Ohio § 3901.62

§ 3901.62.

(A) Except as provided in sections 3901.63 and 3901.64 of the Revised Code , a domestic ceding insurer that is authorized to do any insurance business in this

state may take credit for any reinsurance ceded as either an asset or a reduction

of liability only if one of the following applies: (1) The reinsurance is ceded to an assuming insurer that is authorized to do any insurance

or reinsurance business in this state. (2) The reinsurance is ceded to an assuming insurer that is accredited by the superintendent

of insurance as a reinsurer in this state in accordance with division (B) of this

section. (3) The reinsurance is ceded to an assuming insurer that is not authorized to do any

insurance or reinsurance business in this state, provided the reinsurance is ceded

to a reinsurance pool or other risk-sharing entity in which participation is required

by law, rule, or regulation of the jurisdiction in which the pool or entity is located. (4) The reinsurance is ceded to an assuming insurer that maintains a trust fund in a

qualified United States financial institution, as defined in section 3901.63 of the Revised Code , for the payment of the valid claims of its United States policyholders and ceding

insurers, and their assigns and successors in interest in accordance with division

(C) of this section. (5) The reinsurance is ceded to an assuming insurer that has been certified by the superintendent

as a reinsurer in this state and that secures its obligations in accordance with division

(D) of this section. (6) The reinsurance is ceded to an assuming insurer that meets all of the conditions

set forth in division (E) of this section. (B)(1) In order to be eligible for accreditation under division (A)(2) of this section,

the assuming insurer shall do all of the following: (a) File with the superintendent evidence of its submission to this state's jurisdiction; (b) Submit to this state's authority to examine its books and records; (c) Maintain a license to transact insurance or reinsurance in at least one state or,

in the case of a United States branch of a foreign or alien assuming insurer, be entered

through and licensed to transact insurance or reinsurance in at least one state; (d) File annually with the superintendent a copy of its annual statement filed with the

insurance department of its state of domicile, and a copy of its most recent audited

financial statement; (e) Demonstrate to the satisfaction of the superintendent that it has adequate financial

capacity to meet its reinsurance obligations and is otherwise qualified to assume

reinsurance from domestic insurers. (2) An assuming insurer is considered to meet the requirement of division (B)(1)(e) of

this section as of the time of its application to the superintendent for accreditation

if it maintains a surplus with regard to policyholders in an amount not less than

twenty million dollars, and the superintendent has not denied its accreditation within

ninety days after submission of its application. (C)(1) A trust maintained by an assuming insurer under division (A)(4) of this section shall

meet the following requirements: (a) In the case of a single assuming insurer, the trust shall consist of a trusteed account

representing the assuming insurer's liabilities attributable to business underwritten

in the United States.  A trusteed surplus of not less than twenty million dollars shall be maintained by

the assuming insurer, except that at any time after the assuming insurer has permanently

discontinued underwriting new business secured by the trust for at least three full

years, the superintendent with principal regulatory oversight of the trust may authorize

a reduction in the required trusteed surplus, but only after a finding, based on an

assessment of the risk, that the new required surplus level is adequate for the protection

of ceding insurers within the United States, policyholders, and claimants in light

of reasonably foreseeable adverse loss development. The risk assessment may involve an actuarial review, including an independent analysis

of reserves and cash flows, and shall consider all material risk factors, including

when applicable the lines of business involved, the stability of the incurred loss

estimates, and the effect of the surplus requirements on the assuming insurer's liquidity

or solvency. The minimum required trusteed surplus shall not be reduced to an amount less than

thirty per cent of the assuming insurer's liabilities attributable to reinsurance

ceded by ceding insurers within the United States covered by the trust. (b) In the case of a group of assuming insurers, including incorporated and individual

unincorporated underwriters, the trust shall consist of a trusteed account representing

the group's liabilities attributable to business written in the United States.  A trusteed surplus shall be maintained by the group, of which surplus one hundred

million dollars shall be held jointly for the benefit of the United States ceding

insurers of any member of the group.  The following requirements apply to the group of assuming insurers: (i) The incorporated members of the group shall not engage in any business other than

underwriting as a member of the group, and shall be subject to the same level of solvency

