Utah Admin. Code 590-173-3

Current through Bulletin 2025-01, January 1, 2025

Section R590-173-3 - Definitions

Terms used in this rule are defined in Section 31A-1-301 and 31A-17-404. Additional terms are defined as follows:

(1) "Accredited reinsurer" means an insurer that meets the requirements of Section R590-173-5.

(2)

(a)

(i) "Beneficiary" as used in Section R590-173-12 means a person for whose sole benefit a trust is established and a successor of the beneficiary by operation of law.

(ii) If a court appoints a successor in interest to the named beneficiary, the named beneficiary includes the court appointed domiciliary receiver, rehabilitator, or liquidator.

(b) "Beneficiary" as used in Section R590-173-13 means a domestic insurer for whose benefit a letter of credit is established and a successor of the beneficiary by operation of law.

(3) "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:

(a) is currently in effect or in a period of provisional application; and

(b) addresses the elimination, under specified conditions, of collateral requirements as a condition for entering into a reinsurance agreement with a ceding insurer domiciled in this state or allows the ceding insurer to recognize credit for reinsurance.

(4) "Grantor" as used in Section R590-173-12 means an unlicensed, unaccredited assuming insurer that establishes, in conjunction with a reinsurance agreement, a trust for the sole benefit of a beneficiary.

(5) "Jurisdiction" as used in Section R590-173-10 means:

(a) a state, district, or territory of the United States; or

(b) a lawful national government.

(6) "Liabilities" as used in Section R590-173-7 means an assuming insurer's gross liabilities attributable to reinsurance ceded by a U.S. domiciled insurer, excluding liabilities that are otherwise secured by acceptable means, including:

(a) for business ceded by a domestic insurer authorized to write accident and health, and property and casualty insurance:

(i) losses and allocated loss expenses paid by the ceding insurer, recoverable from the assuming insurer;

(ii) reserves for losses reported and outstanding;

(iii) reserves for losses incurred but not reported;

(iv) reserves for allocated loss expenses; and

(v) unearned premiums; and

(b) for business ceded by a domestic insurer authorized to write life, health, and annuity insurance:

(i) aggregate reserves for life policies and contracts net of policy loans, net due, and deferred premiums;

(ii) aggregate reserves for accident and health policies;

(iii) deposit funds and other liabilities without life or disability contingencies; and

(iv) liabilities for policy and contract claims.

(7) "Manufactured home" has the same meaning as that term is defined in 42 U.S.C. 5402.

(8) "Mortgage-related security" means an obligation that is rated AA or higher, or the equivalent, by a securities rating agency recognized by the Securities Valuation Office of the NAIC and that:

(a) represents ownership of a promissory note, a certificate of interest, or participation in a note that includes a right designed to assure servicing of, or the receipt or timeliness of receipt by a holder of the note, certificate, or participation of an amount payable under a note, certificate, or participation, that:

(i) is directly secured by a first lien on a single parcel of real estate, including stock allocated to a dwelling unit in a residential cooperative housing corporation, where:

(A) a dwelling or mixed residential and commercial structure is located; or

(B) a residential manufactured home, whether the manufactured home is considered real or personal property under the laws of the state, is located; and

(ii) is originated by:

(A) a savings and loan association;

(B) a savings bank;

(C) a commercial bank;

(D) a credit union;

(E) an insurance company;

(F) a similar institution that is supervised and examined by a federal or state housing authority;

(G) a mortgage approved by the Secretary of Housing and Urban Development under 12 U.S.C. 1709 and 12 U.S.C. 1715b; or

(H) where a note involves a lien on a manufactured home, by an institution or by a financial institution approved for insurance by the Secretary of Housing and Urban Development pursuant to 12 U.S.C. 1703; or

(b)

(i) is secured by a promissory note, certificate of deposit, or participation in a note, with or without recourse to the insurer of the note; and

(ii) by its terms, provides for a payment of principal in relation to a payment, or a reasonable projection of a payment, or note meeting the requirements of Subsections (8)(a)(i) and (8)(a)(ii).

(9) "Obligation" means:

(a) reinsured losses and allocated loss expenses paid by a ceding company, but not recovered from an assuming insurer;

(b) reserves for reinsured losses reported and outstanding;

(c) reserves for reinsured losses incurred but not reported; and

(d) reserves for allocated reinsured loss expenses and unearned premium.

(10) "Promissory note," used in connection with a manufactured home means:

(a) a loan;

(b) an advance or credit sale evidenced by a retail installment sales contract or another instrument.

(11)

(a) "Qualified jurisdiction" means a jurisdiction that:

(i) requires an insurer with its domicile or head office in the qualified jurisdiction to receive credit for reinsurance ceded to a U.S. domiciled assuming insurer in the same manner as credit for reinsurance is received for reinsurance assumed by an insurer domiciled in the qualified jurisdiction;

(ii) recognizes a U.S. state's regulatory approach to group supervision and group capital by providing written confirmation, by a competent regulatory authority in the qualified jurisdiction, that an insurer and an insurance group that is domiciled or maintains its head office in this state or another jurisdiction accredited by the NAIC is subject only to worldwide prudential insurance group supervision including:

(A) worldwide group governance;

(B) solvency and capital; and

(C) reporting, as applicable, by the commissioner or the commissioner of the domiciliary state;

(iii) provides written confirmation by a competent regulatory authority in the qualified jurisdiction that information regarding an insurer and its parent, subsidiary, or affiliated entities are provided to the commissioner in accordance with a memorandum of understanding or similar document between the commissioner and the qualified jurisdiction, including:

(A) the International Association of Insurance Supervisors Multilateral Memorandum of Understanding; or

(B) other multilateral memoranda of understanding coordinated by the NAIC; and

(iv) is designated as a qualified jurisdiction by the commissioner pursuant to Subsection 31A-17-404(7)(d) and this rule.

(b) A qualified jurisdiction may not:

(i) require a U.S. domiciled assuming insurer to establish or maintain a local presence as a condition for entering into a reinsurance agreement with a ceding insurer subject to regulation by the non-U.S. jurisdiction or as a condition to allow a ceding insurer to recognize credit for reinsurance; and

(ii) be subject to group supervision at the level of the worldwide parent undertaking of an insurance or reinsurance group by the qualified jurisdiction.

(12) "Reciprocal jurisdiction" means a jurisdiction, as designated by the commissioner under Section R590-173-9, that is:

(a) a non-U.S. jurisdiction subject to an in-force covered agreement with the United States, within its legal authority;

(b) in the case of a covered agreement between the United States and the European Union, a member state of the European Union;

(c) a U.S. jurisdiction that meets the requirements for accreditation under the NAIC financial standards and accreditation program; or

(d) a qualified jurisdiction, as determined by the commissioner pursuant to Subsection R590-173-8(6), that is not otherwise described in Subsection (12)(a), (12)(b), or (12)(c).

(13) "Solvent scheme of arrangement" means a foreign or alien statutory or regulatory compromise procedure subject to:

(a) requisite majority creditor approval;

(b) judicial sanction in the assuming insurer's home jurisdiction to:

(i) commute liabilities of noticed classed members or creditors of a solvent debtor; or

(ii) reorganize or restructure the debts and obligations of a solvent debtor on a financial basis; and

(c) possible judicial recognition and enforcement of an arrangement by a governing authority outside the ceding insurer's home jurisdiction.

(14) "Statutory financial statement" means a quarterly, annual, or other financial statement required by law.

Utah Admin. Code R590-173-3

Amended by Utah State Bulletin Number 2017-3, effective 1/10/2017

Adopted by Utah State Bulletin Number 2022-12, effective 6/7/2022