60A.093 REDUCTION FROM LIABILITY FOR REINSURANCE CEDED BY A
DOMESTIC INSURER; COLLATERAL REQUIREMENTS.
Subdivision 1. Reduction allowed.
A reduction from liability for reinsurance ceded by a
domestic insurer to an assuming insurer not meeting the requirements of section
allowed in an amount not exceeding the liabilities carried by the ceding insurer. Such reduction
shall be in the amount of funds held by or on behalf of the ceding insurer, including funds held
in trust for the ceding insurer, as security for the payment of obligations under the reinsurance
contract with the assuming insurer. Such security must be held in the United States subject to
withdrawal solely by, and under the exclusive control of, the ceding insurer; or, in the case of a
trust, held in a qualified United States financial institution. The funds held as security may be in
any form of security acceptable to the commissioner or in the form of:
(2) securities listed by the Securities Valuation Office of the National Association of
Insurance Commissioners and qualifying as admitted assets and, with the exception of United
States treasury notes, readily marketable over a national exchange or NASDAQ with maturity
dates within one year; or
(3) clean, irrevocable, unconditional letters of credit issued or confirmed by a qualified
United States financial institution no later than December 31 in respect of the year for which
filing is being made, and in the possession of the ceding company on or before the filing date
of its annual statement. The financial institution must meet the standards of financial condition
and standing considered necessary and appropriate to regulate the quality of financial institutions
as determined by either the commissioner or the Securities Valuation Office of the National
Association of Insurance Commissioners, and the financial institution's letters of credit must
be acceptable to the commissioner.
Subd. 2. Letters of credit continued acceptance.
Letters of credit meeting applicable
standards of issuer acceptability as of the dates of their issuance or confirmation must continue to
be acceptable as security until their expiration, extension, renewal, modification, or amendment,
whichever comes first.
The letter of credit of an institution failing the standards of subdivision 1, clause (3), continues
to be acceptable for no more than 30 days.
History: 1991 c 325 art 1 s 13; 1995 c 214 s 4