Section 7.604 - Assumption Reinsurance(a) An insurer authorized to do the business of insurance in this state must, prior to entering into an assumption reinsurance agreement for its entire outstanding business, submit to TDI the written plan of reinsurance, including the assumption reinsurance agreement, and all necessary documents to allow the Commissioner to determine that the interests of all policyholders are fully protected as follows: (1) a letter signed by a company officer, and including the phone number and email of the appropriate company contact individual:(A) explaining the transaction;(B) identifying all parties involved and specifying which are affiliates;(C) stating the intentions of all parties post transaction;(D) stating whether the assumption reinsurance transaction is all of the ceding company's direct insurance exposure or only a portion and whether the transaction cedes all direct insurance exposure, the ceding company's plans going forward to maintain its certificate of authority or dissolve the entity;(E) providing the date that any required assumption certificate or endorsement was filed with TDI;(F) stating whether the policy reserves associated with the assumption reinsurance agreement are greater than 10 percent of the assuming insurer's total policyholder surplus or 25 percent of the ceding insurer's total assets;(G) stating whether there is a settlement fee or consideration associated with the assumption reinsurance agreement;(H) stating whether any parties to the agreement have assets deposited with or pledged to TDI and, if applicable, the party's expectations related to such deposits; and(I) addressing any due diligence issues, including disclosure of any currently owned assets that may be nonadmitted as a result of the assumption reinsurance;(J) stating the number of policies to be reinsured broken down by type of policy, form number, or other appropriate means;(K) specifying in detail any changes in the policy coverage, provisions, rights or privileges, or in the actuarial reserving basis; and(L) specifying a "date certain" for the effective date and contain the date by which all of the assumption certificates will be delivered or mailed (for group policies, each individual certificate holder must receive an assumption certificate);(2) a copy of the assumption reinsurance agreement to be signed by officers of the parties to the agreement;(3) a copy of any agreement governing the settlement fee or consideration reflecting the acquisition cost;(4) if associated policy reserves of the business being ceded is greater than 10 percent of assuming insurer's total policyholder surplus or greater than 25 percent of ceding insurer's total assets, a four column balance sheet reflecting historical numbers from the most recently filed annual or quarterly statement, consistent with the following subparagraphs: (A) the first column should reflect the ceding insurer's financial position pre-transaction;(B) the second column should reflect assuming insurer's financial position pre-transaction;(C) the third column should reflect the effect of the transaction on the applicable balance sheet accounts; and(D) the fourth column should reflect the financial position of the assuming insurer post-transaction;(5) if one of the companies involved in the transaction is a foreign domiciled insurer, provide evidence that the state of domicile has approved the assumption reinsurance, or if no approval is required in the state of domicile, an original letter from the domiciliary state insurance department stating such; and(6) a copy of the letter appointing agents of the ceding insurer to the assuming insurer.(b) If the assumption reinsurance agreement is between only foreign domiciled insurers that have policyholders or certificate holders located in Texas, the insurer must submit only the information and documents listed in subsection (a)(1), (2), (3), and (5) of this section.28 Tex. Admin. Code § 7.604
The provisions of this §7.604 adopted to be effective August 16, 1990, 15 TexReg 4435; amended to be effective September 30, 1993, 18 TexReg 6329; Amended by Texas Register, Volume 43, Number 24, June 15, 2018, TexReg 3888, eff. 6/19/2018