regulation and control by the group's domiciliary regulator as are the unincorporated

members. (ii) The group shall make available to the superintendent of insurance an annual certification

of the solvency of each underwriter in the group.  The certification shall be provided by the group's domiciliary regulator and its

independent public accountants. (c) In the case of a group of incorporated insurers under common administration with

aggregate policyholders' surplus of ten billion dollars that has continuously transacted

an insurance business outside the United States for at least three years immediately

prior to assuming reinsurance, the trust shall be in an amount equal to the group's

several liabilities attributable to business ceded by United States ceding insurers

to any member of the group pursuant to reinsurance contracts issued in the name of

the group.  A joint trusteed surplus shall be maintained by the group, of which surplus one

hundred million dollars shall be held jointly for the benefit of United States ceding

insurers of any member of the group as additional security for any such liabilities.  The following requirements apply to the group of incorporated insurers: (i) The group shall comply with all filing requirements contained in this section. (ii) The books and records of the group shall be subject to examination by the superintendent

in the same manner as the books and records of insurers are subject to examination

by the superintendent in accordance with section 3901.07 of the Revised Code .  The group shall bear the expenses of these examinations in the manner provided by

that section. (iii) Each member of the group shall make available to the superintendent an annual certification

of the member's solvency by the member's domiciliary regulator and an independent

public accountant. (2) A trust maintained by an assuming insurer under division (A)(4) of this section shall

remain in effect for as long as the assuming insurer has outstanding obligations due

under the reinsurance agreements subject to the trust.  The trust shall be in a form approved by the superintendent and shall include the

following: (a) The trust instrument shall provide that contested claims are valid and enforceable

upon the final order of any court of competent jurisdiction in the United States. (b) The trust shall vest legal title to its assets in the trustees of the trust for its

United States policyholders and ceding insurers, and their assigns and successors

in interest. (c) The trust, and the assuming insurer maintaining the trust, shall allow the superintendent

to conduct examinations in the same manner as the superintendent conducts examinations

of insurers under section 3901.07 of the Revised Code . (3) No later than the last day of February of each year, the trustees of a trust maintained

by an assuming insurer under division (A)(4) of this section shall provide the superintendent

with a written report setting forth the balance of the trust and listing the trust's

investments as of the preceding thirty-first day of December.  The trustees shall certify the date of the termination of the trust, if termination

of the trust is planned, or shall certify that the trust does not expire prior to

the following thirty-first day of December. (4) To enable the superintendent to determine the sufficiency of a trust maintained by

an assuming insurer under division (A)(4) of this section, the assuming insurer shall

annually report information on the trust to the superintendent that is substantially

the same as that information licensed insurers are required to report under sections 3907.19 , 3909.06 , and 3929.30 of the Revised Code on forms adopted under section 3901.77 of the Revised Code . (D)(1) In order to be eligible for certification under division (A)(5) of this section,

the assuming insurer shall do all of the following: (a) Be domiciled and licensed to transact insurance or reinsurance in a qualified jurisdiction

as determined by the superintendent pursuant to division (D)(3) of this section; (b) Maintain minimum capital and surplus, or its equivalent, in an amount to be determined

by the superintendent in rule or regulation; (c) Maintain financial strength ratings from two or more rating agencies that meet criteria

the superintendent sets forth in rule or regulation; (d) Agree to submit to the jurisdiction of this state, appoint the superintendent as

its agent for service of process in this state, and agree to provide security for

one hundred per cent of the assuming insurer's liabilities attributable to reinsurance

ceded by ceding insurers in the United States if it resists enforcement of a final

judgment from the United States; (e) Agree to meet applicable information filing requirements as determined by the superintendent

with respect to an initial application for certification and on an ongoing basis; (f) Satisfy any other requirements for certification considered relevant by the superintendent. (2) An association, including incorporated and individual unincorporated underwriters,

may be a certified reinsurer.  In order to be eligible for certification, an association, in addition to satisfying

the requirements of division (D)(1) of this section, shall also meet the following

requirements: (a) The association shall satisfy its minimum capital and surplus requirements through

the capital and surplus equivalents (net of liabilities), or the net liabilities,

of the association and its members which shall include a joint central fund that may

