An asset or a reduction from liability for the reinsurance ceded by a domestic insurer to an assuming insurer not meeting the requirements of § 27-1.1-1 shall be allowed in an amount not exceeding the liabilities carried by the ceding insurer; provided, further, that the commissioner may adopt by regulation pursuant to § 27-1.1-4 specific additional requirements relating to or setting forth:

(1)  The valuation of assets or reserve credits;

(2)  The amount and forms of security supporting reinsurance arrangements described in § 27-1.1-4; and

(3)  The circumstances pursuant to which credit will be reduced or eliminated.

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Terms Used In Rhode Island General Laws 27-1.1-2

  • Amendment: A proposal to alter the text of a pending bill or other measure by striking out some of it, by inserting new language, or both. Before an amendment becomes part of the measure, thelegislature must agree to it.
  • Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
  • Contract: A legal written agreement that becomes binding when signed.
  • Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
  • United States: include the several states and the territories of the United States. See Rhode Island General Laws 43-3-8

The reduction shall be in the amount of funds held by or on behalf of the ceding insurer, including funds held in trust for the ceding insurer, under a reinsurance contract with the assuming insurer as security for the payment of obligations thereunder, if the security is held in the United States subject to withdrawal solely by, and under the exclusive control of, the ceding insurer, or, in the case of a trust, held in a qualified United States financial institution as defined in § 27-1.1-3(b). This security may be in the form of:

(1)  Cash;

(2)  Securities listed by the securities valuation office of the National Association of Insurance Commissioners, including those deemed exempt from filing as defined by the Purposes and Procedures Manual of the Securities Valuation Office, and qualifying as admitted assets;

(3)(i)  Clean, irrevocable, unconditional letters of credit, issued or confirmed by a qualified United States financial institution as defined in § 27-1.1-3(a), no later than December 31st of the year for which the filing is being made, and in the possession of, or in trust for, the ceding insurer on or before the filing date of its annual statement.

(ii)  Letters of credit meeting applicable standards of issuer acceptability as of the dates of their issuance or confirmation shall, notwithstanding the issuing or confirming institution’s subsequent failure to meet applicable standards of issuer acceptability, continue to be acceptable as security until their expiration, extension, renewal, modification, or amendment, whichever first occurs; or

(4)  Any other form of security acceptable to the commissioner.

History of Section.
P.L. 1991, ch. 257, § 1; P.L. 1991, ch. 348, § 1; P.L. 2013, ch. 84, § 2; P.L. 2013, ch. 91, § 2; P.L. 2017, ch. 389, § 1; P.L. 2017, ch. 434, § 1.