§ 22:652 — Reduction from liability for ceded reinsurance

§652. Reduction from liability for ceded reinsurance
A reduction from liability for the reinsurance ceded by a domestic insurer to an
assuming insurer that fails to satisfy the requirements of R.S. 22:651 shall be allowed in an
amount not exceeding the liabilities carried by the ceding insurer. Additionally, the
commissioner may adopt by regulation pursuant to R.S. 22:661(B) specific additional
requirements relating to or setting forth the valuation of assets or reserve credits, the amount
and forms of security supporting reinsurance arrangements described in R.S. 22:661(B), or
the circumstances pursuant to which credit will be reduced or eliminated. The reduction
shall be in the amount of funds held by or on behalf of the ceding insurer, including funds
held in trust in this state for the ceding insurer, under a reinsurance contract with such
assuming insurer as security for the payment of obligations thereunder, if such security is
held in this state subject to withdrawal solely by, and under the exclusive control of, the
ceding insurer, or, in the case of a trust, held in a qualified United States financial institution,
as defined in R.S. 22:653(B). The security may be in the form of:
(1) Cash.
(2) Securities listed by the Securities Valuation Office of the National Association
of Insurance Commissioners (NAIC), including those deemed exempt from filing as defined
by the Purposes and Procedures Manual of the NAIC Securities Valuation Office, and
qualifying as admitted assets.
(3)(a) Clean, irrevocable, unconditional letters of credit, issued or confirmed by a
qualified United States financial institution, as defined in R.S. 22:653(A), effective no later
than December thirty-first in respect of the year for which filing is being made, and in
possession of or in trust for the ceding insurer on or before the filing date of its annual
statement.
(b) Letters of credit meeting applicable standards of issuer acceptability as of the
dates of their issuance or confirmation shall, notwithstanding the issuing or confirming
institution's subsequent failure to meet applicable standards of issuer acceptability, continue
to be acceptable as security until their expiration, extension, renewal, modification, or
amendment, whichever occurs first.
(4) Any other form of security acceptable to the commissioner.
NOTE: Former R.S. 22:652 redesignated as R.S. 22:34 by Acts 2008, No.
415, §1, eff. Jan. 1, 2009.

Legislative History

Acts 1991, No. 996, §1, eff. Jan. 1, 1992; Acts 1995, No. 1182, §1; Redesignated from R.S. 22:941.1 by Acts 2008, No. 415, §1, eff. Jan. 1, 2009; Acts 2012, No. 419, §1; Acts 2016, No. 199, §1.