be applied to any unsatisfied obligation of the association or any of its members,

in an amount determined by the superintendent in order to provide adequate protection. (b) The incorporated members of the association shall not be engaged in any business

other than underwriting as a member of the association, and shall be subject to the

same level of regulation and solvency control by the association's domiciliary regulator

as the unincorporated members. (c) The association shall provide the superintendent an annual certification by the association's

domiciliary regulator of the solvency of each underwriter member within ninety days

after its financial statements are due to be filed with the association's domiciliary

regulator.  If a certification is unavailable, the association shall provide the superintendent

with financial statements prepared by independent public accountants of each underwriter

member of the association. (3) The superintendent shall create and publish a list of qualified jurisdictions under

which an assuming insurer licensed and domiciled in such jurisdiction is eligible

to be considered by the superintendent for certification as a certified reinsurer. (a) The superintendent shall consider the list of qualified jurisdictions published through

the national association of insurance commissioner's committee process in determining

qualified jurisdictions.  If the superintendent approves a jurisdiction as qualified that does not appear

on the list, the superintendent shall provide justification in accordance with criteria

to be developed by the superintendent under rule or regulation. (b) Jurisdictions within the United States that meet the requirement for accreditation

under the national association of insurance commissioner's financial standards and

accreditation program shall be recognized as qualified. (c) To determine if a domiciliary jurisdiction not located within the United States is

eligible to be recognized as a qualified jurisdiction, the superintendent shall evaluate

the appropriateness and effectiveness of the reinsurance supervisory system of the

jurisdiction, both initially and on an ongoing basis, and consider the rights, benefits,

and the extent of reciprocal recognition afforded by the jurisdiction to reinsurers

licensed and domiciled in the United States. (d) A qualified jurisdiction shall agree to share information and cooperate with the

superintendent with respect to all certified reinsurers domiciled within that jurisdiction. (e) A jurisdiction shall not be recognized as a qualified jurisdiction if the superintendent

has determined that the jurisdiction does not adequately and promptly enforce final

judgments and arbitration awards from the United States. (f) If a certified reinsurer's domiciliary jurisdiction ceases to be a qualified jurisdiction,

the superintendent may revoke the reinsurer's certification or suspend the reinsurer's

certification indefinitely. (g) The superintendent may consider additional factors as the superintendent considers

appropriate. (4) The superintendent shall assign a rating to each certified reinsurer giving due consideration

to the financial strength ratings assigned by rating agencies pursuant to division

(D)(1)(c) of this section.  The superintendent shall publish a list of all certified reinsurers and their ratings. (5) A certified reinsurer shall secure obligations assumed from a ceding insurer within

the United States at a level consistent with its rating as specified by the superintendent

in rule or regulation. (a) Except as otherwise provided in division (D)(5) of this section, a certified reinsurer

shall maintain security in a form acceptable to the superintendent and consistent

with section 3901.63 of the Revised Code , or in a multibeneficiary trust on behalf of the ceding insurer in accordance with

division (A)(4) of this section, in order for a domestic ceding insurer to qualify

for full financial statement credit for reinsurance ceded to a certified reinsurer. (b) If a certified reinsurer chooses to secure its obligations incurred as a certified

reinsurer in the form of a multibeneficiary trust for the benefit of the ceding insurer,

the certified reinsurer shall maintain separate trust accounts for its obligations

incurred under reinsurance agreements issued or renewed as a certified reinsurer with

reduced security as permitted by this division or comparable laws of other jurisdictions

within the United States, and for its obligations subject to division (A)(4) of this

section. (c) Upon termination of any such trust account described in division (A)(4) of this section,

a certified reinsurer shall be bound by the language of the trust and agreement with

the superintendent that has principal regulatory oversight of each trust account to

fund any deficiency of any other trust account out of the remaining surplus of such

trust as a condition to certification under division (D)(1) of this section. (d) The minimum trusteed surplus requirements provided in division (C) of this section

are not applicable with respect to a multibeneficiary trust maintained by a certified

reinsurer for the purpose of securing obligations incurred under division (A)(5) of

this section, except that such trust shall maintain a minimum trusteed surplus of

