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31.05.07.00.htm 31.05.07.00. Title 31 MARYLAND INSURANCE ADMINISTRATION Subtitle 05 ASSETS, LIABILITIES, RESERVES, AND INVESTMENTS OF INSURERS Chapter 07 Life and Health Reinsurance Agreements Authority: Insurance Article, §1-101(jj) 2-109, 3-124, 3-125, 4-113, 4-114, 4-116, 5-103, 5-201(b)2) 5-203, 5-901, 5-903―5-905, 14-102, 14-108―14-111, 14-124(b) and 14-126, and Title 5, Subtitle 3, Annotated Code of Maryland
31.05.07.01.htm 31.05.07.01. 01 Regulatory Considerations.. A. The Insurance Commissioner recognizes that licensed insurers routinely enter into reinsurance agreements that yield legitimate relief to the ceding insurer from strain to the ceding insurer's surplus.B. It is improper, however, for a licensed insurer, in the capacity of ceding insurer, to enter into a reinsurance agreement for the principal purpose of producing significant surplus aid for the ceding insurer, typically on a temporary basis, while
31.05.07.02.htm 31.05.07.02. 02 Scope.. A. This chapter applies to:. 1) Each domestic life and accident and health insurer, including nonprofit health service plans;. 2) Any other licensed life and accident and health insurer, including a nonprofit health services plan, that is not subject to a substantially similar regulation in its domiciliary state; and3) Each licensed property and casualty insurer with respect to its accident and health business.. B. This chapter does not apply to:.
31.05.07.03.htm 31.05.07.03. 03 Definitions.. A. In this chapter, the following terms have the meanings indicated.. B. Terms Defined.. 1) Credit Quality Risk.. a) "Credit quality risk" means the risk that invested assets supporting the reinsured business will decrease in value creating the hazard that assets will default or that there will be a decrease in earning power.b) "Credit quality risk" does not include market value declines due to changes in interest rates.. 2) "Disintermediation ris
31.05.07.04.htm 31.05.07.04. 04 Taking Reserve Credit or Establishing Assets for Reinsurance Ceded.. A. Allowed. Notwithstanding the prohibitions contained in Regulation .05 of this chapter, an insurer may, with the prior approval of the Commissioner, take the reserve credit and establish the assets for reinsurance ceded as the Commissioner considers consistent with the Insurance Article of the Annotated Code of Maryland, the Code of Maryland Regulations, and any actuarial interpretations or stan
31.05.07.05.htm 31.05.07.05. 05 Circumstances Under Which Reduction of Liability and Establishment of Asset Prohibited.. A. In general. An insurer may not, for reinsurance ceded, reduce any liability or establish any asset in any financial statement filed with the Commissioner if, by the terms of the reinsurance agreement, in substance or effect:1) Renewal expense allowances provided or to be provided to the ceding insurer by the reinsurer in any accounting period are not sufficient to cover a
31.05.07.06.htm 31.05.07.06. 06 Determining Whether Significant Risk Exists.. A. Risk Table.. 1) The table contained in this section identifies for a representative sampling of products or types of business the risks that are considered to be significant.2) For products that are not included in the table, the risks determined to be significant shall be consistent with the table.3) Table.. Type of Policy. Morbidity Risk. Mortality Risk. Lapse Risk. Credit Quality Risk (C1). Reinvestment Risk (C2).
31.05.07.07.htm 31.05.07.07. 07 Filing Agreements with Commissioner.. A. Filing Required. A ceding insurer shall file with the Commissioner:. 1) Each agreement entered into after the effective date of this chapter that involves the reinsurance of business issued before the effective date of the agreement; and2) Any amendment to an agreement required to be filed under §A(1) of this regulation.. B. Time for Filing. A ceding insurer shall file an agreement or amendment within 30 days after the e
31.05.07.08.htm 31.05.07.08. 08 Requirements of Written Agreements.. A. Execution by Both Parties. An insurer may not use a reinsurance agreement or an amendment to a reinsurance agreement to reduce any liability or to establish any asset in a financial statement filed with the Commissioner, unless the agreement, amendment, or a binding letter of intent has been duly executed by both parties not later than the "as of date" of the financial statement.B. Letter of Intent-Time of Execution. In the case
31.05.07.09.htm 31.05.07.09. 09 Existing Agreements.. A. Subject to §B of this regulation, an insurer shall reduce to zero by December 31, 1998, any reserve credits or assets established with respect to reinsurance agreements entered into before the effective date of this chapter that, under this chapter, would not be entitled to recognition of the reserve credits or assets.B. An insurer is entitled to the grace period for a reinsurance agreement under §A of this regulation only if the reinsurance
31.05.07.9999.htm 31.05.07.9999. Administrative History Effective date: January 2, 1993 (19:26 Md. R. 2287). Regulations .01―05 repealed and new Regulations .01―09 adopted as an emergency provision effective December 19, 1997 (25:2 Md. R. 73) adopted permanently effective May 4, 1998 (25:9 Md. R. 678) ―Chapter recodified from COMAR 09.30.91 to COMAR 31.05.07 effective September 7, 1998 (25:18 Md. R. 1439)Regulation .01D amended effective December 17, 2007 (34:25 Md. R. 2216).
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