2016 Regular Session ENROLLED
SENATE BILL NO. 104
BY SENATOR JOHN SMITH
1 AN ACT
2 To amend and reenact R.S. 22:651(A), 652, and 661, relative to credits for reinsurance; to
3 provide for specific additional requirements relative to the valuation of assets or
4 reserve credits, for the amount and forms of security supporting reinsurance
5 arrangements, and the circumstances pursuant to which credit will be reduced or
6 eliminated; to provide specific authority to promulgate regulations that conform to
7 National Association of Insurance Commissioners model regulations relative to
8 reinsurance for certain health, life, and annuity products; and to provide for related
9 matters.
10 Be it enacted by the Legislature of Louisiana:
11 Section 1. R.S. 22:651(A), 652, and 661 are hereby amended and reenacted to read
12 as follows:
13 §651. Reinsurance credits
14 A. The commissioner shall allow credit for reinsurance to a domestic ceding
15 insurer as either an asset or deduction from liability when the assuming insurer
16 satisfies the requirements of Subsection B, C, D, E, or F of this Section.
17 Additionally, the commissioner may adopt by regulation pursuant to R.S.
18 22:661(B) specific additional requirements relating to or setting forth the
19 valuation of assets or reserve credits, the amount and forms of security
20 supporting reinsurance arrangements described in R.S. 22:661(B), or the
21 circumstances pursuant to which credit will be reduced or eliminated. The
22 commissioner shall allow credit under Subsection B or C of this Section pertaining
23 only to cessions of those kinds or classes of business that the assuming insurer is
24 licensed or otherwise permitted to write or assume in its state of domicile or, in the
25 case of a United States branch of an alien assuming insurer, in the state through
26 which it is entered and licensed to transact insurance or reinsurance. The
Page 1 of 4
Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions. SB NO. 104 ENROLLED
1 commissioner shall allow the credit for reinsurance pursuant to Subsection D of this
2 Section only if the assuming insurer satisfies the requirements of Subsection G of
3 this Section.
4 * * *
5 §652. Reduction from liability for ceded reinsurance
6 A reduction from liability for the reinsurance ceded by a domestic insurer to
7 an assuming insurer that fails to satisfy the requirements of R.S. 22:651 shall be
8 allowed in an amount not exceeding the liabilities carried by the ceding insurer. , and
9 such a Additionally, the commissioner may adopt by regulation pursuant to R.S.
10 22:661(B) specific additional requirements relating to or setting forth the
11 valuation of assets or reserve credits, the amount and forms of security
12 supporting reinsurance arrangements described in R.S. 22:661(B), or the
13 circumstances pursuant to which credit will be reduced or eliminated. The
14 reduction shall be in the amount of funds held by or on behalf of the ceding insurer,
15 including funds held in trust in this state for the ceding insurer, under a reinsurance
16 contract with such assuming insurer as security for the payment of obligations
17 thereunder, if such security is held in this state subject to withdrawal solely by, and
18 under the exclusive control of, the ceding insurer, or, in the case of a trust, held in
19 a qualified United States financial institution, as defined in R.S. 22:653(B). The
20 security may be in the form of:
21 (1) Cash.
22 (2) Securities listed by the Securities Valuation Office of the National
23 Association of Insurance Commissioners (NAIC), including those deemed exempt
24 from filing as defined by the Purposes and Procedures Manual of the NAIC
25 Securities Valuation Office, and qualifying as admitted assets.
26 (3)(a) Clean, irrevocable, unconditional letters of credit, issued or confirmed
27 by a qualified United States financial institution, as defined in R.S. 22:653(A),
28 effective no later than December thirty-first in respect of the year for which filing is
29 being made, and in possession of or in trust for the ceding insurer on or before the
30 filing date of its annual statement.
Page 2 of 4
Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions. SB NO. 104 ENROLLED
1 (b) Letters of credit meeting applicable standards of issuer acceptability as
2 of the dates of their issuance or confirmation shall, notwithstanding the issuing or
3 confirming institution's subsequent failure to meet applicable standards of issuer
4 acceptability, continue to be acceptable as security until their expiration, extension,
5 renewal, modification, or amendment, whichever occurs first.
6 (4) Any other form of security acceptable to the commissioner.
7 * * *
8 §661. Authorization
9 A. The commissioner may adopt, pursuant to the provisions of this Title and
10 the Administrative Procedure Act, R.S. 49:950 et seq., rules and regulations to
11 implement any provision of this Subpart.
12 B. The commissioner may further adopt rules and regulations applicable
13 to reinsurance arrangements described in Paragraph (1) of this Subsection.
14 (1) A regulation adopted pursuant to this Subsection may apply only to
15 reinsurance relating to any or all of the following:
16 (a) Life insurance policies with guaranteed nonlevel gross premiums or
17 guaranteed nonlevel benefits.
18 (b) Universal life insurance policies with provisions resulting in the
19 ability of a policyholder to keep a policy in force over a secondary guarantee
20 period.
21 (c) Variable annuities with guaranteed death or living benefits.
22 (d) Long-term care insurance policies.
23 (e) Such other life and health insurance and annuity products as to which
24 the National Association of Insurance Commissioners (NAIC) adopts model
25 regulatory requirements with respect to credit for reinsurance.
26 (2) A regulation adopted pursuant to Subparagraph (1)(a) or (1)(b) of
27 this Subsection may apply to any treaty containing policies issued on or after
28 January 1, 2015, or policies issued prior to January 1, 2015, if risk pertaining
29 to such pre-2015 policies is ceded in connection with the treaty, in whole or in
30 part, on or after January 1, 2015.
Page 3 of 4
Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions. SB NO. 104 ENROLLED
1 (3) A regulation adopted pursuant to this Subsection may require the
2 ceding insurer, in calculating the amounts or forms of security required to be
3 held under regulations promulgated under this authority, to use the Valuation
4 Manual adopted by the NAIC pursuant to R.S. 22:753(C), including all
5 amendments adopted by the NAIC and in effect on the date as of which the
6 calculation is made, to the extent applicable.
7 (4) A regulation adopted pursuant to this Subsection shall not apply to
8 any cession to an assuming insurer if the assuming insurer meets any of the
9 following criteria:
10 (a) Is certified in this state or certified in a minimum of five other states.
11 (b) Maintains at least two hundred fifty million dollars in capital and
12 surplus when determined in accordance with the NAIC Accounting Practices
13 and Procedures Manual, including all amendments thereto adopted by the
14 NAIC, excluding the impact of any permitted or prescribed practices, and is
15 either of the following:
16 (i) Licensed in at least twenty-six states.
17 (ii) Licensed in at least ten states and licensed or accredited in a total of
18 at least thirty-five states.
19 C. The authority to adopt regulations pursuant to Subsection B of this
20 Section shall not limit the general authority of the commissioner to adopt
21 regulations pursuant to Subsection A of this Section or any other provision of
22 this Title.
PRESIDENT OF THE SENATE
SPEAKER OF THE HOUSE OF REPRESENTATIVES
GOVERNOR OF THE STATE OF LOUISIANA
APPROVED:
Page 4 of 4
Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions.