The Office of Insurance Regulation is updating Chapter 69O-144 to conform with changes to the NAIC’s model regulations relating to credit for reinsurance and term and universal life insurance reserve financing.

 

DEPARTMENT OF FINANCIAL SERVICES

OIR – Insurance Regulation

RULE NOS.:RULE TITLES:

69O-144.001Purpose

69O-144.002Approval Procedures

69O-144.004Credit for Reinsurance: Authorized Reinsurers

69O-144.005Credit for Reinsurance

69O-144.006Credit for Reinsurance: Reinsurers Maintaining Trust Funds

69O-144.007Credit for Reinsurance from Certified Reinsurers

69O-144.009Credit for Reinsurance: Other Requirements and Provisions

69O-144.011Credit for Reinsurance from Reinsurers Domiciled in Reciprocal Jurisdictions

69O-144.012Term and Universal Life Insurance Reserve Financing

PURPOSE AND EFFECT: The Office of Insurance Regulation is updating Chapter 69O-144 to conform with changes to the NAIC’s model regulations relating to credit for reinsurance and term and universal life insurance reserve financing

SUMMARY: 69O-144.001 is repealed. 69O-144.002 is amended to contain all reinsurance applications and renewals. 69O-144.004 is created to contain requirements for authorized reinsurers. 69O-144.005 is amended to contain requirements for accredited reinsurers. 69O-144.006 is created to contain requirements for reinsurers maintaining trust funds. 69O-144.007 is amended to contain requirements for certified reinsurers. 69O-144.009 is created to cover requirements that apply to all types of credit for reinsurance. 69O-144.011 is created to contain requirements for reinsurers domiciled in reciprocal jurisdictions. 69O-144.012 is created to adopt NAIC Term and Universal Life Insurance Reserve Financing Model Regulation.

SUMMARY OF STATEMENT OF ESTIMATED REGULATORY COSTS AND LEGISLATIVE RATIFICATION:

The Agency has determined that this will not have an adverse impact on small business or likely increase directly or indirectly regulatory costs in excess of $200,000 in the aggregate within one year after the implementation of the rule. A SERC has not been prepared by the Agency.

The Agency has determined that the proposed rule is not expected to require legislative ratification based on the statement of estimated regulatory costs or if no SERC is required, the information expressly relied upon and described herein: Agency personnel familiar with the subject matter of the rule amendment have performed an economic analysis of the rule amendment that shows that the rule amendment is unlikely to have an adverse impact on the State economy in excess of the criteria established in Section 120.541(2)(a), Florida Statutes.

Any person who wishes to provide information regarding a statement of estimated regulatory costs, or provide a proposal for a lower cost regulatory alternative must do so in writing within 21 days of this notice.

RULEMAKING AUTHORITY: 624.308(1), 624.424(1), 624.610(4), (15), 625.121(3), 625.1212(5), (8) FS.

LAW IMPLEMENTED: 624.307, 624.316, 624.317, 624.318, 624.321, 624.624, 624.34, 624.401, 624.404, 624.407, 624.4085, 624.413, 624.424, 624.501, 624.5091, 624.610, 625.012, 625.121, 625.1212, 625.151, 626.9641, 628.051, 628.061, 628.801, 629.081, 631.051, 631.071, 631.081 FS.

IF REQUESTED WITHIN 21 DAYS OF THE DATE OF THIS NOTICE, A HEARING WILL BE SCHEDULED AND ANNOUNCED IN THE FAR.

THE PERSON TO BE CONTACTED REGARDING THE PROPOSED RULE IS: Michael Lawrence, Jr., Chief Legal Counsel, [e-mail], [phone].

 

THE FULL TEXT OF THE PROPOSED RULE IS:

 

69O-144.001 Purpose.

Rulemaking Authority 624.308 FS. Law Implemented 624.307(1), 624.610 FS. History–New 1-30-91, Formerly 4-108.001, Amended 5-12-94, Formerly 4-144-001, Repealed __________.

 

Substantial rewording of rule 69O-144.002, F.A.C., follows. See Florida Administrative Code for present text.

69O-144.002 Approval Reinsurance Application Procedures. 

(1) Filing requirements and costs.

(a) Insurers making the required filings under the provisions of section 624.610, F.S., and the rules of this chapter shall submit such filings electronically to the Office at www.floir.com/iportal.

1. Application filings shall be submitted to the Office’s Company Admissions System, “iApply.”

2. Other annual, quarterly, or requested filings shall be submitted to the Office’s Regulatory Electronic Filing System, “REFS.”

(b) The costs and expenses incurred by the Office to review an application for, and subsequent reviews of accredited reinsurer status under section 624.610, F.S., and the rules of this chapter shall be charged to and collected from the applicant assuming insurer. Costs are defined as the sum of the time spent by Office personnel calculated at payroll rates inclusive of personnel benefit expenses and overhead expenses for each Office employee, and other Office expenses related to processing the application; or, the actual charges incurred by a third party retained to assist in the Office’s review of the application.

1. Should it become necessary to hire an outside consultant in the process of the review, the insurer shall be contacted in advance to consent to this and agree to the cost. In the event that the Office and the insurer agree to utilize the services of an outside consultant to conduct the review, the following applies:

a. The acceptability of a person or firm to the Office shall be determined based on consideration of the person or firm’s professional competence, objectivity, and cost.

b. Consent of the insurer shall be demonstrated by written confirmation from an officer of the insurer agreeing to an examination or the specific services to be performed by the person or firm, and acknowledgment that the person or firm is acceptable to the insurer and that the cost will be paid by the applicant.

c. All payments for services under this provision shall be made directly to the person or firm in accordance with the rates and terms agreed to by the Office, the insurer, and the person or firm performing the examination.

(c) Failure to pay the assessed costs under paragraph (b) may be grounds for revocation of the insurer’s application or accreditation, pursuant to section 624.610, F.S.

(2)(a) An assuming insurer seeking accredited reinsurer status in this state, pursuant to section 624.610(3), F.S. and rule 69O-144.005, F.A.C., shall file an application in compliance with the directions in Form OIR-C1-923, “Application for Accredited Reinsurer Status,” effective 9/21, which is hereby incorporated by reference and available at www.flrules.org/XXXXX. The insurer shall further submit, or otherwise comply with, the following:

1. Form OIR-A1-2116, “Form C Summary of Changes to Registration Statement,” effective 9/21, is hereby incorporated by reference and available at www.flrules.org/XXXXX;

2. Form OIR-C1-905, “Instructions for Furnishing Background Investigative Reports,” effective 9/21, is hereby incorporated by reference and available at www.flrules.org/XXXXX;

3. Form OIR-C1-938, “Fingerprint Payment and Submission Procedure,” effective 6/20, is hereby incorporated by reference and available at www.flrules.org/XXXXX;

4. Form OIR-C1-1423, “Uniform Certificate of Authority Application (UCAA) Biographical Affidavit,” effective 9/21, is hereby incorporated by reference and available at www.flrules.org/XXXXX;

5. Form OIR-C1-1464, “Florida Certificate of Assuming Insurer,” effective 9/21, which is hereby incorporated by reference and available at www.flrules.org/XXXXX, as required by rule 69O-144.005(2)(a), F.A.C.;

6. Form OIR-C1-1524, “Uniform Certificate of Authority Application (UCAA) Uniform Consent to Service of Process,” effective 12/19, is hereby incorporated by reference and available at www.flrules.org/XXXXX;

7. Form OIR-D0-516, “Form B Insurance Holding Company System Registration Statement,” effective 9/21, is hereby incorporated by reference and available at www.flrules.org/XXXXX; and,

8. Form OIR-C1-2221, “Management Information Form,” effective 6/20, is hereby incorporated by reference and available at www.flrules.org/XXXXX.

(b) An assuming insurer seeking to maintain its accredited reinsurer status in this state, pursuant to rule 69O-144.005(2)(c), F.A.C., shall submit the following:

1. Annually, a copy of its annual statements prepared in accordance with the National Association of Insurance Commissioners (NAIC) manuals adopted in rule 69O-137.001, F.A.C., as filed with the insurance regulator of the assuming insurer’s state of domicile or, in the case of a U.S. branch of an alien assuming insurer, as filed with the state through which it is entered and in which it is licensed to transact insurance or reinsurance;

2. If quarterly statements are required by the assuming insurer’s state of domicile, or if quarterly statements are not required by the state of domicile but the Office makes a written request of them from the assuming insurer: then quarterly, a copy of the assuming insurer’s quarterly statements prepared in accordance with the NAIC manuals adopted in rule 69O-137.001, F.A.C., with the insurance regulator of the assuming insurer’s state of domicile or, in the case of a U.S. branch of an alien assuming insurer, with the state through which it is entered and in which it is licensed to transact insurance or reinsurance; and,

3. Annually, a copy of the assuming insurer’s most recent audited financial statement.

(3)(a) An assuming insurer seeking trusteed reinsurer status in this state, pursuant to section 624.610(3)(c), F.S. and rule 69O-144.006(1)(a)1., F.A.C., shall file an application in compliance with the directions in Form OIR-C1-1466, “Application for Trusteed Reinsurer Status,” effective 9/21, which is hereby incorporated by reference and available at www.flrules.org/XXXXX. The insurer shall further submit, or otherwise comply with, the following:

1. A copy of its annual statement with information substantially the same as that required to be reported in the NAIC Annual Statement form by authorized insurers, as incorporated by reference in rule 69O-137.001, F.A.C., in the same format required by such form and including all supporting documents;

2. A certified copy of the trust agreement and any trust amendments, including an approval from the insurance regulator of the state in which the trust is domiciled or of the insurance regulator of another state who, pursuant to the terms of the trust instrument, has accepted principal regulatory oversight of the trust;

3. A statement from the trustee of the trust to the insurance regulator having regulatory oversight of the trust certifying the balance of the trust and the trust’s investments at the preceding year end with certification that the trust will not expire prior to the following December 31;

4. Form OIR-C1-1423, incorporated by reference in subsection (1);

5. Form OIR-C1-1469, “Certificate of Assuming Insurer to Submit to Examination and Bear the Cost of Examination,” effective 9/21, is hereby incorporated by reference and available at www.flrules.org/XXXXX;

6. Form OIR-C1-1524, incorporated by reference in subsection (1);

7. Form OIR-C1-2221, incorporated by reference in subsection (1); and,

8. Any other information required by section 624.610(3), F.S., or rule 69O-144.006(1), F.A.C.

(b) An assuming insurer seeking to maintain its trusteed reinsurer status in this state, pursuant to section 624.610(3)(c), F.S., and rule 69O-144.006(1)(a)2., F.A.C., shall:

1. File annually with the Office substantially the same information as that required to be reported on the NAIC Annual Statement form by authorized insurers, which is incorporated in rule 69O-137.001, F.A.C., to enable the Office to determine the sufficiency of the trust fund; and,

2. Comply with the ongoing requirements in rule 69O-144.006(1), F.A.C.

(4)(a) An assuming insurer seeking certified reinsurer status in this state, pursuant to section 624.610(3), F.S. and rule 69O-144.007(8)(a), F.A.C., shall file an application in compliance with the directions in Form OIR-C1-996, “Application for Certified Reinsurer Status,” effective 9/21, which is hereby incorporated by reference and available at www.flrules.org/XXXXX. The insurer shall further submit, or otherwise comply with, the following:

1. Audited annual financial statements for the last two (2) years, as filed with the assuming insurer’s domiciliary jurisdiction;

2. The report(s) of the independent auditor for the financial statements of the assuming insurer’s insurance enterprise from the last two (2) years, as filed with the assuming insurer’s domiciliary jurisdiction;

3. The most recent actuarial opinion as filed with the assuming insurer’s domiciliary jurisdiction;

4. Form OIR-C1-2116, “Certificate of Certified Reinsurer,” effective 9/21, which is hereby incorporated by reference and available at www.flrules.org/XXXXX, as required by rule 69O-144.007(8)(a)4., F.A.C.;

5. Form OIR-C1-2117, “NAIC Form CR-F” (for property/casualty), effective 9/21, which is hereby incorporated by reference and available at www.flrules.org/XXXXX, or Form OIR-C1-2118, “NAIC Form CR-S” (for life and health), effective 9/21, which is hereby incorporated by reference and available at https://www.flrules.org/XXXXX;

6. A list of all disputed or overdue recoverables due to or claimed by ceding insurers, whether or not the claims are in litigation or arbitration;

7. A certification from the domiciliary jurisdiction of the assuming insurer that the insurer is in good standing with that jurisdiction and that the insurer maintains capital in excess of the jurisdiction’s highest regulatory action level;

8. Form OIR-C1-1416, “Uniform Certificate of Authority Application (UCAA) Lines of Insurance,” effective 9/21, which is hereby incorporated by reference and available at www.flrules.org/XXXXX;

9. Form OIR-C1-1524, incorporated by reference in subsection (1);

10. Form OIR-C1-2221, incorporated by reference in subsection (1); and,

11. Any other information that the Office reasonably requires to evaluate the application, including any information required by rule 69O-144.007(8)(a), F.A.C.

(b) An assuming insurer seeking to maintain its certified reinsurer status in this state, pursuant to section 624.610(3), F.S., and rule 69O-144.007(8)(h), F.A.C., shall annually submit the following, no later than

July 1:

1. Form OIR-C1-2117, “NAIC Form CR-F” (for property/casualty), or Form OIR-C1-2118, “NAIC Form CR-S” (for life and health), both of which are incorporated in paragraph (3)(a) of this rule;

2. The assuming insurer’s most recent audited financial statements, as filed with its domiciliary jurisdiction;

3. The report(s) of the independent auditor for the most recent financial statements of the assuming insurer’s insurance enterprise, as filed with the assuming insurer’s domiciliary jurisdiction;

4. The most recent actuarial opinion as filed with the assuming insurer’s domiciliary jurisdiction;

5. A statement from the assuming insurer’s domiciliary jurisdiction that the assuming insurer is in good standing and maintains capital in excess of the jurisdiction’s highest regulatory action level;

6. A statement certifying that there has been no change in the provisions of the assuming insurer’s domiciliary license or any of its financial strength ratings, or a statement describing such changes and the reasons therefore;

7. Any change in the assuming insurer’s directors and officers;

8. An updated list of all disputed and overdue reinsurance claims regarding reinsurance assumed from ceding insurers; and,

9. Any other information that the Office reasonably requires to evaluate the assuming insurer’s status, including any information required by rule 69O-144.007(8)(h), F.A.C.

(c) If an NAIC accredited jurisdiction has determined that a certified reinsurer has met the conditions in that jurisdiction to become a certified reinsurer, the Office may accept documentation filed with that NAIC accredited jurisdiction or with the NAIC to satisfy the certified reinsurer’s status in this state.

(5)(a) An assuming insurer seeking reciprocal jurisdiction reinsurer status in this state, pursuant to section 624.610(4), F.S., and rule 69O-144.011(3)(e), F.A.C., shall, on behalf of itself and any legal predecessors, file an application in compliance with the directions in Form OIR-C1-518, “Application for Reciprocal Jurisdiction Reinsurer Status,” effective 9/21, which is hereby incorporated by reference and available at www.flrules.org/XXXXX. The insurer shall further submit, or otherwise comply with, the following:

1. Form OIR-C1-517, “Certificate of Reinsurer Domiciled in Reciprocal Jurisdiction,” effective 9/21, which is hereby incorporated by reference and available at www.flrules.org/XXXXX, as required by rule 69O-144.011(3)(d), F.A.C.;

2. Written confirmation from the assuming insurer’s reciprocal jurisdiction that as of the preceding December 31 or as of the most recent date otherwise statutorily reported to the jurisdiction, the assuming insurer has complied with the requirements set forth in rules 69O-144.011(3)(b) and (3)(c), F.A.C.;

3. For the two (2) years preceding entry into the reinsurance agreement, the assuming insurer’s annual audited financial statements, in accordance with the applicable law of the assuming insurer’s reciprocal jurisdiction, including the external audit report; 

4. For the two (2) years preceding entry into the reinsurance agreement, the solvency and financial condition report or actuarial opinion, if filed with the assuming insurer’s supervisor;

5. Prior to entry into the reinsurance agreement, a current list of all disputed and overdue reinsurance claims outstanding for 90 days or more, regarding reinsurance assumed from ceding insurers domiciled in the United States;

6. Prior to entry into the reinsurance agreement, information regarding the assuming insurer’s assumed reinsurance by ceding insurer, ceded reinsurance by the assuming insurer, and reinsurance recoverable on paid and unpaid losses by the assuming insurer to allow for the evaluation of the criteria set forth in rule 69O-144.011(3)(f), F.A.C.;

7. Form OIR-C1-1524, incorporated by reference in subsection (1);

8. Form OIR-C1-2221, incorporated by reference in subsection (1); and,

9. Any other information required or requested by the Office, pursuant to section 624.610(4), F.S., or rule 69O-144.011(3), F.A.C.

(b) An assuming insurer seeking to maintain its reciprocal jurisdiction reinsurer status in this state, pursuant to section 624.610(4), F.S., and rule 69O-144.011(3)(g), F.A.C., shall annually submit the following, no later than each July 1:

1. Written confirmation from the assuming insurer’s reciprocal jurisdiction that as of the preceding December 31 or as of the annual date otherwise statutorily reported to the jurisdiction, the assuming insurer complies with the requirements set forth in rules 69O-144.011(3)(b) and (3)(c), F.A.C.;

2. The assuming insurer’s most recent audited financial statements, in accordance with the applicable law of the assuming insurer’s reciprocal jurisdiction, including the external audit report;

3. The assuming insurer’s most recent solvency and financial condition report or actuarial opinion, if filed with its supervisor;

4. An updated list of all disputed and overdue reinsurance claims outstanding for 90 days or more, regarding reinsurance assumed from ceding insurers domiciled in the United States;

5. Information regarding the assuming insurer’s assumed reinsurance by ceding insurer, ceded reinsurance by the assuming insurer, and reinsurance recoverable on paid and unpaid losses by the assuming insurer, to allow for the evaluation of the criteria set forth in rule 69O-144.011(3)(f), F.A.C.; and,

6. Any other information required or requested by the Office, pursuant to section 624.610(4), F.S., or rule 69O-144.011(3)(g), F.A.C.

(c) If an NAIC accredited jurisdiction has determined that a reciprocal jurisdiction reinsurer has met the conditions in that jurisdiction to become a reciprocal jurisdiction reinsurer, the Office may accept documentation filed with that NAIC accredited jurisdiction or with the NAIC to satisfy the reciprocal jurisdiction reinsurer’s status in this state.

(d) This subsection does not limit the authority of the Office to request additional information pertaining to the reinsurance agreement, or any subsequent reinsurance agreement entered into by the assuming insurer and Florida ceding insurers, under section 624.610(4)(e), F.S.

(6) An assuming insurer meeting any other eligibility criteria under the rules of this chapter or under section 624.610, F.S., shall make the necessary and applicable filings with the Office.

Rulemaking Authority 624.308, 624.610(15)(14) FS. Law Implemented 624.307(1), (2), (3), (5), 624.316, 624.317, 624.318, 624.321, 624.324, 624.34, 624.401, 624.404, 624.407, 624.413, 624.424, 624.501(20), 624.5091, 624.610, 628.051, 628.061, 628.801, 629.081 FS. History–New 1-30-91, Formerly 4-108.002, Amended 5-12-94, 10-13-02, Formerly 4-144-002, Amended 9-14-06, __________.

 

69O-144.004 Credit for Reinsurance: Authorized Reinsurers.

(1) Credit for reinsurance by a domestic insurer shall be allowed when the reinsurance is ceded to an assuming insurer that is authorized to transact that line of insurance or reinsurance both in this state and its state, place, or country of domicile as of the ceding insurer’s statutory financial statement, pursuant to section 624.610(3)(a), F.S.

(2) An assuming insurer seeking to apply for and/or maintain authorized reinsurer status in this state shall comply with the applicable portions of this chapter and the Florida Insurance Code.

Rulemaking Authority 624.308(1), 624.610(15) FS. Law Implemented 624.307(1), 624.610 FS. History–New __________.

 

Substantial rewording of rule 69O-144.005 follows. See Florida Administrative Code for present text.

69O-144.005 Credit for Reinsurance: Accredited Reinsurers.

(1) Credit for reinsurance by a domestic insurer shall be allowed when the reinsurance is ceded to an assuming insurer that is accredited as a reinsurer in this state pursuant to section 624.610(3)(b), F.S., and the rules of this chapter, as of any date on which statutory financial statement credit for reinsurance is claimed.

(2) Application and documentation requirements. An assuming insurer seeking accredited reinsurer status in this state pursuant to section 624.610(3)(b), F.S., must file an application with the Office in accordance with rule 69O-144.002(2)(a), F.A.C. The application must include documentation that the assuming insurer:

(a) Submits to this state’s jurisdiction and to this state’s authority to examine its books and records, via a properly executed Form OIR-C1-1464, “Florida Certificate of Assuming Insurer,” which is incorporated by reference in rule 144.002(2)(a)5.;

(b) Is licensed or authorized to transact insurance or reinsurance in at least one state; or in the case of a U.S. branch of an alien assuming insurer, is entered through at least one state, or is licensed or authorized to transact insurance or reinsurance in at least one state; and,

(c) Maintains a surplus as regards policyholders in an amount not less than $20 million.

(3) Pursuant to section 624.610(3)(b), F.S., an assuming reinsurer that meets the requirements of subsection (2) of this rule shall be considered accredited if either:

(a) The Office approves the assuming insurer’s accreditation application; or

(b) The Office does not deny the assuming insurer’s accreditation application within ninety (90) days of the application date.

(4) Accreditation renewal requirements. An assuming insurer seeking to maintain its accreditation in this state must file the appropriate documentation with the Office, in accordance with rule 69O-144.002(2)(b), F.A.C.

(5) The Office shall follow the procedures and standards in section 624.610(3)(b)2., F.S., when determining whether to approve or deny the assuming insurer’s application for accreditation, and when determining whether to maintain or revoke an accredited reinsurer’s accreditation.

Rulemaking Authority 624.308(1), 624.610(4), (15) FS. Law Implemented 624.307(1), 624.610 FS. History–New 1-30-91, Formerly 4-108.005, Amended 12-25-97, 10-13-02, Formerly 4-144-005, Amended 9-14-06, 7-28-15, __________.

 

69O-144.006 Credit for Reinsurance: Reinsurers Maintaining Trust Funds.

(1) Trusteed Reinsurers. Pursuant to section 624.610(3)(c)1., F.S., the Office shall allow credit for reinsurance ceded by a domestic insurer to an assuming insurer which, as of any date on which statutory financial statement credit for reinsurance is claimed, and thereafter for so long as credit for reinsurance is claimed, maintains a trust fund in an amount prescribed below in a qualified financial institution as defined in section 624.610(6)(b), F.S., for the payment of the valid claims of its U.S. domiciled ceding insurers, their assigns and successors in interest. Such reinsurers shall be referred to as “trusteed reinsurers” if approved by the Office.

(a)1. An assuming insurer seeking trusteed reinsurer status in this state, pursuant to section 624.610(3)(c), F.S., and this rule, shall file an application under the standards provided in rule 69O-144.002(3)(a), F.A.C., and in this rule.

2. An assuming insurer seeking to maintain its trusteed reinsurer status in this state shall make the additional filings required by rule 69O-144.002(3)(b), F.A.C., and shall continue to meet the applicable requirements of this rule.

(b) The following requirements apply to the following categories of assuming insurer:

1.a. The trust fund for a single assuming insurer shall consist of funds in trust in an amount not less than the assuming insurer’s liabilities attributable to reinsurance ceded by U.S. domiciled insurers; and,

b. The assuming insurer shall maintain a trusteed surplus of not less than $20 million, except as provided in sub-subparagraph (1)(b)1.c. of this subsection.

c. At any time after the assuming insurer has permanently discontinued underwriting new business secured by the trust for at least three full years, the insurance regulator with principal regulatory oversight of the trust may authorize a reduction in the required trusteed surplus, but only after a finding, based on an assessment of the risk, that the new required surplus level is adequate for the protection of U.S. ceding insurers, policyholders and claimants in light of reasonably foreseeable adverse loss development. The risk assessment may involve an actuarial review, including an independent analysis of reserves and cash flows, and shall consider all material risk factors, including when applicable the lines of business involved, the stability of the incurred loss estimates and the effect of the surplus requirements on the assuming insurer’s liquidity or solvency. The minimum required trusteed surplus may not be reduced to an amount less than thirty percent (30%) of the assuming insurer's liabilities attributable to reinsurance ceded by U.S. ceding insurers covered by the trust.

2.a. In the case of a group including incorporated and individual unincorporated underwriters, the trust fund shall consist of:

(I) For reinsurance ceded under reinsurance agreements with an inception, amendment, or renewal date on or after August 1, 1995, a trusteed account in an amount not less than the group’s several liabilities attributable to business ceded by United States domiciled ceding insurers to any member of the group;

(II) For reinsurance ceded under reinsurance agreements with an inception date on or before July 31, 1995, and not amended or renewed after that date, notwithstanding the other provisions of this rule, funds in trust in an amount not less than the group’s several insurance and reinsurance liabilities attributable to business written in the United States; and,

(III) In addition to these trusts, the group shall maintain a trusteed surplus of which $100 million shall be held jointly for the benefit of the U.S. domiciled ceding insurers of any member of the group for all the years of account.

b.(I) The incorporated members of the group shall not be engaged in any business other than underwriting as a member of the group and shall be subject to the same level of regulation and solvency control by the group’s domiciliary regulator as are the unincorporated members.

(II) The group shall, within ninety (90) days after its financial statements are due to be filed with the group’s domiciliary regulator, provide to the Office:

(A) An annual certification by the group’s domiciliary regulator of the solvency of each underwriter member of the group; or

(B) If a certification is unavailable, a financial statement, prepared by independent public accountants, of each underwriter member of the group.

(c)1.a. Credit for reinsurance shall not be granted unless the form of the trust and any amendments to the trust have been approved by either the insurance regulator of the state where the trust is domiciled or the insurance regulator of another state who, pursuant to the terms of the trust instrument, has accepted responsibility for regulatory oversight of the trust.

b. The form of the trust and any trust amendments also shall be filed with the insurance regulator of every state in which the ceding insurer beneficiaries of the trust are domiciled.

c. The trust instrument shall provide that:

(I) Contested claims shall be valid and enforceable out of funds in trust to the extent remaining unsatisfied thirty (30) days after entry of the final order of any court of competent jurisdiction in the United States;

(II) Legal title to the assets of the trust shall be vested in the trustee for the benefit of the grantor’s U.S. ceding insurers, their assigns and successors in interest;

(III) The trust shall be subject to examination as determined by the Office;

(IV) The trust shall remain in effect for as long as the assuming insurer, or any member or former member of a group of insurers, shall have outstanding obligations under reinsurance agreements subject to the trust; and,

(V) No later than February 28 of each year, the trustee of the trust shall report to the Office in writing setting forth the balance in the trust and listing the trust’s investments at the preceding year-end, and shall certify the date of termination of the trust, if so planned, or certify that the trust shall not expire prior to the following December 31.

(VI) Any amendment to the trust shall be filed with the Office no later than thirty (30) days after approval of the amendment by the insurance regulator with principal regulatory oversight of the trust.

2.a. Notwithstanding any other provisions in the trust instrument, if the trust fund is inadequate because it contains an amount less than the amount required by this subsection, or if the grantor of the trust has been declared insolvent or placed into receivership, rehabilitation, liquidation, or similar proceedings under the laws of its state or country of domicile, the trustee shall comply with an order of the insurance regulator with regulatory oversight over the trust or with an order of a court of competent jurisdiction directing the trustee to transfer to the insurance regulator with regulatory oversight over the trust or other designated receiver all of the assets of the trust fund.

b. The assets shall be distributed by and claims shall be filed with and valued by the insurance regulator with regulatory oversight over the trust in accordance with the laws of the state in which the trust is domiciled applicable to the liquidation of domestic insurance companies.

c. If the insurance regulator with regulatory oversight over the trust determines that the assets of the trust fund or any part thereof are not necessary to satisfy the claims of the U.S. beneficiaries of the trust, the insurance regulator with regulatory oversight over the trust shall return the assets, or any part thereof, to the trustee for distribution in accordance with the trust agreement.

d. The grantor shall waive any right otherwise available to it under U.S. law that is inconsistent with this provision.

(d) For purposes of this rule, the term “liabilities” shall mean the assuming insurer’s gross liabilities attributable to reinsurance ceded by U.S. domiciled insurers that are not otherwise secured by acceptable means, and, shall include:

1. For business ceded by domestic insurers authorized to write accident and health, and property and casualty insurance:

a. Losses and allocated loss expenses paid by the ceding insurer, recoverable from the assuming insurer;

b. Reserves for losses reported and outstanding;

c. Reserves for losses incurred but not reported;

d. Reserves for allocated loss expenses; and,

e. Unearned premiums.

2. For business ceded by domestic insurers authorized to write life, health and annuity insurance:

a. Aggregate reserves for life policies and contracts net of policy loans and net due and deferred premiums;

b. Aggregate reserves for accident and health policies;

c. Deposit funds and other liabilities without life or disability contingencies; and,

d. Liabilities for policy and contract claims.

(e) Assets deposited in the trust and the trusteed surplus of a single assuming insurer shall consist of assets of a quality and limitation substantially similar to that required in part II of chapter 625, F.S., and shall be valued according to their fair market value.

(f) Assets deposited in the trust and the trusteed surplus of a group including incorporated and individual unincorporated underwriters established to meet the requirements of section 624.610(3)(c)3.b., F.S., shall be of the type and subject to limitations of the following:

1. Assets deposited in the trusts established pursuant to section 624.610(3)(c)3.b., F.S., and this rule shall be valued according to their fair market value and shall consist only of cash in U.S. dollars, certificates of deposit issued by a U.S. financial institution as defined in section 624.610(6)(a), F.S., clean irrevocable, unconditional and “evergreen” letters of credit issued or confirmed by a qualified U.S. financial institution, as defined in section 624.610(6)(a), F.S., and investments of the type specified in this subsection.

2. Investments in or issued by an entity controlling, controlled by or under common control with either the grantor or beneficiary of the trust shall not exceed five percent (5%) of total investments.

3. No more than ten percent (10%) of the total of the investments in the trust may be securities denominated in foreign currencies. For purposes of applying the preceding sentence, a depository receipt denominated in U.S. dollars and representing rights conferred by a foreign security shall be classified as a foreign investment denominated in a foreign currency.

4. No more than twenty percent (20%) of the total of the investments in the trust may be foreign investments authorized under sub-sub-subparagraph (1)(f)5.a.(V), sub-subparagraph (1)(f)5.c., sub-sub-subparagraph (1)(f)5.f.(II) or sub-subparagraph (1)(f)5.g. of this subsection.

5. The assets of a trust established to satisfy the requirements of subsection (1) shall be invested only as follows:

a. Government obligations that are not in default as to principal or interest, that are valid and legally authorized and that are issued, assumed or guaranteed by:

(I) The United States or by any agency or instrumentality of the United States;

(II) A state of the United States;

(III) A territory, possession or other governmental unit of the United States;

(IV) An agency or instrumentality of a governmental unit referred to in sub-subparagraphs (1)(f)5.(I) and (II) of this paragraph, if the obligations shall be by law (statutory or otherwise) payable, as to both principal and interest, from taxes levied or by law required to be levied or from adequate special revenues pledged or otherwise appropriated or by law required to be provided for making these payments, but shall not be obligations eligible for investment under this paragraph if payable solely out of special assessments on properties benefited by local improvements; or

(V) The government of any other country that is a member of the Organization for Economic Cooperation and Development and whose government obligations are rated A or higher, or the equivalent, by a rating agency recognized by the Securities Valuation Office of the NAIC;

b. Obligations that are issued in the United States, or that are dollar denominated and issued in a non-U.S. market, by a solvent U.S. institution (other than an insurance company) or that are assumed or guaranteed by a solvent U.S. institution (other than an insurance company) and that are not in default as to principal or interest if the obligations:

(I) Are rated A or higher (or the equivalent) by a securities rating agency recognized by the Securities Valuation Office of the NAIC, or if not so rated, are similar in structure and other material respects to other obligations of the same institution that are so rated;

(II) Are insured by at least one authorized insurer (other than the investing insurer or a parent, subsidiary or affiliate of the investing insurer) licensed to insure obligations in this state and, after considering the insurance, are rated AAA (or the equivalent) by a securities rating agency recognized by the Securities Valuation Office of the NAIC; or

(III) Have been designated as Class One or Class Two by the Securities Valuation Office of the NAIC;

c. Obligations issued, assumed or guaranteed by a solvent non-U.S. institution chartered in a country that is a member of the Organization for Economic Cooperation and Development or obligations of U.S. corporations issued in a non-U.S. currency, provided that in either case the obligations are rated A or higher, or the equivalent, by a rating agency recognized by the Securities Valuation Office of the NAIC;

d. An investment made pursuant to the provisions of sub-subparagraphs (1)(f)5.a., b. or c. of this subsection, shall be subject to the following additional limitations:

(I) An investment in or loan upon the obligations of an institution other than an institution that issues mortgage-related securities shall not exceed five percent (5%) of the assets of the trust;

(II) An investment in any one mortgage-related security shall not exceed five percent (5%) of the assets of the trust;

(III) The aggregate total investment in mortgage-related securities shall not exceed twenty-five percent (25%) of the assets of the trust; and,

(IV) Preferred or guaranteed shares issued or guaranteed by a solvent U.S. institution are permissible investments if all of the institution’s obligations are eligible as investments under sub-subparagraphs b.(I) and b.(II) of this subsection, but shall not exceed two percent (2%) of the assets of the trust.

e. As used in this chapter:

(I) “Mortgage-related security” means an obligation that is rated AA or higher (or the equivalent) by a securities rating agency recognized by the Securities Valuation Office of the NAIC and that either:

(A) Represents ownership of one or more promissory notes or certificates of interest or participation in the notes (including any rights designed to assure servicing of, or the receipt or timeliness of receipt by the holders of the notes, certificates, or participation of amounts payable under, the notes, certificates or participation), that:

(i) Are directly secured by a first lien on a single parcel of real estate, including stock allocated to a dwelling unit in a residential cooperative housing corporation, upon which is located a dwelling or mixed residential and commercial structure, or on a residential manufactured home as defined in 42 U.S.C. section 5402(6), whether the manufactured home is considered real or personal property under the laws of the state in which it is located; and,

(ii) Were originated by a savings and loan association, savings bank, commercial bank, credit union, insurance company, or similar institution that is supervised and examined by a federal or state housing authority, or by a mortgagee approved by the Secretary of Housing and Urban Development pursuant to 12 U.S.C. sections 1709 and 1715b, or, where the notes involve a lien on the manufactured home, by an institution or by a financial institution approved for insurance by the Secretary of Housing and Urban Development pursuant to 12 U.S.C. section 1703; or

(B) Is secured by one or more promissory notes or certificates of deposit or participations in the notes (with or without recourse to the insurer of the notes) and, by its terms, provides for payments of principal in relation to payments, or reasonable projections of payments, or notes meeting the requirements of sub-sub-sub-subparagraphs (1)(f)5.e.(A)(i) and (A)(ii) of this subsection;

(II) “Promissory note,” when used in connection with a manufactured home, shall also include a loan, advance or credit sale as evidenced by a retail installment sales contract or other instrument.

f. Equity interests:

(I) Investments in common shares or partnership interests of a solvent U.S. institution are permissible if:

(A) Its obligations and preferred shares, if any, are eligible as investments under this subsection; and,

(B) The equity interests of the institution (except an insurance company) are registered on a national securities exchange as provided in the Securities Exchange Act of 1934, 15 U.S.C. sections 78a to 78kk or otherwise registered pursuant to that Act, and if otherwise registered, price quotations for them are furnished through a nationwide automated quotations system approved by the National Association of Securities Dealers, Inc. A trust shall not invest in equity interests under this paragraph an amount exceeding one percent (1%) of the assets of the trust even though the equity interests are not so registered and are not issued by an insurance company;

(II) Investments in common shares of a solvent institution organized under the laws of a country that is a member of the Organization for Economic Cooperation and Development, if:

(A) All its obligations are rated A or higher, or the equivalent, by a rating agency recognized by the Securities Valuation Office of the NAIC; and,

(B) The equity interests of the institution are registered on a securities exchange regulated by the government of a country that is a member of the Organization for Economic Cooperation and Development;

(III) An investment in or loan upon any one institution’s outstanding equity interests shall not exceed one percent (1%) of the assets of the trust. The cost of an investment in equity interests made pursuant to this paragraph, when added to the aggregate cost of other investments in equity interests then held pursuant to this paragraph, shall not exceed ten percent (10%) of the assets in the trust;

g. Obligations issued, assumed or guaranteed by a multinational development bank, provided the obligations are rated A or higher, or the equivalent, by a rating agency recognized by the Securities Valuation Office of the NAIC.

h. Letters of Credit.

(I) In order for a letter of credit to qualify in funding the trust, the trustee shall have the right and the obligation pursuant to the deed of trust or some other binding agreement (as duly approved by the Office) to immediately draw down the full amount of the letter of credit and hold the proceeds in trust for the beneficiaries of the trust if the letter of credit will otherwise expire without being renewed or replaced.

(II) The trust agreement shall provide that the trustee shall be liable for its negligence, willful misconduct or lack of good faith. The failure of the trustee to draw against the letter of credit in circumstances where such draw would be required shall be deemed to be negligence and willful misconduct.

(2) Certified reinsurers involved with trust funds should refer to rule 69O-144.007(10), F.A.C. Insurers dealing with trust funds that do not meet the requirements of this rule should refer to rule 69O-144.009, F.A.C.

Rulemaking Authority 624.308(1), 624.610(4), (15) FS. Law Implemented 624.307(1), 624.610 FS. History–New __________.

 

69O-144.007 Credit for Reinsurance from Certified Reinsurers.

(1) Purpose. Section 624.610(3)(e), F.S., gives the Office the option to allow credit for reinsurance without full collateral for transactions involving assuming insurers not meeting the requirements of section 624.610(3)(a), (b), (c), or (d), F.S. These rules implement that subsection. This rule does not apply to assuming insurers that meet the requirements of section 624.610(3)(a), (b), (c), or (d), F.S. This rule is not an attempt to assert extra-territorial jurisdiction. Insurers that write in states other than Florida will need to comply with the laws of those states.

(2) Definitions. As used in this rule the following terms have the following meanings:

(a) “Ceding insurer” means a domestic insurer, as defined by section 624.06(1), F.S.

(a)(b) “Certified reinsurer” means an assuming insurer that may not meet the requirements of section 624.610(3)(a), (b), (c), or (d), F.S., and that has been determined by the Office by order to have met the requirements set forth in subsections (7) and (8) of this rule.

(b)(c) “Qualified jurisdiction” means a jurisdiction which has met the requirements set forth in subsection (9) of this rule.

(3) Credit for reinsurance under this rule section shall apply only to reinsurance contracts entered into renewed or amended on or after the effective date of the certification of the assuming insurer, provided that the certified reinsurer holds surplus in excess of $250 million and maintains a secure financial strength rating from at least two of the rating agencies indicated in paragraphs (3)(a) through (e), of this subsection. Due consideration shall be given to the group rating where appropriate. The credit is subject to the limitations set forth in this rule. As provided in section 624.610(3)(e), F.S., acceptable the rating agencies are:

(a) through (c) No change.

(d) A.M. Best Company; and,

(e) Demotech; and, .

(f) Any other rating agency deemed acceptable by order of the Office.  Copies of the orders issued by the Office deeming rating agencies as having experience and expertise in rating insurers doing business in Florida pursuant to section 624.610(3)(e), Florida Statutes, are located at https://www.floir.com/resources-and-reports/certified-reinsurers.

(4) No change.

(5) Nothing in this rule shall be construed to deny the ceding insurer the ability to take credit for reinsurance for the remainder of its liabilities with a certified reinsurer so long as those amounts are secured with acceptable collateral pursuant to section 624.610(5) 624.610(4), F.S., and subsections 69O-144.005(5) and (6), F.A.C.

(6) In addition to the trust fund required under section 624.610(3)(c), F.S., the Office shall permit an assuming insurer that maintains a trust fund in a qualified U.S. financial institution, as that term is defined in section 624.610(6)(b) 624.610(5)(b), F.S., for the payment of the valid claims of its U.S. ceding cedent insurers and their assigns and successors in interest to also maintain in a qualified U.S. financial institution a trust fund constituting a trusteed amount at least equal to the collateral required in accordance with subsection (4) of this rule, to secure the liabilities attributable to U.S. ceding cedent insurers under reinsurance policies (contracts) entered into or renewed by such assuming insurer on or after the effective date of this rule or such other date as may be established in other states for ceding cedent insurers domiciled in such states, but only when maintenance of such a trust fund serves to protect the interests of the public and the interests of insurer solvency.

(7) A ceding insurer may not take credit pursuant to this rule unless:

(a) The assuming insurer has been determined, by order of the Office, to be a an certified reinsurer, pursuant to subsection (8) of this rule;

(b) The ceding insurer maintains satisfactory evidence that the eligible certified reinsurer meets the standards of solvency, including standards for capital adequacy, established by its domestic regulator; and,

(c) All reinsurance contracts between the ceding insurer and the certified reinsurer provide for:

1. An  For an insolvency clause in conformance with section 624.610(9) 624.610(8), F.S.;

2. A submission to jurisdiction clause in conformance with sections 624.610(3)(f)1.a. and 2., F.S. The For a service of process clause in conformance with sections 624.610(3)(f)1. and 2., F.S.; and,

3. A service of process clause in conformance with sections 624.610(3)(f)1.b. and 2., F.S. For a submission to jurisdiction clause in conformance with sections 624.610(3)(f)1. and 2., F.S.

(8) Status as certified reinsurer:

(a) An assuming insurer seeking certified reinsurer status in this state pursuant to this rule, shall file an application in accordance with rule 69O-144.002(4)(a), F.A.C., and the requirements of this rule. The application shall include written confirmation, in the form of a properly executed Form OIR-C1-2116, “Certificate of Certified Reinsurer,” which is incorporated by reference in rule 69O-144.002(4)(a), F.A.C., that the assuming insurer submits to the jurisdiction of the U.S. courts, appoints the Chief Financial Officer, pursuant to section 48.151, F.S., as its agent for service of process in this state, and agrees to post one hundred percent (100%) collateral for its Florida liabilities if it resists enforcement of a valid and final judgment from a court in the United States, or if otherwise required by the Office pursuant to this rule. If an NAIC accredited jurisdiction has determined that a certified reinsurer has met the conditions in that jurisdiction to become a certified reinsurer, the Office may accept documentation filed with that NAIC accredited jurisdiction or with the NAIC to satisfy the certified reinsurer’s status in this state.

Application for a determination as a certified reinsurer under this rule shall be made by cover letter from the insurer requesting a finding of certification as a reinsurer pursuant to this rule and shall be filed electronically via the Office’s Online Company Admissions system, “iApply,” located at http://www.floir.com/iportal. The cover letter shall be accompanied with the following:

1. Audited financial statements prepared on a basis for the last three (3) years as filed with the insurer’s domiciliary jurisdiction. With permission of the Office, an insurer may provide audited International Financial Reporting Standards (IFRS) basis statements so long as they include an audited reconciliation of equity and net income on a U.S. GAAP basis, or, with the permission of the Office, audited IFRS statements with a reconciliation of equity and net income on a U.S. GAAP basis certified by an officer of the company;

2. An actuarial opinion as filed with the insurer’s domiciliary jurisdiction;

3. Documentation, in the form of a properly executed Form OIR-C1-2116, “Certificate of Certified Reinsurer,” (New 6/15), which is hereby adopted and incorporated by reference https://www.flrules.org/Gateway/reference.asp?No=Ref-05566, that the insurer submits to the jurisdiction of the U.S. courts, appoints an agent for service of process in Florida, and agrees to post one hundred percent (100%) collateral for its Florida liabilities if it resists enforcement of a valid and final judgment from a court in the United States, or if otherwise required by the Office pursuant to this rule;

4. At the request of the Office, any other regulatory filing made with the insurer’s domiciliary jurisdiction;

5. Form OIR-C1-2117 https://www.flrules.org/Gateway/reference.asp?No=Ref-05567 “NAIC Form CR-F” (New 6/15) (for property/casualty) or Form OIR-C1-2118 https://www.flrules.org/gateway/reference.asp?No=Ref-05568 “NAIC Form CR-S” (New 6/15) (for life and health), which are hereby adopted and incorporated by reference;

6. A list of all disputed or overdue recoverables due to or claimed by ceding insurers, whether or not the claims are in litigation or arbitration;

7. A certification from the domiciliary jurisdiction of the insurer that the company is in good standing and that the domiciliary jurisdiction will provide financial and operational information to the Office; and,

8. Any other information that the Office may reasonably deem appropriate to clarify or explain information submitted with the application.

(b) No change.

(c) The determination of certified reinsurer status eligibility will be made by order issued by the Office.

(d) To become a certified reinsurer, the assuming insurer, at a minimum:

1. through 2. No change.

3. Shall be domiciled in a qualified jurisdiction, as defined in subsection (9) of this rule.

(e) Each certified reinsurer shall be rated on a legal entity basis, with due consideration being given to the group rating where appropriate, except that an association including incorporated and individual unincorporated underwriters that has been approved to do business as a single certified reinsurer may be evaluated on the basis of its group rating.  Factors that may be considered as part of the evaluation process include, but are not limited to, the following:

1. The certified reinsurer’s financial strength rating from an acceptable rating agency. The maximum rating that a certified reinsurer may be assigned will correspond to its financial strength rating as outlined in subsection (4) of this rule. The Office shall use the lowest financial strength rating received from a rating agency indicated in subsection (3) paragraphs (3)(a)-(e) of this rule, in establishing the maximum rating of a certified reinsurer. A failure to obtain or maintain at least two financial strength ratings from acceptable rating agencies pursuant to subsection (3), will result in loss of eligibility for certification;

2. through 6. No change.

7. The A certified reinsurer’s participation in any solvent schemes of arrangement, or similar procedure, that involves U.S. ceding insurers. The A certified reinsurer shall notify the Office prior to participation in any a solvent scheme of arrangement.

(f) through (g) No change.

(h) An assuming insurer seeking to maintain its Every certified reinsurer status in this state shall annually file the following information required by rule 69O-144.002(4)(b), F.A.C. If an NAIC accredited jurisdiction has determined that a certified reinsurer has met the conditions in that jurisdiction to become a certified reinsurer, the Office may accept documentation filed with that NAIC accredited jurisdiction or with the NAIC to satisfy the certified reinsurer’s status in this state. annually with the Office electronically via the Office’s Regulatory Electronic Filing System, “REFS,” located at  http://www.floir.com/iportal, no later than July 1:

1. Form OIR-C1-2117, “NAIC Form CR-F,” (New 6/15) (for property/casualty) or Form OIR-C1-2118, “NAIC Form CR-S,” (New 6/15) (for life and health);

2. The report of the independent auditor on the financial statements of the insurance enterprise, filed on a U.S. GAAP basis. If a U.S. GAAP audit is not reasonably available, the Office may allow the reinsurer to provide audited IFRS basis statements so long as a reconciliation of equity and net income are provided on a U.S. GAAP basis. The reconciliation of equity and net income to U.S. GAAP must either be audited or certified by an officer of the company;

3. Actuarial opinion as filed with the certified reinsurer’s domiciliary jurisdiction;

4. A statement from the certified reinsurer’s domiciliary jurisdiction that the certified reinsurer is in good standing and maintains capital in excess of the jurisdiction’s highest regulatory action level;

5. A statement certifying that there has been no change in the provisions of its domiciliary license or any of its financial strength ratings, or a statement describing such changes and the reasons therefore;

6. At the request of the Office, a copy of any regulatory filings made with the certified reinsurer’s domiciliary jurisdiction;

7. Any change in its directors and officers;

8. An updated list of all disputed and overdue reinsurance claims regarding reinsurance assumed from ceding insurers; and,

9. Any other information that the Office may require to assure market stability and the solvency of ceding insurers.

(i) through (k) No change.

(9) Qualified Jurisdictions. Status as a qualified jurisdiction:

(a) through (c) No change.

(d) The Office shall publish a list of a jurisdictions that have been determined to be qualified on its website.

(e) No change.

(10) A certified reinsurer shall secure obligations assumed from U.S. ceding insurers under this rule and section 624.610(3)(e), F.S., at a level consistent with its rating pursuant to subsections (3) and (4) of this rule, or by order of the Office pursuant to section 624.610(5), F.S.

(a) In order for a domestic ceding insurer to qualify for full financial statement credit for reinsurance ceded to a certified reinsurer, the certified reinsurer shall maintain security as allowed by section 624.610(5), F.S., and consistent with section 624.610(3)(e), F.S., or in a multibeneficiary trust in accordance with section 624.610(3)(c), F.S., and rule 69O-144.006, F.A.C., except as otherwise provided in this subsection.

(b) If a certified reinsurer maintains a trust to fully secure its obligations subject to section 624.610(3)(c), F.S., and rule 69O-144.006, F.A.C., and chooses to secure its obligations incurred as a certified reinsurer in the form of a multibeneficiary trust, the certified reinsurer shall maintain separate trust accounts for its obligations incurred under reinsurance agreements issued or renewed as a certified reinsurer with reduced security as permitted by this subsection or comparable laws of other U.S. jurisdictions and for its obligations subject to section 624.610(3)(c), F.S., and rule 69O-144.006, F.A.C. It shall be a condition to the grant of certification under section 624.610(3)(e), F.S., and this rule, that the certified reinsurer shall have bound itself, by the language of the trust and agreement with the insurance regulator with principal regulatory oversight of each such trust account, to fund, upon termination of any such trust account, out of the remaining surplus of such trust any deficiency of any other such trust account.

(c) The minimum trusteed surplus requirements provided in section 624.610(3)(c), F.S., and rule 69O-144.006, F.A.C., are not applicable with respect to a multibeneficiary trust maintained by a certified reinsurer for the purpose of securing obligations incurred under this subsection, except that such trust shall maintain a minimum trusteed surplus of $10 million.

(d) With respect to obligations incurred by a certified reinsurer under this subsection, if the security is insufficient, the Office shall reduce the allowable credit by an amount proportionate to the deficiency, and has the discretion to impose further reductions in allowable credit upon finding that there is a material risk that the certified reinsurer’s obligations will not be paid in full when due.

(e) For purposes of this subsection, a certified reinsurer whose certification has been terminated for any reason shall be treated as a certified reinsurer required to secure one hundred percent (100%) of its obligations.

1. As used in this subsection, the term “terminated” refers to revocation, suspension, voluntary surrender and inactive status.

2. If the Office continues to assign a higher rating as permitted by other provisions of this rule, this requirement does not apply to a certified reinsurer in inactive status or to a reinsurer whose certification has been suspended.

(11)(10)(a) If the rating of a certified reinsurer is below or falls below that required in subsection (4) of this rule, for the respective amount of credit, the Office shall upon written notice assign a new rating to the certified reinsurer in accordance with subsection (4) of this rule. Notwithstanding the change or withdrawal of a certified reinsurer’s rating, the Office, upon a determination that the interest of ensuring market stability and the solvency of the ceding insurer requires it, shall, upon request by the ceding insurer, authorize the ceding insurer to continue to take credit for the reinsurance recoverable, or part thereof, relating to the rating change or withdrawal for some specified period of time following such change or withdrawal, unless the reinsurance recoverable is deemed uncollectible.

(b) No change.

(c) The Office shall have the authority to suspend, revoke, or otherwise modify a certified reinsurer’s certification at any time if the certified reinsurer fails to meet its obligations or security requirements under this rule section, or if other financial or operating results of the certified reinsurer, or documented significant delays in payment by the certified reinsurer, would cause the Office to determine that the certified reinsurer is unwilling or unable to meet its contractual obligations.

(d) through (e) No change.

(12)(11) The ceding insurer shall give immediate notice to the Office and provide for the necessary increased reserves with respect to any reinsurance recoverables applicable, in the event:

(a) through (b) No change.

(13)(12) The Office shall disallow all or a portion of the credit based on a review of the ceding insurer’s reinsurance program, the financial condition of the certified reinsurer, the certified reinsurer’s claim payment history, or any other relevant information when such action is in the best interests of market stability and the solvency of the ceding insurer. At any time, the Office may request additional information from the certified reinsurer. The failure of a certified reinsurer to cooperate with the Office is grounds for the Office to withdraw the status of the insurer as a certified reinsurer or for the disallowance or reduction of the credit granted under this rule.

(14)(13)(a) Upon the entry of an order of rehabilitation, liquidation, or conservation against the ceding insurer, pursuant to chapter 631, part I, F.S., or the equivalent law of another jurisdiction, a certified reinsurer, within thirty (30) days of the order, shall fund the entire amount that the ceding insurer has taken, as an asset or deduction from reserves, for reinsurance recoverable from the certified reinsurer. The insurer may request a variance and waiver from this provision as provided by section 120.542, F.S.

(b) No change.

(15)(14) The Office may, by order, determine that credit shall not be allowed to any ceding insurer for reinsured risk pursuant to this rule if it appears to the Office that granting of the credit to the ceding insurer would not be in the public interest or serve the best interests of the ceding insurer’s solvency.

(16)(15) Nothing in this rule prohibits a ceding insurer and a reinsurer from entering into agreements establishing collateral requirements in excess of those set forth in this rule.

(16) A ceding insurer shall notify the Office within thirty (30) days after reinsurance recoverables from any single assuming insurer, or group of assuming insurers, exceeds fifty percent (50%) of the ceding insurer’s last reported surplus to policyholders, or after it is determined that reinsurance recoverables from any single assuming insurer, or group of assuming insurers, is likely to exceed this limit. The notification shall demonstrate that the exposure is safely managed by the domestic ceding insurer.

(17) A ceding insurer shall notify the Office within thirty (30) days after ceding to any single assuming insurer, or group of assuming insurers, more than twenty percent (20%) of the ceding insurer’s gross written premium in the prior calendar year, or after it is determined that the reinsurance ceded to any single assuming insurer, or group of assuming insurers, is likely to exceed this limit. The notification shall demonstrate that the exposure is safely managed by the ceding insurer.

(18) All filings shall be submitted electronically to http://www.floir.com/iportal. Forms are available at http://www.floir.com/iportal.

Rulemaking Authority 624.308, 624.610(4), (15) (14) FS. Law Implemented 624.307(1), 624.424, 624.610 FS. History–New 10-29-08, Amended 7-28-15, 7-30-17, __________.

 

69O-144.009 Credit for Reinsurance: Other Requirements and Provisions.

(1) Credit shall be allowed for foreign and alien insurers when the reinsurance is ceded to an assuming insurer which is domiciled or licensed in, or, in the case of a U.S. branch of an alien assuming insurer, which is entered through, a state which employs standards regarding credit for reinsurance substantially similar to those applicable under this chapter, provided the Office verifies that the assuming insurer and reinsurance agreement meet the requirements established by this chapter and section 624.610, F.S. Verification by the Office under this subsection may be made via direct review of the information that the assuming insurer has filed with the state in which it is domiciled, licensed, or entered through.

(2) Concentration risk requirements for domestic ceding insurers. The following requirements apply to all domestic ceding insurers in this state that seek to claim credit for reinsurance from assuming insurers under sections 624.610(2) through (4), F.S., or the respective rules of this chapter.

(a) A ceding insurer shall notify the Office within thirty (30) days after reinsurance recoverables from any single assuming insurer, or group of assuming insurers, exceeds fifty percent (50%) of the ceding insurer’s last reported surplus to policyholders, or after it is determined that reinsurance recoverables from any single assuming insurer, or group of assuming insurers, is likely to exceed this limit. The notification shall demonstrate that the exposure is safely managed by the domestic ceding insurer.

(b) A ceding insurer shall notify the Office within thirty (30) days after ceding to any single assuming insurer, or group of assuming insurers, more than twenty percent (20%) of the ceding insurer’s gross written premium in the prior calendar year, or after it is determined that the reinsurance ceded to any single assuming insurer, or group of assuming insurers, is likely to exceed this limit. The notification shall demonstrate that the exposure is safely managed by the ceding insurer.

(3) Trust agreements qualified under section 624.610(5), F.S. The provisions of this subsection and subsection (4) concern assuming insurers that do not meet the requirements of sections 624.610(2) through (4), F.S., or the respective rules of this chapter, including rule 69O-144.007, F.A.C.

(a) As used in this subsection:

1. “Beneficiary” means the entity for whose sole benefit the trust has been established and any successor of the beneficiary by operation of law. If a court of law appoints a successor in interest to the named beneficiary, then the named beneficiary includes and is limited to the court appointed domiciliary receiver (including conservator, rehabilitator or liquidator).

2. “Grantor” means the entity that has established a trust for the sole benefit of the beneficiary. When established in conjunction with a reinsurance agreement, the grantor is the unlicensed, unaccredited assuming insurer.

3. “Obligations,” as used in sub-subparagraphs (3)(b)11.b. and c. of this subsection, means:

a. Reinsured losses and allocated loss expenses paid by the ceding company, but not recovered from the assuming insurer;

b. Reserves for reinsured losses reported and outstanding;

c. Reserves for reinsured losses incurred but not reported; and,

d. Reserves for allocated reinsured loss expenses and unearned premiums.

(b) Required conditions:

1. The trust agreement shall be entered into between the beneficiary, the grantor and a trustee, which shall be a qualified U.S. financial institution as defined in section 624.610(6)(b), F.S.

2. The trust agreement shall create a trust account into which assets shall be deposited.

3. All assets in the trust account shall be held by the trustee at the trustee’s office in the United States.

4. The trust agreement shall provide that:

a. The beneficiary shall have the right to withdraw assets from the trust account at any time, without notice to the grantor, subject only to written notice from the beneficiary to the trustee;

b. No other statement or document is required to be presented to withdraw assets, except that the beneficiary may be required to acknowledge receipt of withdrawn assets;

c. It is not subject to any conditions or qualifications outside of the trust agreement; and,

d. It shall not contain references to any other agreements or documents except as provided for in sub-subparagraph (3)(b)11. below.

5. The trust agreement shall be established for the sole benefit of the beneficiary.

6. The trust agreement shall require the trustee to:

a. Receive assets and hold all assets in a safe place;

b. Determine that all assets are in such form that the beneficiary, or the trustee upon direction by the beneficiary, may whenever necessary negotiate any such assets, without consent or signature from the grantor or any other person or entity;

c. Furnish to the grantor and the beneficiary a statement of all assets in the trust account upon its inception and at intervals no less frequent than the end of each calendar quarter;

d. Notify the grantor and the beneficiary within ten (10) days of any deposits to or withdrawals from the trust account;

e. Upon written demand of the beneficiary, immediately take any and all steps necessary to transfer absolutely and unequivocally all right, title and interest in the assets held in the trust account to the beneficiary and deliver physical custody of the assets to the beneficiary; and,

f. Allow no substitutions or withdrawals of assets from the trust account, except on written instructions from the beneficiary, except that the trustee may, without the consent of but with notice to the beneficiary, upon call or maturity of any trust asset, withdraw the asset upon condition that the proceeds are paid into the trust account.

7. The trust agreement shall provide that at least thirty (30) days prior to termination of the trust account written notification of termination shall be delivered by the trustee to the beneficiary and to the Office.

8. The trust agreement shall be made subject to and be governed by the laws of the state in which the trust is domiciled.

9. The trust agreement shall prohibit invasion of the trust corpus for the purpose of paying compensation to, or reimbursing the expenses of, the trustee.

10. The trust agreement shall provide that the trustee shall be liable for its negligence, willful misconduct, or lack of good faith. The failure of the trustee to draw against the letter of credit in circumstances where such draw would be required shall be deemed to be negligence and willful misconduct.

11. Notwithstanding any other provisions of this rule, when a trust agreement is established to meet the requirements of section 624.610(5), F.S., in conjunction with a reinsurance agreement covering risks other than life, annuities, and accident and health, where it is customary practice to provide a trust agreement for a specific purpose, the trust agreement may provide that the ceding insurer shall undertake to use and apply amounts drawn upon the trust account, without diminution because of the insolvency of the ceding insurer or the assuming insurer, only for the following purposes:

a. To pay or reimburse the ceding insurer for the assuming insurer’s share under the specific reinsurance agreement regarding any losses and allocated loss expenses paid by the ceding insurer, but not recovered from the assuming insurer, or for unearned premiums due to the ceding insurer if not otherwise paid by the assuming insurer;

b. To make payment to the assuming insurer of any amounts held in the trust account that exceed 102 percent of the actual amount required to fund the assuming insurer’s obligations under the specific reinsurance agreement; or

c. Where the ceding insurer has received notification of termination of the trust account and where the assuming insurer’s entire obligations under the specific reinsurance agreement remain unliquidated and undischarged ten (10) days prior to the termination date, to withdraw amounts equal to the obligations and deposit those amounts in a separate account, in the name of the ceding insurer in any qualified U.S. financial institution apart from its general assets, in trust for such uses and purposes specified in sub-subparagraphs a. and b., above, as may remain executory after the withdrawal and for any period after the termination date.

12. Notwithstanding other provisions of this rule, when a trust agreement is established to meet the requirements of section 624.610(5), F.S., in conjunction with a reinsurance agreement covering life, annuities, or accident and health risks, where it is customary to provide a trust agreement for a specific purpose, the trust agreement may provide that the ceding insurer shall undertake to use and apply amounts drawn upon the trust account, without diminution because of the insolvency of the ceding insurer or the assuming insurer, only for the following purposes:

a. To pay or reimburse the ceding insurer for:

(I) The assuming insurer’s share under the specific reinsurance agreement of premiums returned, but not yet recovered from the assuming insurer, to the owners of policies reinsured under the reinsurance agreement on account of cancellations of the policies; and,

(II) The assuming insurer’s share under the specific reinsurance agreement of surrenders and benefits or losses paid by the ceding insurer, but not yet recovered from the assuming insurer, under the terms and provisions of the policies reinsured under the reinsurance agreement;

b. To pay to the assuming insurer amounts held in the trust account in excess of the amount necessary to secure the credit or reduction from liability for reinsurance taken by the ceding insurer; or

c. Where the ceding insurer has received notification of termination of the trust and where the assuming insurer’s entire obligations under the specific reinsurance agreement remain unliquidated and undischarged ten (10) days prior to the termination date, to withdraw amounts equal to the assuming insurer’s share of liabilities, to the extent that the liabilities have not yet been funded by the assuming insurer, and deposit those amounts in a separate account, in the name of the ceding insurer in any qualified U.S. financial institution apart from its general assets, in trust for the uses and purposes specified in a. and b. above as may remain executory after withdrawal and for any period after the termination date.

13. The reinsurance agreement may, but need not, contain the provisions required in paragraph (5)(d) of this subsection, so long as these required conditions are included in the trust agreement.

14.a. Notwithstanding any other provisions in the trust instrument, if the grantor of the trust has been declared insolvent or placed into receivership, rehabilitation, liquidation, or similar proceedings under the laws of its state or country of domicile, the trustee shall comply with an order of the insurance regulator with regulatory oversight over the trust or court of competent jurisdiction directing the trustee to transfer to the insurance regulator with regulatory oversight or other designated receiver all of the assets of the trust fund.

b. The assets shall be applied in accordance with the priority statutes and laws of the state in which the trust is domiciled applicable to the assets of insurance companies in liquidation.

c. If the insurance regulator with regulatory oversight determines that the assets of the trust fund or any part thereof are not necessary to satisfy claims of the U.S. beneficiaries of the trust, the assets or any part of them shall be returned to the trustee for distribution in accordance with the trust agreement.

(c) Permitted conditions:

1.a. The trust agreement may provide that the trustee may resign upon delivery of a written notice of resignation, effective not less than ninety (90) days after the beneficiary and grantor receive the notice and that the trustee may be removed by the grantor by delivery to the trustee and the beneficiary of a written notice of removal, effective not less than ninety (90) days after the trustee and the beneficiary receive the notice.

b. The resignation or removal shall not be effective until a successor trustee has been duly appointed and approved by the beneficiary, and the grantor and all assets in the trust have been duly transferred to the new trustee.

2.a. The grantor may have the full and unqualified right to vote any shares of stock in the trust account and to receive from time to time payments of any dividends or interest upon any shares of stock or obligations included in the trust account.

b. Any interest or dividends shall be either forwarded promptly upon receipt to the grantor or deposited in a separate account established in the grantor’s name.

3. The trustee may be given authority to invest, and accept substitutions of, any funds in the account, provided that no investment or substitution shall be made without prior approval of the beneficiary, unless the trust agreement specifies categories of investments acceptable to the beneficiary and authorizes the trustee to invest funds and to accept substitutions that the trustee determines are at least equal in market value to the assets withdrawn and that are consistent with the restrictions in sub-subparagraph (3)(d)1.b. of this subsection.

4.a. The trust agreement may provide that the beneficiary may at any time designate a party to which all or part of the trust assets are to be transferred.

b. Transfer may be conditioned upon the trustee receiving, prior to or simultaneously, other specified assets.

5. The trust agreement may provide that, upon termination of the trust account, all assets not previously withdrawn by the beneficiary shall, with written approval by the beneficiary, be delivered over to the grantor.

(d) A reinsurance agreement may contain provisions that stipulate that assets deposited in the trust account shall be valued according to their current fair market value and shall consist only of cash in U.S. dollars, certificates of deposit issued by a U.S. bank and payable in U.S. dollars, and investments permitted by part II of chapter 625, F.S., or any combination of the above, provided investments in or issued by an entity controlling, controlled by or under common control with either the grantor or the beneficiary of the trust shall not exceed five percent (5%) of total investments. The reinsurance agreement may further specify the types of investments to be deposited. Where a trust agreement is entered into in conjunction with a reinsurance agreement covering risks other than life, annuities and accident and health, then the trust agreement may contain the provisions required by this paragraph in lieu of including such provisions in the reinsurance agreement.

(e) A trust agreement may be used to reduce any liability for reinsurance ceded to an unauthorized assuming insurer in financial statements required to be filed with the Office in compliance with this chapter when established on or before the date of filing of the financial statement of the ceding insurer  Further, the reduction for the existence of an acceptable trust account may be up to the current fair market value of acceptable assets available to be withdrawn from the trust account at that time, but such reduction shall be no greater than the specific obligations under the reinsurance agreement that the trust account was established to secure.

(4) Letters of credit qualified under section 624.610(5), F.S.

(a)1. The letter of credit shall be clean, irrevocable, unconditional, and issued or confirmed by a qualified U.S. financial institution.

2. As used in this subsection, a qualified U.S. financial institution is one which meets the definition set forth in section 624.610(6)(a), F.S.

3. The letter of credit shall contain an issue date and expiration date and shall stipulate that the beneficiary need only draw a sight draft under the letter of credit and present it to obtain funds and that no other document need be presented.

4. The letter of credit also shall indicate that it is not subject to any condition or qualifications outside of the letter of credit.

5. The letter of credit shall not contain reference to any other agreements, documents, or entities, except as provided in subparagraph (4)(f)1. of this subsection.

6.a. As used in this subsection, “beneficiary” means the domestic insurer for whose benefit the letter of credit has been established and any successor by operation of law of the named beneficiary, including without limitation any liquidator, rehabilitator, receiver or conservator.

b. If a court of law appoints a successor in interest to the named beneficiary, then the named beneficiary includes and is limited to the court appointed domiciliary receiver, including conservator, rehabilitator, or liquidator.

(b)1. The heading of the letter of credit may include a boxed section containing the name of the applicant and other appropriate notations to provide a reference for the letter of credit.

2. The boxed section shall be clearly marked to indicate that such information is for internal identification purposes only.

(c) The letter of credit shall contain a statement to the effect that the obligation of the qualified U.S. financial institution under the letter of credit is in no way contingent upon reimbursement with respect thereto.

(d)1. The term of the letter of credit shall be for at least one year and shall contain an “evergreen clause” that prevents the expiration of the letter of credit without due notice from the issuer.

2. The “evergreen clause” shall provide for a period of no less than sixty (60) days’ notice prior to expiration date or nonrenewal.

(e)1. The letter of credit shall be subject to and governed by the laws of the state of Florida;

2. All drafts drawn on the letter of credit shall be presentable at an office in the United States of a qualified U.S. financial institution.

(f) Reinsurance agreement provisions.

1. The reinsurance agreement in conjunction with which the letter of credit is obtained may contain provisions that:

a. Require the assuming insurer to provide letters of credit to the ceding insurer and specify what they are to cover.

b. Stipulate that the assuming insurer and ceding insurer agree that the letter of credit provided by the assuming insurer pursuant to the provisions of the reinsurance agreement may be drawn upon at any time, notwithstanding any other provisions in the agreement, and shall be utilized by the ceding insurer or its successors in interest only for one or more of the following reasons:

(I) To pay or reimburse the ceding insurer for:

(A) The assuming insurer’s share under the specific reinsurance agreement of premiums returned, but not yet recovered from the assuming insurers, to the owners of policies reinsured under the reinsurance agreement on account of cancellations of such policies; and,

(B) The assuming insurer’s share, under the specific reinsurance agreement, of surrenders and benefits or losses paid by the ceding insurer, but not yet recovered from the assuming insurers, under the terms and provisions of the policies reinsured under the reinsurance agreement; and,

(C) Any other amounts necessary to secure the credit or reduction from liability for reinsurance taken by the ceding insurer.

(II) Where the letter of credit will expire without renewal or be reduced or replaced by a letter of credit for a reduced amount and where the assuming insurer’s entire obligations under the specific reinsurance remain unliquidated and undischarged ten (10) days prior to the termination date, to withdraw amounts equal to the assuming insurer’s share of the liabilities, to the extent that the liabilities have not yet been funded by the assuming insurer and exceed the amount of any reduced or replacement letter of credit, and deposit those amounts in a separate account in the name of the ceding insurer in a qualified U.S. financial institution apart from its general assets, in trust for such uses and purposes specified in sub-sub-subparagraph (4)(f)1.b.(I) of this subsection, as may remain after withdrawal and for any period after the termination date.

c. All of the provisions of this subparagraph (4)(f)1., shall be applied without diminution because of insolvency on the part of the ceding insurer or assuming insurer.

2. Nothing in this paragraph (4)(f), shall preclude the ceding insurer and assuming insurer from providing for:

a. An interest payment, at a rate not in excess of the prime rate of interest, on the amounts held pursuant to sub-subparagraph (4)(f)1.b., above; or

b. The return of any amounts drawn down on the letters of credit in excess of the actual amounts required for the above or any amounts that are subsequently determined not to be due.

Rulemaking Authority 624.308(1), 624.610(4), (15) FS. Law Implemented 624.307(1), 624.610 FS. History–New _______.

 

69O-144.011 Credit for Reinsurance from Reinsurers Domiciled in Reciprocal Jurisdictions.

(1) Pursuant to section 624.610(4), F.S., the Office shall allow credit for reinsurance ceded by a domestic insurer to an assuming insurer that is licensed to write reinsurance by, and has its head office or is domiciled in, a reciprocal jurisdiction, and which meets the other requirements of the statute and this rule.

(2) As used in this chapter, a “reciprocal jurisdiction” is a jurisdiction, as designated by the Office pursuant to subsection (4) of this rule, that is one of the following:

(a) A non-United States jurisdiction that is subject to an in-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, a jurisdiction that is a member state of the European Union. As used in this rule, the term “covered agreement” has the same definition as that within section 624.610(4)(a)1., F.S.

(b) A United States jurisdiction that meets the requirements for accreditation under the Financial Regulation Standards and Accreditation Program of the National Association of Insurance Commissioners.

(c) A qualified jurisdiction, as defined in rule 69O-144.007(9), F.A.C., which meets the additional requirements present in section 624.610(4)(a)3., F.S.

(3) Credit shall be allowed when the reinsurance is ceded from an insurer domiciled in this state to an assuming insurer meeting each of the conditions set forth below.   

(a) The assuming insurer must be licensed to transact reinsurance by, and have its head office or be domiciled in, a reciprocal jurisdiction.

(b) The assuming insurer must have and maintain on an ongoing basis minimum capital and surplus, or its equivalent, calculated on at least an annual basis as of the preceding December 31 or at the annual date otherwise statutorily reported to the reciprocal jurisdiction, and confirmed as set forth in paragraph (3)(g) according to the methodology of its domiciliary jurisdiction, in the following amounts:

1. No less than $250 million; or

2. If the assuming insurer is an association, including incorporated and individual unincorporated underwriters: 

a. Minimum capital and surplus equivalents (net of liabilities) or own funds of the equivalent of at least $250 million; and 

b. A central fund containing a balance of the equivalent of at least $250 million.

(c) The assuming insurer must have and maintain on an ongoing basis a minimum solvency or capital ratio, as applicable, as follows:

1. If the assuming insurer has its head office or is domiciled in a reciprocal jurisdiction as defined in section 624.610(4)(a)1., F.S., the ratio specified in the applicable covered agreement;

2. If the assuming insurer is domiciled in a reciprocal jurisdiction as defined in section 624.610(4)(a)2., F.S., a risk-based capital (RBC) ratio of three hundred percent (300%) of the authorized control level, calculated in accordance with the formula developed by the NAIC; or

3. If the assuming insurer is domiciled in a reciprocal jurisdiction as defined in section 624.610(4)(a)3., F.S., after consultation with the reciprocal jurisdiction and considering any recommendations published through the NAIC Committee Process, such solvency or capital ratio as the Office determines to be an effective measure of solvency.

(d) The assuming insurer must agree to and provide adequate assurance, in the form of a properly executed Form OIR-C1-517, “Certificate of Reinsurer Domiciled in Reciprocal Jurisdiction,” of its agreement to the following: 

1. The assuming insurer must agree to provide prompt written notice and explanation to the Office if it falls below the minimum requirements set forth in paragraphs (2)(b) or (2)(c) of this subsection, or if any regulatory action is taken against it for serious noncompliance with applicable law.

2. The assuming insurer must consent in writing to the jurisdiction of the courts of this state and to the appointment of the Chief Financial Officer, pursuant to section 48.151, F.S., as its agent for service of process in this state. 

a. The Office may also require that such consent be provided and included in each reinsurance agreement under the Office’s jurisdiction. 

b. Nothing in this provision shall limit or in any way alter the capacity of parties to a reinsurance agreement to agree to alternative dispute resolution mechanisms, except to the extent such agreements are unenforceable under applicable insolvency or delinquency laws.

3. The assuming insurer must consent in writing to pay all final judgments, wherever enforcement is sought, obtained by a ceding insurer, that have been declared enforceable in the territory where the judgment was obtained. 