ten million dollars. (e) With respect to obligations incurred by a certified reinsurer under division (A)(5)

of this section, if the security is insufficient, the superintendent shall reduce

the allowable credit by an amount proportionate to the deficiency, and the superintendent

may impose further reductions in allowable credit upon finding that there is a material

risk that the certified reinsurer's obligations will not be paid in full when due. (f) Except as otherwise provided in division (D)(5) of this section, a reinsurer whose

certification has been terminated for any reason shall be treated under this section

as a certified reinsurer required to secure one hundred per cent of its obligations.  The superintendent may continue to assign a higher rating to the reinsurer if the

reinsurer is in inactive status or the reinsurer's certification has been suspended.  As used in division (D)(5)(f) of this section, “ terminated ” means revocation, suspension, voluntary surrender, or inactive status. (6) If an applicant for certification has been certified as a reinsurer in a national

association of insurance commissioners accredited jurisdiction, the superintendent

may defer to that jurisdiction's certification and rating assignment, and the assuming

insurer shall be considered to be a certified reinsurer in this state. (7) A certified reinsurer that ceases to assume new business in this state may request

to maintain its certification in inactive status in order to continue to qualify for

a reduction in security for its in-force business.  An inactive certified reinsurer shall continue to comply with all applicable requirements

of division (A)(5) of this section, and the superintendent shall assign a rating that

takes into account, if relevant, the reasons why the reinsurer is not assuming new

business. (E)(1)(a) The assuming insurer shall have its head office, or be domiciled in, as applicable,

and be licensed in a reciprocal jurisdiction. (b)(i) The assuming insurer shall have and maintain, on an ongoing basis, minimum capital

and surplus, or its equivalent, calculated according to the methodology of its domiciliary

jurisdiction, in an amount to be set forth in rule adopted by the superintendent. (ii) If the assuming insurer is an association, including incorporated and individual

unincorporated underwriters, it shall have and maintain, on an ongoing basis, minimum

capital and surplus equivalents, net of liabilities, calculated according to the methodology

applicable in its domiciliary jurisdiction, and a central fund containing a balance

in amounts determined by the superintendent in rule or regulation. (c)(i) The assuming insurer shall have and maintain, on an ongoing basis, a minimum solvency

or capital ratio, as applicable, that will be set forth in rule adopted by the superintendent. (ii) If the assuming insurer is an association, including incorporated and individual

unincorporated underwriters, it shall have and maintain, on an ongoing basis, a minimum

solvency or capital ratio in the reciprocal jurisdiction where the assuming insurer

has its head office or is domiciled, as applicable, and is also licensed. (d) The assuming insurer shall agree and provide adequate assurance to the superintendent,

in a form specified in rule adopted by the superintendent, as follows: (i) The assuming insurer shall provide prompt written notice and explanation to the superintendent

if it falls below the minimum requirements set forth in division (E)(1)(b) or (c)

of this section, or if any regulatory action is taken against it for serious noncompliance

with applicable law. (ii) The assuming insurer shall consent in writing to the jurisdiction of the courts of

this state and to the appointment of the superintendent as agent for service of process.  The superintendent may require that consent for service of process be provided to

the superintendent and included in each reinsurance agreement.  Nothing in this provision shall be construed as limiting, or in any way altering,

the capacity of parties to a reinsurance agreement to agree to alternative dispute

resolution mechanisms, except to the extent such agreements are unenforceable under

applicable insolvency or delinquency laws. (iii) The assuming insurer shall consent in writing to pay all final judgments, wherever

enforcement is sought, obtained by a ceding insurer or its legal successor, that have

been declared enforceable in the jurisdiction where the judgment was obtained. (iv) Each reinsurance agreement shall include a provision requiring the assuming insurer

to provide security in an amount equal to one hundred per cent of the assuming insurer's

liabilities attributable to reinsurance ceded pursuant to that agreement if the assuming

insurer resists enforcement of a final judgment that is enforceable under the law

of the jurisdiction in which it was obtained or a properly enforceable arbitration

award, whether obtained by the ceding insurer or by its legal successor on behalf

of its resolution estate. (v) The assuming insurer shall confirm that it is not presently participating in any

