This rule is promulgated pursuant to the authority granted to the Arkansas Insurance Commissioner ("Commissioner") by Ark. Code Ann. §§ 23-61-108, 23-62-308 and Ark. Code Ann. 25-15-201, et seq.
The purpose of this rule is to set forth instructions and procedural requirements that the Commissioner deems necessary to carry out the provisions of the Arkansas Law on Credit for Reinsurance, Ark. Code Ann. §§ 23-62-301, et seq. (the "Acf). The actions and information required by this rule are declared to be necessary and appropriate in the public interest and for the protection of the ceding insurers in this state.
If any provision of this rule, or the application of the provision to any person or circumstance, is held invalid, the remainder of the rule, and the application of the provision to persons or circumstances other than those to which it is held invalid, shall not be affected.
Pursuant to Ark. Code Ann. § 23-62-305(b), the Commissioner shall allow credit for reinsurance ceded by a domestic insurer to an assuming insurer that was licensed in this state as of any date on which statutory financial statement credit for reinsurance is claimed.
Ratings | Security Required |
Secure - 1 | 0% |
Secure - 2 | 10% |
Secure - 3 | 20% |
Secure - 4 | 50% |
Secure - 5 | 75% |
Vulnerable - 6 | 100% |
The one year deferral period is contingent upon the certified reinsurer continuing to pay claims in a timely manner. Reinsurance recoverables for only the following lines of business as reported on the NAIC annual financial statement related specifically to the catastrophic occurrence will be included in the deferral:
Ratings | Best | S&P | Moody's | Fitch |
Secure - 1 | A++ | AAA | Aaa | AAA |
Secure - 2 | A+ | AA+, AA, AA- | Aal, Aa2, Aa3 | AA+, AA, AA- |
Secure - 3 | A | A+, A | A1, A2 | A+, A |
Secure - 4 | A- | A- | A3 | A- |
Secure - 5 | B++, B+ | BBB+, BBB, BBB- | Baa1, Baa2, Baa3 | BBB+, BBB, BBB- |
Vulnerable -6 | B, B-C++, C+, C, C-, D, E, F | BB+, BE, BB-, B+, B, B-, CCC, CC, C, D, R | Ba1, Ba2, Ba3, B1, B2, B3, Caa, Ca, C | BB+, BB, BB-, B+, B, B-, CCC+, CC, CCC-, DD |
Pursuant to Ark. Code Ann. § 23-62-305(h), the Commissioner shall allow credit for reinsurance ceded by a domestic insurer to an assuming insurer not meeting the requirements of Ark. Code Ann. § 23-62-305(b)(c)(d)(e) or (g), but only as to the insurance of risks located in jurisdictions where the reinsurance is required by the applicable law or rule of that jurisdiction. As used in this section, "jurisdiction" means any state, district or territory of the United States and any lawful national government.
A ceding insurer may take credit for unencumbered funds witliheld by the ceding insurer in the United States subject to withdrawal solely by the ceding insurer and under its exclusive control.
Credit will not be granted, nor an asset or reduction from liability allowed, to a ceding insurer for reinsurance effected with assuming insurers meeting the requirements of Sections 4, 5, 6, 7, 8 or 10 of this rule or otherwise in compliance with Ark. Code Ann. § 23-62-305 after the adoption of this rule unless the reinsurance agreement:
All new and renewal reinsurance transactions entered into after January 1, 2016 shall confomi to the requirements of the Act and this rule if credit is to be given to the ceding insurer for such reinsurance.
The provisions of this rule shall become effective on January 1, 2016.
FORM AR-1
CERTIFICATE OF ASSUMING INSURER I,_______________________________________________________________________________________________ (name of officer) (title of officer) of______________________________________________________________________, the assuming insurer (name of assuming insurer) under a reinsurance agreement with one or more insurers domiciled in __________________________________________________________________________, hereby certify that (name of state) ______________________________________________________________________("Assuming Insurer"): (name of assuming insurer)
(ceding insurer's state of domicile)
for the adjudication of any issues arising out of the reinsm-ance agreement, agrees to comply with all requirements necessary to give such court jurisdiction, and will abide by the final decision of such court or any appellate court in the event of an appeal. Nothing in this paragraph constitutes or should be understood to constitute a waiver of Assuming Insurer's rights to commence an action in any court of competent jurisdiction in the United States, to remove an action to a United States District Court, or to seek a transfer of a case to another court as permitted by the laws of the United States or of any state in the United States. This paragraph is not intended to conflict with or override the obligation of the parties to the reinsvu'ance agreement to arbitrate their disputes if such an obligation is created in the agreement.
(ceding insurer's state of domicile)
as its lawful attorney upon whom may be served any lawful process in any action, suit or proceeding arising out of the reinsurance agreement instituted by or on behalf of the ceding insiirer.
(ceding insurer's state of domicile)
its books and records and agrees to bear the expense of any such examination.
(ceding insurer's state of domicile)
reinsured by Assuming Insurer and undertakes to submit additions to or deletions from the list to the Insurance Commissioner at least once per calendar quarter.
Dated:__________________________ __________________________
(name of assuming insurer)
BY:___________________________________________
(name of officer)
________________________________
(title of officer)
FORM CR-1
CERTIFICATE OF CERTIFIED REINSURER
I,___________________________________________,___________________________________________________ (name of officer) (title of officer) of______________________________________________________________________, the assuming insui'er (name of assuming insurer) under a reinsurance agreement with one or more insurers domiciled in__________________________________, in order to be considered for approval in this state, hereby certify that (name of state) ________________________________________________________________________C'A.ssumiQg Insurer"):
(name of assuming insurer)
(ceding insurer's state of domicile)
for the adjudication of any issues arising out of the reinsurance agreement, agrees to comply with all requirements necessary to give such court jurisdiction, and will abide by the final decision of such court or any appellate court in the event of an appeal. Nothing in tliis paragraph constitutes or should be understood to constitute a waiver of Assuming Insurer's rights to commence an action in any court of competent jurisdiction in the United States, to remove an action to a United States District Court, or to seek a transfer of a case to another court as permitted by the laws of the United States or of any state in the United States. This paragraph is not intended to conflict with or override the obligation of the parties to the reinsurance agreement to arbitrate their disputes if such an obligation is created in the agreement.
(ceding insurer's state of domicile)
as its lawful attorney upon whom may be served any lawful process in any action, suit or proceeding arising out of the reinsurance agreement instituted by or on behalf of the ceding insurer.
Dated:__________________________ _______________________________________________
(name of assuming insurer)
BY:__________________________
(name of officer)
_________________________
(title of officer)
054.00.15 Ark. Code R. 007