4. The assuming insurer must agree to include a provision in each reinsurance agreement  requiring the assuming insurer to provide security in an amount equal to one hundred percent (100%) of the assuming insurer’s liabilities attributable to reinsurance ceded pursuant to that agreement if the assuming insurer resists enforcement of a final judgment that is enforceable under the law of the jurisdiction in which it was obtained or a properly enforceable arbitration award, whether obtained by the ceding insurer or by its legal successor on behalf of its estate, if applicable.

5. The assuming insurer must confirm that it is not presently participating in any solvent scheme of arrangement, which involves this state’s ceding insurers, and agrees to notify the ceding insurer and the Office and to provide one hundred percent (100%) security to the ceding insurer consistent with the terms of the scheme, should the assuming insurer enter into such a solvent scheme of arrangement. Such security shall be in a form consistent with the provisions of sections 624.610(3) and (5), F.S., and rule 69O-144.009, F.A.C. For purposes of this rule, the term “solvent scheme of arrangement” means a foreign or alien statutory or regulatory compromise procedure subject to requisite majority creditor approval and judicial sanction in the assuming insurer’s domiciliary jurisdiction either to finally commute liabilities of duly noticed classed members or creditors of a solvent debtor, or to reorganize or restructure the debts and obligations of a solvent debtor on a final basis, and which may be subject to judicial recognition and enforcement of the arrangement by a governing authority outside the ceding insurer’s domiciliary jurisdiction.

6. The assuming insurer must agree in writing to meet the applicable information filing requirements as set forth in paragraphs (3)(e) and (3)(g) of this subsection.  

(e) The assuming insurer must file an application for reciprocal jurisdiction reinsurer status, in accordance with rule 69O-144.002(5)(a), F.A.C., and the requirements of this rule.  If an NAIC accredited jurisdiction has determined that a reciprocal jurisdiction reinsurer has met the conditions in that jurisdiction to become a reciprocal jurisdiction reinsurer, the Office may accept documentation filed with that NAIC accredited jurisdiction or with the NAIC to satisfy the reciprocal jurisdiction reinsurer’s status in this state.

(f) The assuming insurer must maintain a practice of prompt payment of claims under reinsurance agreements. The lack of prompt payment will be evidenced if any of the following criteria is met: 

1. More than fifteen percent (15%) of the reinsurance recoverables from the assuming insurer are overdue and in dispute as reported to the Office; 

2. More than fifteen percent (15%) of the assuming insurer’s ceding insurers or reinsurers have overdue reinsurance recoverable on paid losses of 90 days or more which are not in dispute and which exceed for each ceding insurer $100,000, or as otherwise specified in a covered agreement; or 

3. The aggregate amount of reinsurance recoverable on paid losses which are not in dispute, but are overdue by 90 days or more, exceeds $50 million, or as otherwise specified in a covered agreement.

(g) To maintain its reciprocal jurisdiction reinsurer status in this state, the assuming insurer or its legal successor must annually provide the information required by rule 69O-144.002(5)(b), F.A.C.  If an NAIC accredited jurisdiction has determined that a certified reinsurer has met the conditions in that jurisdiction to become a certified reinsurer, the Office may accept documentation filed with that NAIC accredited jurisdiction or with the NAIC to satisfy the certified reinsurer’s status in this state.

(h) Nothing in this chapter precludes an assuming insurer from providing the Office with information on a voluntary basis.

(i) The provisions of this chapter do not limit the authority of the Office to request additional information pertaining to the reinsurance agreement, or any subsequent reinsurance agreement entered into by the assuming insurer and Florida ceding insurers, under section 624.610(4)(e), F.S.

(4) The Office shall publish and maintain a list of approved reciprocal jurisdictions on its website. 

(5) The Office shall publish and maintain a list of reciprocal jurisdiction reinsurers on its website.

(6) The determination of reciprocal jurisdiction reinsurer status shall be made by order issued by the Office.

(7) If the Office determines that an assuming insurer no longer meets one or more of the requirements under section 624.610, F.S., or this chapter, the Office may revoke or suspend the status of the assuming insurer. 

(a) While an assuming insurer’s status is suspended, no reinsurance agreement issued, amended or renewed after the effective date of the suspension qualifies for credit except to the extent that the assuming insurer’s obligations under the contract are secured in accordance with section 624.610(5), F.S.

(b) If an assuming insurer’s status is revoked, no credit for reinsurance may be granted after the effective date of the revocation with respect to any reinsurance agreements entered into by the assuming insurer, including reinsurance agreements entered into prior to the date of revocation, except to the extent that the assuming insurer’s obligations under the contract are secured in a form acceptable to the Office and consistent with the provisions of section 624.610(4), F.S..

(8) Before denying statement credit or imposing a requirement to post security with respect to subsection (7) of this rule or adopting any similar requirement that will have substantially the same regulatory impact as security, the Office shall:

(a) Communicate with the ceding insurer, the assuming insurer, and the assuming insurer’s supervisory authority that the assuming insurer no longer satisfies one of the conditions listed in subsection (2) of this rule;

(b) Provide the assuming insurer with 30 days from the initial communication to submit a plan to remedy the defect, and 90 days from the initial communication to remedy the defect, except in exceptional circumstances in which a shorter period is necessary for policyholder and other consumer protection; 

(c) After the expiration of 90 days or less, as set out in paragraph (8)(b), if the Office determines that no or insufficient action was taken by the assuming insurer, the Office may impose any of the requirements as set out in this subsection; and 

(d) Provide a written explanation to the assuming insurer of any of the requirements set out in this subsection.

(9) If subject to a legal process of rehabilitation, liquidation or conservation, as applicable, the ceding insurer, or its representative, may seek and, if determined appropriate by the court in which the proceedings are pending, may obtain an order requiring that the assuming insurer post security for all outstanding liabilities.

Rulemaking Authority 624.308(1); 624.610(15). Law Implemented 624.610 FS. History-New _____.

 

69O-144.012 Term and Universal Life Insurance Reserve Financing.

(1) The purpose and intent of this rule is to establish uniform, national standards governing reserve financing arrangements pertaining to life insurance policies containing guaranteed nonlevel gross premiums, guaranteed nonlevel benefits and universal life insurance policies with secondary guarantees; and to ensure that, with respect to each such financing arrangement, funds consisting of primary security and other security, as defined in subsection (3) of this rule, are held by or on behalf of ceding insurers in the forms and amounts required herein. In general, reinsurance ceded for reserve financing purposes has one or more of the following characteristics: some or all of the assets used to secure the reinsurance treaty or to capitalize the reinsurer:

(a) Are issued by the ceding insurer or its affiliates; or

(b) Are not unconditionally available to satisfy the general account obligations of the ceding insurer; or

(c) Create a reimbursement, indemnification or other similar obligation on the part of the ceding insurer or any if its affiliates (other than a payment obligation under a derivative contract acquired in the normal course and used to support and hedge liabilities pertaining to the actual risks in the policies ceded pursuant to the reinsurance treaty).

(2) This rule shall apply to reinsurance treaties that cede liabilities pertaining to covered policies, as that term is defined in paragraph (3)(b) of this rule, issued by any life insurance company domiciled in this state.

(3) Definitions

(a) “Actuarial method” means the methodology used to determine the required level of primary security, as described in subsection (5) of this rule.

(b) “Covered policies” means policies, other than grandfathered policies and the exemptions described in subsection (4) of this rule, of the following policy types:

1. Life insurance policies with guaranteed nonlevel gross premiums and/or guaranteed nonlevel benefits, except for flexible premium universal life insurance policies; or

2. Flexible premium universal life insurance policies with provisions resulting in the ability of a policyholder to keep a policy in force over a secondary guarantee period.

(c) “Grandfathered policies” means policies of the types described in subparagraphs (b)1. and (b)2. of this rule that were:

1. Issued prior to January 1, 2015; and

2. Ceded, as of December 31, 2014, as part of a reinsurance treaty that would not have met one of the exemptions set forth in subsection (4) of this rule, had the rule then been in effect.

(d) “NAIC” means the National Association of Insurance Commissioners.

(e) “Non-covered policies” means any policy that does not meet the definition of covered policies, including grandfathered policies.

(f) “Required level of primary security” means the dollar amount determined by applying the actuarial method to the risks ceded with respect to covered policies, but not more than the total reserve ceded.

(g) “Primary security” means the following forms of security:

1. Cash meeting the requirements of section 624.610(5)(a), F.S.;

2. Securities listed by the NAIC Securities Valuation Office meeting the requirements of section 624.610(5)(b), F.S., but excluding any synthetic letter of credit, contingent note, credit-linked note or other similar security that operates in a manner similar to a letter of credit, and excluding any securities issued by the ceding insurer or any of its affiliates; and

3. For security held in connection with funds-withheld and modified coinsurance reinsurance treaties:

a. Commercial loans in good standing of CM3 quality and higher as defined and calculated pursuant to section 624.4085(1)(m), F.S.;

b. Policy loans; and

c. Derivatives acquired in the normal course and used to support and hedge liabilities pertaining to the actual risks in the policies ceded pursuant to the reinsurance treaty.

(h) “Other security” means any security acceptable to the office pursuant to section 625.151, F.S., other than security meeting the definition of primary security.

(i) “Valuation Manual” means the valuation manual adopted by the NAIC as defined in section 625.1212(1)(k), F.S., with all amendments adopted by the NAIC that are effective for the financial statement date on which credit for reinsurance is claimed.

(j) “VM-20” means “Requirements for Principle-Based Reserves for Life Products,” including all relevant definitions, from the Valuation Manual defined in section 625.1212(1k).

(4) This rule does not apply to the following situations:

(a) Reinsurance of:

1. Policies that satisfy the criteria for exemption set forth in rule 69O-164.020(6)(f) or (g), F.A.C.; and which are issued before the later of:

a. The effective date of this rule, and

b. The date on which the ceding insurer begins to apply the provisions of VM-20 (as defined in subsection (3) of this rule) to establish the ceded policies’ statutory reserves, but in no event later than January 1, 2020;

2. Portions of policies that satisfy the criteria for exemption set forth in rule 69O-164.020(6)(e) and which are issued before the later of:

a. The effective date of this rule, and

b. The date on which the ceding insurer begins to apply the provisions of VM-20 to establish the ceded policies’ statutory reserves, but in no event later than January 1, 2020;

3. Any universal life policy that meets all of the following requirements:

a. Secondary guarantee period, if any, is five (5) years or less;

b. Specified premium for the secondary guarantee period is not less than the net level reserve premium for the secondary guarantee period based on the Commissioners Standard Ordinary (CSO) valuation tables and valuation interest rate applicable to the issue year of the policy as provided in section 625.121(5), F.S.; and

c. The initial surrender charge is not less than 100 percent of the first year annualized specified premium for the secondary guarantee period;

4. Credit life insurance;

5. Any variable life insurance policy that provides for life insurance, the amount or duration of which varies according to the investment experience of any separate account or accounts; nor

6. Any group life insurance certificate unless the certificate provides for a stated or implied schedule of maximum gross premiums required in order to continue coverage in force for a period in excess of one year.