solvent scheme of arrangement that involves this state's ceding insurers, and agree

to notify the ceding insurer and the superintendent and to provide security in an

amount equal to one hundred per cent of the assuming insurer's liabilities to the

ceding insurer, should the assuming insurer enter into such a solvent scheme of arrangement.  Such security shall be in a form consistent with the provisions of division (A)(5)

of this section and section 3901.63 of the Revised Code and as specified by the superintendent in rule or regulation. (e) The assuming insurer or its legal successor shall provide, if requested by the superintendent,

on behalf of itself and any legal predecessors, certain documentation to the superintendent,

as specified in rule adopted by the superintendent. (f) The assuming insurer shall maintain a practice of prompt payment of claims under

reinsurance agreements, pursuant to criteria set forth in rule adopted by the superintendent. (g) The assuming insurer's supervisory authority shall confirm to the superintendent

on an annual basis, as of the preceding thirty-first day of December, or on the annual

date that the assuming insurer is statutorily required to report to the reciprocal

jurisdiction, that the assuming insurer complies with the requirements set forth in

divisions (E)(1)(b) and (c) of this section. (h) Nothing in division (E) of this section precludes an assuming insurer from providing

the superintendent with information on a voluntary basis. (2) The superintendent shall timely create and publish a list of reciprocal jurisdictions. (a) The superintendent's list shall include any reciprocal jurisdiction as defined under

divisions (E)(8)(b)(i) and (ii) of this section, and shall consider any other reciprocal

jurisdiction included on the list compiled by the national association of insurance

commissioners.  The superintendent may approve a jurisdiction that does not appear on the national

association of insurance commissioners' list of reciprocal jurisdictions in accordance

with criteria established rules or regulations issued by the superintendent. (b)(i) The superintendent may remove a jurisdiction from the list of reciprocal jurisdictions

upon a determination that the jurisdiction no longer meets the requirements of a reciprocal

jurisdiction, in accordance with a process set forth in rules or regulations issued

by the superintendent, except that the superintendent shall not remove from the list

a reciprocal jurisdiction as defined under division (E)(8)(b)(i) or (ii) of this section. (ii) Upon removal of a reciprocal jurisdiction from this list credit for reinsurance ceded

to an assuming insurer that has its home office or is domiciled in that jurisdiction

shall be allowed, if otherwise allowed pursuant to sections 3901.61 to 3901.65 of the Revised Code . (3)(a) The superintendent shall timely create and publish a list of assuming insurers that

have satisfied the conditions set forth in division (E)(1) of this section and to

which cessions shall be granted credit in accordance with this section. (b) The superintendent may add an assuming insurer to such list if a jurisdiction accredited

by the national association of insurance commissioners has added such assuming insurer

to a list of such assuming insurers or if, upon initial eligibility, the assuming

insurer submits the information to the superintendent as required under division (E)(1)(d)

of this section and complies with any additional requirements that the superintendent

may impose by rule or regulation, except to the extent that they conflict with an

applicable covered agreement. (4)(a) If the superintendent determines that an assuming insurer no longer meets one or

more of the requirements prescribed in division (E)(1) of this section, the superintendent

may revoke or suspend the eligibility of the assuming insurer for recognition under

this section in accordance with rules adopted by the superintendent. (b) While an assuming insurer's eligibility is suspended, no reinsurance agreement issued,

amended, or renewed after the effective date of the suspension qualifies for credit

except to the extent that the assuming insurer's obligations under the contract are

secured in accordance with section 3901.63 of the Revised Code . (c) If an assuming insurer's eligibility is revoked, no credit for reinsurance may be

granted after the effective date of the revocation with respect to any reinsurance

agreements entered into by the assuming insurer, including reinsurance agreements

entered into prior to the date of revocation, except to the extent that the assuming

insurer's obligations under the contract are secured in a form acceptable to the superintendent

and consistent with the provisions of section 3901.63 of the Revised Code . (5) If subject to a legal process of rehabilitation, liquidation, or conservation, as

applicable, the ceding insurer, or its representative, may seek and, if determined

appropriate by the court in which the proceedings are pending, may obtain an order

