South Carolina § 38-9-210 - Reduction from liability for reinsurance; security.

§ 38-9-210. Reduction from liability for reinsurance; security.

An asset or a reduction from liability for the reinsurance ceded by a domestic insurer to an assuming insurer not meeting the requirements of Section 38-9-200 must be allowed in an amount not exceeding the liabilities carried by the ceding insurer provided that the director, or his designee, may adopt by regulation pursuant to Section 38-9-200(N) specific additional requirements relating to or setting forth the valuation of assets or reserve credits, the amount and forms of security supporting reinsurance arrangements, or the circumstances pursuant to which a credit may be reduced or eliminated.

The reduction must 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, if the security is held in the United States subject to withdrawal solely by and under the exclusive control of the ceding insurer or, for a trust, held in a qualified United States financial institution, defined in Section 38-9-220(B). This security may be in the form of:

(1) cash;

(2) securities listed by the National Association of Insurance Commissioners Investment Analysis Office, including those deemed exempt from filing as defined by the Purposes and Procedures Manual of the Securities Valuation Office and qualifying as admitted assets as defined in Section 38-13-80;

(3) clean, irrevocable, unconditional letters of credit issued or confirmed by a qualified United States financial institution defined in Section 38-9-220(A) no later than December thirty-first of the year for which filing is being made and in the possession of, or in trust for, the ceding company on or before the filing date of its annual statement. Letters of credit meeting applicable standards of issuer acceptability as of the dates of their issuance or confirmation, 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) other form of security acceptable to the director, or his designee.

HISTORY: 1991 Act No. 13, SECTION 1; 1993 Act No. 181, SECTION 535; 1998 Act No. 422, SECTION 3; 2012 Act No. 137, SECTION 4, eff April 2, 2012; 2018 Act No. 172 (H.4656), SECTION 2, eff May 3, 2018; 2020 Act No. 165 (S.881), SECTION 2, eff September 28, 2020; 2022 Act No. 195 (H.4832), SECTION 4, eff May 16, 2022.

Effect of Amendment

2018 Act No. 172, SECTION 2, amended the section, authorizing the director to adopt additional requirements for an asset or reduction from liability for reinsurance ceded by a domestic insurer and expanding the acceptable form of security for a liability reduction.

2020 Act No. 165, SECTION 2, in the first undesignated paragraph, substituted "Section 38-9-200(N)" for "Section 38-9-200(M)".

2022 Act No. 195, SECTION 4, in (2), substituted "National Association of Insurance Commissioners Investment Analysis Office" for "Securities Valuation Office of the National Association of Insurance Commissioners", and made nonsubstantive changes.