CODE OF VIRGINIA

CREDIT ALLOWED ANY CEDING INSURER (§ 38.2-1316.4)

Credit shall be allowed any ceding insurer under the following conditions:

   1.  Credit shall be allowed when reinsurance is ceded to an assuming insurer
   not meeting the requirements of § 38.2-1316.2 but only with respect to the
   insurance of risks located in jurisdictions where such reinsurance is required
   by applicable law or regulation of that jurisdiction.

   2.  Credit, in the form of a reduction from liability for reinsurance ceded to
   an assuming insurer not meeting the requirements of § 38.2-1316.2, shall be
   allowed in an amount not exceeding the liabilities carried by the ceding
   insurer and attributable to the reinsurance, provided such reduction does not
   exceed 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 such assuming insurer as security for the payment of obligations
   thereunder, if (i) such security is held in the United States subject to
   withdrawal solely by, and under the exclusive control of, the ceding insurer;
   or (ii) in the case of a trust, held in a qualified United States financial
   institution. The required security may be in the form of:
               
               
               
            

      a.  Cash.

      b.  Securities listed by the Securities Valuation Office of the National
      Association of Insurance Commissioners, including those deemed exempt from
      filing as defined by the Purposes and Procedures Manual of the Securities
      Valuation Office, and qualifying as admitted assets with adequate liquidity
      and readily determinable market value.

      c.  Clean, irrevocable, unconditional letters of credit issued or confirmed
      by a qualified United States financial institution, as defined in this
      article, no later than December 31 in respect of the year for which filing
      is being made, and in the possession of the ceding insurer on or before the
      filing date of its annual statement. Letters of credit meeting applicable
      standards of insurer acceptability as of the dates of their issuance (or
      confirmation) shall, notwithstanding the issuing (or confirming)
      institution’s subsequent failure to meet applicable standards of
      insurer acceptability, continue to be acceptable as security until their
      expiration, extension, renewal, modification or amendment, whichever first
      occurs.

      d.  Any other form of security acceptable to the Commission.

HISTORY: 1991, c. 264; 2012, c. 539.