(b) Reinsurance ceded to an assuming insurer that meets the applicable requirements of section 624.610(3)(c), F.S.;

(c) Reinsurance ceded to an assuming insurer that meets the applicable requirements of sections 624.610(3)(a) or (3)(b), F.S., and that, in addition:

1. Prepares statutory financial statements in compliance with the NAIC Accounting Practices and Procedures Manual, which are incorporated by reference in Rule 69O-137.001, F.A.C., without any departures from NAIC statutory accounting practices and procedures pertaining to the admissibility or valuation of assets or liabilities that increase the assuming insurer’s reported surplus and are material enough that they need to be disclosed in the financial statement of the assuming insurer pursuant to Statement of Statutory Accounting Principles No. 1 (“SSAP 1”); and

2. Is not in a company action level event, regulatory action level event, authorized control level event, or mandatory control level event (as those terms are defined in section 624.4085, F.S.), when its risk-based capital (“RBC”) is calculated in accordance with the life RBC report including overview and instructions for companies, as the same may be amended by the NAIC from time to time, without deviation;

(d) Reinsurance ceded to an assuming insurer that meets the applicable requirements of sections 624.610(3)(a) or (3)(b), F.S., and that, in addition:

1. Is not an affiliate, as that term is defined in section 624.10(1), F.S., of:

a. The insurer ceding the business to the assuming insurer; or

b. Any insurer that directly or indirectly ceded the business to that ceding insurer;

2. Prepares statutory financial statements in compliance with the NAIC Accounting Practices and Procedures Manual;

3. Is both:

a. Licensed or accredited in at least 10 states (including its state of domicile), and

b. Not licensed in any state as a captive, special purpose vehicle, special purpose financial captive, special purpose life reinsurance company, limited purpose subsidiary, or any other similar licensing regime; and

4. Is not, or would not be, below 500 percent of the authorized control level RBC (as that term is defined in section 624.4085, F.S.) when its RBC is calculated in accordance with the life RBC report including overview and instructions for companies, as the same may be amended by the NAIC from time to time, without deviation, and without recognition of any departures from NAIC statutory accounting practices and procedures pertaining to the admission or valuation of assets or liabilities that increase the assuming insurer’s reported surplus;

(e) Reinsurance ceded to an assuming insurer that:

1. Meets this state’s conditions for reciprocal jurisdiction reinsurers, as set forth in section 624.610(4), F.S., and rule 69O-144.011, F.A.C.; or

2. Is certified as a reinsurer in this state, in accordance with rule 69O-144.007, F.A.C.; or

3. Maintains at least $250 million in capital and surplus when determined in accordance with the NAIC Accounting Practices and Procedures Manual, including all amendments thereto adopted by the NAIC, excluding the impact of any permitted or prescribed practices; and is:

a. Licensed in at least 26 states; or

b. Licensed in at least 10 states, and licensed or accredited in a total of at least 35 states;

(f) Reinsurance not otherwise exempt under paragraphs (a) through (e) if the office, after consulting with the NAIC Financial Analysis Working Group (FAWG) or other group of regulators designated by the NAIC, as applicable, determines under all the facts and circumstances that all of the following apply:

1. The risks are clearly outside of the intent and purpose of this rule (as described in subsection (1) of this rule);

2. The risks are included within the scope of this rule only as a technicality; and

3. The application of this rule to those risks is not necessary to provide appropriate protection to policyholders. The office shall publicly disclose any decision made pursuant to this paragraph to exempt a reinsurance treaty from this rule, as well as the general basis therefor (including a summary description of the treaty).

(5) The actuarial method

(a) Actuarial Method

The actuarial method to establish the required level of primary security for each reinsurance treaty subject to this rule shall be VM-20, applied on a treaty-by-treaty basis, including all relevant definitions, from the Valuation Manual as then in effect, applied as follows:

1. For covered policies described in subparagraph (3)(b)1. of this rule, the actuarial method is the greater of the deterministic reserve or the net premium reserve (NPR) regardless of whether the criteria for exemption testing can be met. However, if the covered policies do not meet the requirements of the stochastic reserve exclusion test in the Valuation Manual, then the actuarial method is the greatest of the deterministic reserve, the stochastic reserve, or the NPR. In addition, if such covered policies are reinsured in a reinsurance treaty that also contains covered policies described in subparagraph (3)(b)2. of this rule, the ceding insurer may elect to instead use subparagraph 2. of this paragraph as the actuarial method for the entire reinsurance agreement. Whether subparagraph 1. or 2. is used, the actuarial method must comply with any requirements or restrictions that the Valuation Manual imposes when aggregating these policy types for purposes of principle-based reserve calculations.

2. For covered policies described in subparagraph (3)(b)2. of this rule, the actuarial method is the greatest of the deterministic reserve, the stochastic reserve, or the NPR regardless of whether the criteria for exemption testing can be met.

3. Except as provided in subparagraph 4., the actuarial method is to be applied on a gross basis to all risks with respect to the covered policies as originally issued or assumed by the ceding insurer.

4. If the reinsurance treaty cedes less than 100 percent of the risk with respect to the covered policies then the required level of primary security may be reduced as follows:

a. If a reinsurance treaty cedes only a quota share of some or all of the risks pertaining to the covered policies, the required level of primary security, as well as any adjustment under sub-subparagraph c. below, may be reduced to a pro rata portion in accordance with the percentage of the risk ceded;

b. If the reinsurance treaty in a non-exempt arrangement cedes only the risks pertaining to a secondary guarantee, the required level of primary security may be reduced by an amount determined by applying the actuarial method on a gross basis to all risks, other than risks related to the secondary guarantee, pertaining to the covered policies, except that for covered policies for which the ceding insurer did not elect to apply the provisions of VM-20 to establish statutory reserves, the required level of primary security may be reduced by the statutory reserve retained by the ceding insurer on those covered policies, where the retained reserve of those covered policies should be reflective of any reduction pursuant to the cession of mortality risk on a yearly renewable term basis in an exempt arrangement;

c. If a portion of the covered policy risk is ceded to another reinsurer on a yearly renewable term basis in an exempt arrangement, the required level of primary security may be reduced by the amount resulting by applying the actuarial method including the reinsurance section of VM-20 to the portion of the covered policy risks ceded in the exempt arrangement, except that for covered policies issued prior to January 1, 2017, this adjustment is not to exceed [cx/ (2 * number of reinsurance premiums per year)] where cx is calculated using the same mortality table used in calculating the NPR; and

d. For any other treaty ceding a portion of risk to a different reinsurer, including but not limited to stop loss, excess of loss and other non-proportional reinsurance treaties, there will be no reduction in the required level of primary security.

It is possible for any combination of sub-subparagraphs a., b., c., and/or d. to apply. Such adjustments to the required level of primary security will be done in the sequence that accurately reflects the portion of the risk ceded via the treaty. The ceding insurer should document the rationale and steps taken to accomplish the adjustments to the required level of primary security due to the cession of less than 100 percent of the risk.

The adjustments for other reinsurance will be made only with respect to reinsurance treaties entered into directly by the ceding insurer. The ceding insurer will make no adjustment as a result of a retrocession treaty entered into by the assuming insurers.

5. In no event will the required level of primary security resulting from application of the actuarial method exceed the amount of statutory reserves ceded.

6. If the ceding insurer cedes risks with respect to covered policies, including any riders, in more than one reinsurance treaty subject to this rule, in no event will the aggregate required level of primary security for those reinsurance treaties be less than the required level of primary security calculated using the actuarial method as if all risks ceded in those treaties were ceded in a single treaty subject to this rule;

7. If a reinsurance treaty subject to this rule cedes risk on both covered and non-covered policies, credit for the ceded reserves shall be determined as follows:

a. The actuarial method shall be used to determine the required level of primary security for the covered policies, and subsection (6) of this rule shall be used to determine the reinsurance credit for the covered policy reserves; and

b. Credit for the non-covered policy reserves shall be granted only to the extent that security, in addition to the security held to satisfy the requirements of sub-subparagraph a., is held by or on behalf of the ceding insurer in accordance with sections 624.610(3) through (5), F.S. Any primary security used to meet the requirements of this

sub-subparagraph may not be used to satisfy the required level of primary security for the covered policies.

(b) Valuation used for Purposes of Calculations

For the purposes of both calculating the required level of primary security pursuant to the actuarial method and determining the amount of primary security and other security, as applicable, held by or on behalf of the ceding insurer, the following shall apply:

1. For assets, including any such assets held in trust, that would be admitted under the NAIC Accounting Practices and Procedures Manual if they were held by the ceding insurer, the valuations are to be determined according to statutory accounting procedures as if such assets were held in the ceding insurer’s general account and without taking into consideration the effect of any prescribed or permitted practices; and

2. For all other assets, the valuations are to be those that were assigned to the assets for the purpose of determining the amount of reserve credit taken in compliance with the valuation manual defined in section 625.1212(2)(k), F.S.

(6) Requirements Applicable to covered policies to Obtain Credit for Reinsurance; Opportunity for Remediation

(a) Requirements

Subject to the exemptions described in subsection (4) of this rule and the provisions of paragraph (6)(b) of this rule, credit for reinsurance shall be allowed with respect to ceded liabilities pertaining to covered policies pursuant to sections 624.610(2) through (5), F.S., if, and only if, in addition to all other requirements imposed by law or regulation, the following requirements are met on a treaty-by-treaty basis:

1. The ceding insurer’s statutory policy reserves with respect to the covered policies are established in full and in accordance with the applicable requirements of section 625.121, F.S., and related regulations and actuarial guidelines, and credit claimed for any reinsurance treaty subject to this rule does not exceed the proportionate share of those reserves ceded under the contract; and

2. The ceding insurer determines the required level of primary security with respect to each reinsurance treaty subject to this rule and provides support for its calculation as determined to be acceptable to the office; and

3. Funds consisting of primary security, in an amount at least equal to the required level of primary security, are held by or on behalf of the ceding insurer, as security under the reinsurance treaty within the meaning of section 624.610(5), F.S., on a funds withheld, trust, or modified coinsurance basis; and

4. Funds consisting of other security, in an amount at least equal to any portion of the statutory reserves as to which primary security is not held pursuant to subparagraph 3. above, are held by or on behalf of the ceding insurer as security under the reinsurance treaty within the meaning of section 624.610(5), F.S.; and

5. Any trust used to satisfy the requirements of this subsection shall comply with all of the conditions and qualifications of section 624.610(5), F.S., except that:

a. Funds consisting of primary security or other security held in trust, shall for the purposes identified in paragraph (5)(b) of this rule, be valued according to the valuation rules set forth in that paragraph, as applicable; and

b. There are no affiliate investment limitations with respect to any security held in such trust if such security is not needed to satisfy the requirements of subparagraph (a)3.; and

c. The reinsurance treaty must prohibit withdrawals or substitutions of trust assets that would leave the fair market value of the primary security within the trust (when aggregated with primary security outside the trust that is held by or on behalf of the ceding insurer in the manner required by subparagraph (a)3.) below 102 percent of the level required by subparagraph (a)3. at the time of the withdrawal or substitution; and

d. The determination of reserve credit under Rule 69O-69O-144.009(3)(e), F.A.C, shall be determined according to the valuation rules set forth in paragraph (5)(b) of this rule, as applicable; and

6. The reinsurance treaty has been approved by the office.

(b) Requirements at Inception Date and on an Ongoing Basis; Remediation

1. The requirements of paragraph (6)(a) must be satisfied as of the date that risks under covered policies are ceded (if such date is on or after the effective date of this rule) and on an ongoing basis thereafter. Under no circumstances shall a ceding insurer take or consent to any action or series of actions that would result in a deficiency under subparagraphs (6)(a)3. or 4. with respect to any reinsurance treaty under which covered policies have been ceded, and in the event that a ceding insurer becomes aware at any time that such a deficiency exists, it shall use its best efforts to arrange for the deficiency to be eliminated as expeditiously as possible.

2. Prior to the due date of each Quarterly or Annual Statement required by Rule 69O-137.001, F.A.C., each life insurance company that has ceded reinsurance within the scope of subsection (2) shall perform an analysis, on a treaty-by-treaty basis, to determine, as to each reinsurance treaty under which covered policies have been ceded, whether as of the end of the immediately preceding calendar quarter (the valuation date) the requirements of subparagraphs (6)(a)3. or 4. were satisfied. The ceding insurer shall establish a liability equal to the excess of the credit for reinsurance taken over the amount of primary security actually held pursuant to subparagraph (6)(a)3., unless either:

a. The requirements of subparagraphs (6)(a)3. or 4. were fully satisfied as of the valuation date as to such reinsurance treaty; or

b. Any deficiency has been eliminated before the due date of the Quarterly or Annual Statement to which the valuation date relates through the addition of primary security and/or other security, as the case may be, in such amount and in such form as would have caused the requirements of subparagraphs (6)(a)3. or 4. to be fully satisfied as of the valuation date.

3. Nothing in subparagraph (6)(b)2. shall be construed to allow a ceding company to maintain any deficiency under subparagraphs (6)(a)3. or 4. for any period of time longer than is reasonably necessary to eliminate it.

(7) No insurer that has covered policies as to which this rule applies (as set forth in subsection (3) of this rule) shall take any action or series of actions, or enter into any transaction or arrangement or series of transactions or arrangements if the purpose of such action, transaction or arrangement or series thereof is to avoid the requirements of this rule, or to circumvent its purpose and intent, as set forth in subsection (1) of this rule.

Rulemaking Authority 624.308(1), 624.610(15), 625.121(3), 625.1212(5), (8). Law Implemented 624.4085, 624.610, 625.012, 625.121, 625.1212, 625.151 FS. History-New _____.

 

NAME OF PERSON ORIGINATING PROPOSED RULE: Michael Lawrence, Jr., Chief Legal Counsel

NAME OF AGENCY HEAD WHO APPROVED THE PROPOSED RULE: Financial Services Commission

DATE PROPOSED RULE APPROVED BY AGENCY HEAD: March 29, 2022

DATE NOTICE OF PROPOSED RULE DEVELOPMENT PUBLISHED IN FAR: October 1, 2021 and March 14, 2022