAIC15
Securities Valuation Office, and qualifying as admitted assets.16
(3)(a) Clean, irrevocable, unconditional letters of credit, issued or confirmed17
by a qualified United States financial institution, as defined in R.S. 22:653(A),18
effective no later than December thirty-first in respect of the year for which filing is19
being made, and in possession of or in trust for the ceding company insurer on or20
before the filing date of its annual statement.21
* * *22
SPEAKER OF THE HOUSE OF REPRESENTATI VES
PRESIDENT OF THE SENATE
GOVERNOR OF THE STATE OF LOUISIANA
APPROVED: