Nev. Admin. Code § 681A.Sec. 18

Current through October 11, 2024

Section 681A.Sec. 18 - NEW

1. The provisions of sections 2 to 22, inclusive apply to all reinsurance treaties that cede liabilities pertaining to a covered policy issued by a life insurance company domiciled in this State.

2. The provisions of sections 2 to 22, inclusive do not apply to reinsurance:

(a) Of the following types of policies that are issued before the effective date or the date on which the ceding insurer begins to apply the provisions of the Valuation Manual to establish the statutory reserves of the ceded policies, whichever occurs later, but not later than January 1, 2022:

(1) An attained-age-based yearly renewable term life insurance policy.

(2) A policy that becomes an attained-age-based yearly renewable term life insurance policy after an initial period of coverage if one of the following conditions are met:

(I) The initial period of coverage is constant for all insureds of the same sex, risk class and plan of insurance; or

(II) The initial period of coverage runs to a common attained age for all insureds of the same sex, risk class and plan of insurance and, after the initial period of coverage, the policy meets the conditions of an attained-age-based yearly renewable term life insurance policy.

(3) A renewable term life insurance policy if:

(I) The policy consists of a series of renewal periods that are identical in length, except for the final renewal period, which may be truncated or extended to reach the expiry age, provided that the final renewal period is less than 10 years and less than twice the size of any other renewal period under the policy, and for each period the premium rates on both the initial current premium scale and the guaranteed maximum premium scale are level;

(II) The guaranteed gross premium in all renewal periods are not less than the corresponding net premiums based upon the Ultimate 1980 CSO Mortality Table, with or without the Ten-Year Select Mortality Factors; and

(III) There are no cash surrender values in any policy year.

(b) Of a portion of a yearly renewable term reinsurance policy in which the mortality risk is reinsured and issued not later than:

(1) The effective date; or

(2) The date on which the ceding insurer begins to apply the provisions of the Valuation Manual to establish the statutory reserves of the ceded policies, whichever occurs later, but not later than January 1, 2022.

(c) Of a universal life policy that has:

(1) A secondary guarantee period, if any, of not more than 5 years;

(2) A specified premium for the secondary guarantee period of not less than the net level reserve premium for the secondary guarantee period, based on the CSO valuation tables and valuation interest rate applicable to the issue year of the policy; and

(3) An initial surrender charge that is not less than 100 percent of the first year annualized specified premium for the secondary guarantee period.

(d) Of credit life insurance.

(e) Of a variable life insurance policy that provides for life insurance in which the amount or duration of the policy varies according to the investment experience of a separate account.

(f) Of a 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 of more than 1 year.

(g) That is ceded to an assuming insurer that meets the applicable requirements of NRS 681A.180 and 681A.190.

(h) That is ceded to an assuming insurer that:

(1) Meets the applicable requirements of NRS 681A.155, 681A.160 and 681A.170;

(2) Prepares statutory financial statements in compliance with the Accounting Practices and Procedures Manual of the National Association of Insurance Commissioners, adopted by reference in NAC 679B.033, without any departures relating to the admissibility or valuation of assets or liabilities that increase the assuming insurer's reported surplus and reach a level of materiality that require disclosure in the financial statements pursuant to the Statement of Statutory Accounting Principles No. 1 of the National Association of Insurance Commissioners; and

(3) Has not triggered a company action level event, regulatory action level event, authorized control level event or a mandatory control level event when its risk-based capital is calculated in accordance with the life risk-based capital report, including, without limitation, overview and instructions for companies, as amended by the National Association of Insurance Commissioners.

(i) That is ceded to an assuming insurer that:

(1) Meets the applicable requirements of NRS 681A.155, 681A.160 and 681A.170;

(2) Is not an affiliate of:

(I) The insurer ceding the business to the assuming insurer; or

(II) An insurer that directly or indirectly ceded the business to the current ceding insurer;

(3) Prepares statutory financial statements in compliance with the Accounting Practices and Procedures Manual of the National Association of Insurance Commissioners, adopted by reference in NAC 679B.033;

(4) Is licensed or accredited in not less than 10 states, including its state of domicile;

(5) Is 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 similarly situated licensing regime; and

(6) Is not below 500 percent of the authorized control level when its risk-based capital is calculated in accordance with the life risk-based capital report, including, without limitation, overview and instructions for companies, as amended by the National Association of Insurance Commissioners, and without recognition of any departures relating to the admissibility or valuation of assets or liabilities that increase the reported surplus of the assuming insurer.

(j) That is ceded to an assuming insurer that meets the requirements of subsection 3 of NRS 681A.145.

(k) That is not otherwise exempt from the provisions of sections 2 to 22, inclusive pursuant to this subsection if the Commissioner, in consultation with the Financial Analysis Working Group of the National Association of Insurance Commissioners or another group of regulators approved by the National Association of Insurance Commissioners, determines that the application of the provisions of sections 2 to 22, inclusive to the risks associated with such form of reinsurance is not necessary to provide adequate protection to policyholders. If the Commissioner exempts a reinsurance treaty pursuant to this paragraph, he or she will, in a manner the Commissioner deems sufficient, publicly disclose the exemption, the basis for the determination and a summary description of the treaty.

Nev. Admin. Code § 681A.Sec. 18

Added to NAC by Comm'r of Insurance by R187-22A, eff. 12/14/2022

NRS 679B.130, 681A.130, 681A.145