Section 2303.25 - Term and Universal Life Insurance Reserve Financing, ExemptionsSections 2303.23, 2303.24, 2303.26, 2303.27 and 2303.28 of this article do not apply to:
(a) Reinsurance of: 1. Policies that satisfy the criteria for exemption set forth in Section 2542.5(f) of article 12.3 or Section 2542.5(g) of article 12.3; and which are issued before the later of: A. The effective date of Sections 2303.23 through 2303.28 of this article, andB. 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, 2020.2. Portions of policies that satisfy the criteria for exemption set forth in Section 2542.5(e) of article 12.3 and which are issued before the later of: A. The effective date of Sections 2303.23 through 2303.28 of this article, andB. 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 Commissioner's Standard Ordinary (CSO) valuation tables and valuation interest rate applicable to the issue year of the policy, andC. The initial surrender charge is not less than 100 percent (100%) 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.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 Code Section 922.4(d).(c) Reinsurance ceded to an assuming insurer that meets the applicable requirements of Code Sections 922.4(a) or (b), and that, in addition: 1. Prepares statutory financial statements in compliance with the NAIC Accounting Practices and Procedures Manual, 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"), and2. 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 Article 4.1 of Code Sections 739et seq. when its RBC is calculated in accordance with the life risk-based capital 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 Code Sections 922.4(a) or (b), and that, in addition: 1. Is not an affiliate, as that term is defined in Code Section 1215(a), of: A. The insurer ceding the business to the assuming insurer, orB. 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), andB. 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, and4. Is not, or would not be, below 500% of the Authorized Control Level RBC as that term is defined in Code Sections 739et seq. when its Risk Based Capital (RBC) is calculated in accordance with the life risk-based capital 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 meets the requirements of Code Section 922.85(b)(5)(A) pertaining to insurers meeting the conditions of Code Section 922.425, Code Section 922.85(b)(5)(B) pertaining to certain certified reinsurers, or Code Section 922.85(b)(5)(C), pertaining to reinsurers meeting certain threshold size and licensing requirements.(f) Reinsurance not otherwise exempt under subdivisions (a) through (e) if the commissioner, 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 Sections 2303.23 through 2303.28 of this article (as described in Section 2303.23 of this article),2. The risks are included within the scope of Sections 2303.23 through 2303.28 of this article only as a technicality, and3. The application of Sections 2303.23 through 2303.28 of this article to those risks is not necessary to provide appropriate protection to policyholders. The commissioner shall post on the Department's public web site a notice of any decision made pursuant to this subdivision to exempt a reinsurance treaty from Sections 2303.23 through 2303.28 of this article, as well as the general basis therefor (including a summary description of the treaty).Cal. Code Regs. Tit. 10, § 2303.25
1. New section filed 11-27-2017; operative 1-1-2018 (Register 2017, No. 48). For prior history, see Register 2015, No. 13.
2. Change without regulatory effect amending subsection (e) and NOTE filed 12-28-2020 pursuant to section 100, title 1, California Code of Regulations (Register 2021, No. 1). Filing deadline specified in Government Code section 11349.3(a) extended 60 calendar days pursuant to Executive Order N-40-20. Note: Authority cited: Sections 739.9, 922.85, 923 and 10489.94, Insurance Code; CalFarm Insurance Company v. Deukmejian, 48 Cal. 3d 805 (1989); and 20th Century Insurance Company v. Garamendi, 8 Cal. 4th 216 (1994). Reference: Sections 739, 900, 922.4, 922.425, 922.5, 922.85, 923, 10489.1, 10489.12, 10489.96 and 12921, Insurance Code.
1. New section filed 11-27-2017; operative 1/1/2018 (Register 2017, No. 48). For prior history, see Register 2015, No. 13.
2. Change without regulatory effect amending subsection (e) and Note filed 12-28-2020 pursuant to section 100, title 1, California Code of Regulations (Register 2021, No. 1). Filing deadline specified in Government Code section 11349.3(a) extended 60 calendar days pursuant to Executive Order N-40-20.