requiring that the assuming insurer post security for all outstanding ceded liabilities. (6) Nothing in division (E) of this section shall limit, or in any way alter, the capacity

of parties to a reinsurance agreement to agree on requirements for security or other

terms in that reinsurance agreement, except as expressly prohibited by sections 3901.61 to 3901.65 of the Revised Code or other applicable law, rule, or regulation. (7)(a) Credit may be taken under division (E) of this section only for reinsurance agreements

entered into, amended, or renewed on or after the effective date of this amendment,

and only with respect to losses incurred and reserves reported on or after the later

of the following: (i) The date on which the assuming insurer has met all eligibility requirements pursuant

to division (E)(1) of this section; (ii) The effective date of the new reinsurance agreement, amendment, or renewal. (b) Division (E)(7)(a) of this section does not alter or impair a ceding insurer's right

to take credit for reinsurance, to the extent that credit is not available under division

(E) of this section, as long as the reinsurance qualifies for credit under any other

applicable provision of sections 3901.61 to 3901.65 of the Revised Code . (c) Nothing in division (E)(7) of this section shall be construed as authorizing an assuming

insurer to withdraw or reduce the security provided under any reinsurance agreement,

except as permitted by the terms of the agreement. (d) Nothing in division (E)(7) of this section shall limit, or in any way alter, the

capacity of parties to any reinsurance agreement to renegotiate the agreement. (8) As used in division (E) of this section: (a) “ Covered agreement ” means an agreement entered into pursuant to the Dodd-Frank Wall Street Reform and

Consumer Protection Act, 31 U.S.C. 313 and 314 , that is currently in effect or in a period of provisional application and addresses

the elimination, under specified conditions, of collateral requirements as a condition

for entering into any reinsurance agreement with a ceding insurer domiciled in this

state or for allowing the ceding insurer to recognize credit for reinsurance. (b) “ Reciprocal jurisdiction ” means a jurisdiction that meets one of the following: (i) A non-United States jurisdiciction 1 that is subject to an in-force covered agreement with the United States, each within

its legal authority, or, in the case of a covered agreement between the United States

and the European Union, is a member state of the European Union; (ii) A United States jurisdiction that meets the requirements for accreditation under

the national association of insurance commissioners' financial standards and accreditation

program; (iii) A qualified jurisdiction, as determined by the superintendent pursuant to division

(D)(3) of this section, that is not otherwise described in division (E)(8)(b)(i) or

(ii) of this section, and that meets certain additional requirements, consistent with

the terms and conditions of in-force covered agreements, as specified in rule adopted

by the superintendent. (F) An assuming insurer shall file a written instrument appointing an attorney as its

agent in this state upon whom all service of process may be served.  Service of process upon this agent shall bring the assuming insurer within the jurisdiction

of the courts of this state as if served upon an agent pursuant to section 3927.03 of the Revised Code . (G) Nothing in this section shall prohibit the parties to a reinsurance agreement from

agreeing to provisions in the agreement establishing security requirements that exceed

the minimum security requirements established for certified reinsurers under this

section. (H)(1) In order to facilitate the prompt payment of claims, the superintendent may permit

a certified reinsurer to defer the posting of security for catastrophe recoverables

for a period of up to one year from the date of the first instance of a liability

reserve entry by the ceding insurer as a result of a loss from a catastrophic occurrence. (2) Upon notice by the ceding insurer to the superintendent that the certified reinsurer

has failed to pay claims owed under a reinsurance agreement in a timely manner, the

superintendent shall notify the certified reinsurer that it is no longer permitted

to defer the posting of security for catastrophe recoverables. (3) Reinsurance recoverables for only the following lines of business, as reported on

the national association of insurance commissioners' annual financial statement related

specifically to the catastrophic occurrence, shall be included in the deferral: (a) Fire; (b) Allied lines; (c) Farmowner's multiple peril; (d) Homeowners multiple peril; (e) Commercial multiple peril; (f) Inland marine; (g) Earthquake; (h) Auto physical damage. (4) The superintendent may adopt rules in accordance with Chapter 119. of the Revised

Code to establish the process for a certified reinsurer to seek a deferral of posting

of security for catastrophe recoverables. 1

 So in original, 2020 S 284.