2899

DEFINITIONS

2899.1

When used in this chapter, the following terms and phrases shall have the meanings ascribed:

Actuarial method – the methodology used to determine the Required Level of Primary Security, as described in § 2851.

Covered policies – those policies, other than Grandfathered policies, of the following policy types:

(1) Life insurance policies with guaranteed nonlevel gross premiums and/or guaranteed nonlevel benefits, except for flexible premium universal life insurance policies; or

(2) Flexible premium universal life insurance policies with provisions resulting in the ability of a policyholder to keep a policy in force over a secondary guarantee period.

Grandfathered policies – policies that would be covered policies except that they were issued prior to January 1, 2015, and were ceded, as of December 31, 2014, as part of a reinsurance treaty that would not have met one of the exemptions set forth in § 2855 had that section then been in effect.

Law on Credit for Reinsurance Act of 1993 – the Law on Credit for Reinsurance Act of 1993, effective October 15, 1993 (D.C. Law 10-36; D.C. Official Code § 31-501 et seq.).

NAIC – the National Association of Insurance Commissioners.

Non-covered policies – any policy that does not meet the definition of covered policies.

Other security – any security acceptable to the Commissioner other than security meeting the definition of primary security.

Primary security – the following forms of security:

(1) Cash meeting the requirements of § 3(b)(1) of the Law on Credit for Reinsurance Act of 1993 (D.C. Official Code § 31-502(b)(1));

(2) Securities listed by the Securities Valuation Office of the National Association of Insurance Commissioners meeting the requirements of §

3(b)(2) of the Law on Credit for Reinsurance Act of 1993 (D.C. Official Code § 31-502(b)(2)), but excluding any synthetic letter of credit, contingent note, credit-linked note or other similar security that operates in a manner similar to a letter of credit, and excluding any securities issued by the ceding insurer or any of its affiliates; and

(3) For security held in connection with funds-withheld and modified coinsurance reinsurance treaties:

(a) Commercial loans in good standing of CM3 quality or higher;

(b) Policy Loans; and

(c) Derivatives acquired in the normal course and used to support the hedge liabilities, pertaining to the actual risks in the policies ceded pursuant to the reinsurance treaty.

Required level of primary security – the dollar amount determined by applying the actuarial method to the risks ceded with respect to covered policies, but not more than the total reserve ceded.

Valuation manual – the valuation manual adopted by the NAIC as described in Section 11(B)(1) of the Standard Valuation Law, with all amendments adopted by the NAIC that are effective for the financial statement date on which credit for reinsurance is claimed.

VM-20 – “Requirements for Principle-Based Reserves for Life Products,” including all relevant definitions, from the Valuation Manual.

FORM RJ-1

CERTIFICATE OF REINSURER DOMICILED IN RECIPROCAL JURISDICTION

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 _______, (name of state)

in order to be considered for approval in this state, hereby certify that

_______ (“Assuming Insurer”): (name of assuming insurer)

1. Submits to the jurisdiction of any court of competent jurisdiction in [Name of State] 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. The assuming insurer agrees that it will include such consent in each reinsurance agreement, if requested by the commissioner. 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 reinsurance agreement to arbitrate their disputes if such an obligation is created in the agreement, except to the extent such agreements are unenforceable under applicable insolvency or delinquency laws.

2. Designates the Insurance Commissioner of [Name of State] as its lawful attorney in and for the [Name of State] upon whom may be served any lawful process in any action, suit or proceeding in this state arising out of the reinsurance agreement instituted by or on behalf of the ceding insurer.

3. Agrees to pay all final judgments, wherever enforcement is sought, obtained by a ceding insurer, that have been declared enforceable in the territory where the judgment was obtained.

4. Agrees to provide prompt written notice and explanation if it falls below the minimum capital and surplus or capital or surplus ratio, or if any regulatory action is taken against it for serious noncompliance with applicable law.

5. Confirms that it is not presently participating in any solvent scheme of arrangement, which

involves insurers domiciled in [Name of State]. If the assuming insurer enters into such an arrangement, the assuming insurer agrees to notify the ceding insurer and the commissioner, and to provide 100% security to the ceding insurer consistent with the terms of the scheme.

6. Agrees that in each reinsurance agreement it will provide security in an amount equal to 100% of the assuming insurer’s liabilities attributable to reinsurance ceded pursuant to that agreement if the assuming insurer resists enforcement of a final U.S. judgment, that is enforceable under the law of the territory in which it was obtained, or a properly enforceable arbitration award whether obtained by the ceding insurer or by its resolution estate, if applicable.

7. Agrees to provide the documentation in accordance with [cite relevant provision of the state equivalent of Section 9C(5) of the Credit for Reinsurance Model Regulation], if requested by the commissioner.

Dated: _______

(name of assuming insurer)

BY: _______

(name of officer)

(title of officer)

SOURCE: Final Rulemaking published at 68 DCR 6518 (June 25, 2021); as amended by Final Rulemaking published at 69 DCR 015557 (December 30, 2022).