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Rule Title: CERTIFIED ASSUMING INSURERS - LEGAL ENTITY SECURITY RATING
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Department: STATE AUDITOR
Chapter: INSURANCE DEPARTMENT
Subchapter: Credit for Reinsurance
 
Latest version of the adopted rule presented in Administrative Rules of Montana (ARM):

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6.6.3850    CERTIFIED ASSUMING INSURERS - LEGAL ENTITY SECURITY RATING

(1) Each certified reinsurer shall be rated on a legal entity basis, with due consideration being given to the group rating where appropriate, except that an association including incorporated and individual unincorporated underwriters that has been approved to do business as a single certified reinsurer may be evaluated on the basis of its group rating. Factors that may be considered as part of the evaluation process include, but are not limited to, the following:

(a) the certified reinsurer's financial strength rating from an acceptable rating agency. The maximum rating that a certified reinsurer may be assigned will correspond to its financial strength rating as outlined in the table below. The commissioner shall use the lowest financial strength rating received from an approved rating agency in establishing the maximum rating of a certified reinsurer. A failure to obtain or maintain at least two financial strength ratings from acceptable rating agencies will result in loss of eligibility for certification:

Ratings

Best

S&P

Moody's

Fitch

Secure 1

A++

AAA

Aaa

AAA

Secure 2

A+

AA+, AA, AA-

Aa1, Aa2, Aa3

AA+, AA, AA-

Secure 3

A

A+, A

A1, A2

A+, A

Secure 4

A-

A-

A3

A-

Secure 5

B++, B+

BBB+, BBB, BBB-

Baa1, Baa2, Baa3

BBB+, BBB, BBB-

Vulnerable

6

B, B-, C++, C+, C, C-, D, E, F

BB+, BB, BB-,

B+, B, B-, CCC, CC, C, D, R

Ba1, Ba2, Ba3,

B1, B2, B3, Caa, Ca, C

BB+, BB, BB-,

B+, B, B-, CCC+, CC, CCC-, DD

(b) the business practices of the certified reinsurer in dealing with its ceding insurers, including its record of compliance with reinsurance contractual terms and obligations;

(c) for certified reinsurers domiciled in the United States, a review of the most recent applicable NAIC Annual Statement Blank, either Schedule F (for property/casualty reinsurers) or Schedule S (for life and health or disability reinsurers);

(d) for certified reinsurers not domiciled in the United States, a review annually of Form CR-F (for property/casualty reinsurers) or Form CR-S (for life and health or disability reinsurers). The forms are found on the web site maintained by the commissioner;

(e) the reputation of the certified reinsurer for prompt payment of claims under reinsurance agreements, based on an analysis of ceding insurers' Schedule F reporting of overdue reinsurance recoverables, including the proportion of obligations that are more than 90 days past due or are in dispute, with specific attention given to obligations payable to companies that are in administrative supervision or receivership;

(f) regulatory actions against the certified reinsurer;

(g) reports of an independent auditor on the financial statements of the assuming insurer, audited financial statement, regulatory filings, and actuarial opinions (as filed with the assuming insurer's supervisor);

(h) for certified reinsurers not domiciled in the United States, audited financial statements (audited United States GAAP basis if available, audited IFRS basis statements are allowed but must include an audited footnote reconciling equity and net income to a United States GAAP basis, or, with the permission of the state insurance commissioner, audited IFRS statements with reconciliation to United States GAAP certified by an officer of the company), regulatory filings, and actuarial opinion (as filed with the non-United States jurisdiction supervisor). Upon the initial application for certification, the commissioner will consider audited financial statements for the last three years filed with its non-United States jurisdiction supervisor;

(i) the liquidation priority of obligations to a ceding insurer in the certified reinsurer's domiciliary jurisdiction in the context of an insolvency proceeding;

(j) a certified reinsurer's participation in any solvent scheme of arrangement, or similar procedure, which involves United States ceding insurers. The commissioner shall receive prior notice from a certified reinsurer that proposes participation by the certified reinsurer in a solvent scheme of arrangement; and

(k) any other information deemed relevant by the commissioner.

(2) The commissioner has the authority to revise and change the legal rating of a certified assuming insurer at any time pursuant to this rule.

History: 33-1-313, 33-2-1517, MCA; IMP, 33-2-1216, MCA; NEW, 2016 MAR p. 2186, Eff. 11/26/16.


 

 
MAR Notices Effective From Effective To History Notes
6-226 11/26/2016 Current History: 33-1-313, 33-2-1517, MCA; IMP, 33-2-1216, MCA; NEW, 2016 MAR p. 2186, Eff. 11/26/16.
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