Ala. Admin. Code r. 482-1-096-.05

Current through Register Vol. 43, No. 1, October 31, 2024

Section 482-1-096-.05 - Determination Of Financial Soundness

(1) The following shall be the minimum considerations for determining the financial soundness of an alien surplus lines insurer:

(a) The value of any assets to be considered in the determination of financial soundness shall be readily ascertainable.

(b) The language contained in the required trust agreement shall be consistent with the requirements of the NAIC regarding alien non-admitted insurers, except as to the minimum amount of the trust fund.

(c) The annual financial statement of each surplus lines company shall accurately reference the admissible assets, liabilities, capital, and/or surplus of the insurer as of year-end of the preceding year.

(d) No surplus lines insurer shall retain any risks on any one subject of insurance in an amount exceeding 10% of its surplus to policyholders.

(e) No surplus lines insurer shall exceed a net premiums written to policyholder surplus ratio of 3.5 to 1.

(f) No surplus lines insurer shall maintain an admitted assets to premiums written ratio of less than 1.

(g) Any securities maintained for the benefit of U.S. policyholders shall be on the list of the "Securities Valuation Office" of the NAIC as being eligible for amortization and classed as 1, 2, or 3 (highest, high, or medium quality).

(h) Any alien non-admitted insurer on the listing of the Non-Admitted Insurers Information Office of the NAIC shall be deemed to be in compliance with these financial requirements, until otherwise determined by the Commissioner.

(i) The company shall adjust the amount of assets in its statutory trust fund according to its premium volume, policy limits, reinsurance, reserves, and liabilities so that the trust fund provides adequate protection to policyholders and creditors. The Commissioner may require periodic increases or allow decreases in the amount held in the statutory trust, except that the trust amount shall never be less than the minimum statutory requirement.

(2) Notwithstanding these requirements, the Commissioner may exercise his authority under Section 27-10-26(b)(5), Code of Ala. 1975, for the reasons stated therein including the financial soundness of the company.

Author: Commissioner of Insurance

Ala. Admin. Code r. 482-1-096-.05

New: September 23, 1996; effective October 3, 1996. Filed for codification in the Alabama Administrative Code by the Department of Insurance on November 14, 2005, pursuant to the Code of Ala. 1975, § 27-7-43.

Statutory Authority:Code of Ala. 1975, §§ 27-2-17; 27-10-1, etseq.