Ins 52.23(1)(f)
(f) If the ceding insurer cedes risks with respect to covered policies, including any riders, in more than one reinsurance treaty subject to this subchapter, in no event will the aggregate required level of primary security for those reinsurance treaties be less than the required level of primary security calculated using the actuarial method as if all risks ceded in those treaties were ceded in a single treaty subject to this subchapter;
Ins 52.23(1)(g)
(g) If a reinsurance treaty subject to this subchapter cedes risk on both covered and non-covered policies, credit for the ceded reserves shall be determined as follows:
Ins 52.23(1)(g)1.
1. The actuarial method shall be used to determine the required level of primary security for the covered policies, and s.
Ins 52.24, shall be used to determine the reinsurance credit for the covered policy reserves; and,
Ins 52.23(1)(g)2.
2. Credit for the non-covered policy reserves shall be granted only to the extent that security, in addition to the security held to satisfy the requirements of subd.
1., is held by or on behalf of the ceding insurer in accordance with ss.
Ins 52.02 and
52.04. Any primary security used to meet the requirements of this subdivision may not be used to satisfy the required level of primary security for the covered policies.
Ins 52.23(2)
(2)
Valuation used for purposes of calculations. For the purposes of both calculating the required level of primary security pursuant to the actuarial method and determining the amount of primary security and other security, as applicable, held by or on behalf of the ceding insurer, the following shall apply:
Ins 52.23(2)(a)
(a) For assets, including any such assets held in trust, that would be admitted under the national association of insurance commissioners accounting practices and procedures manual if they were held by the ceding insurer, the valuations are to be determined according to statutory accounting procedures as if such assets were held in the ceding insurer's general account and without taking into consideration the effect of any prescribed or permitted practices; and
Ins 52.23(2)(b)
(b) For all other assets, the valuations are to be those that were assigned to the assets for the purpose of determining the amount of reserve credit taken. In addition, the asset spread tables and asset default cost tables required by VM-20 shall be included in the actuarial method if adopted by the national association of insurance commissioners Life Actuarial (A) Task Force no later than the December 31st on or immediately preceding the valuation date for which the required level of primary security is being calculated. The tables of asset spreads and asset default costs shall be incorporated into the actuarial method in the manner specified in VM-20.
Ins 52.23 History
History: CR 21-066: cr. Register May 2022 No. 797, eff. 6-1-22. Ins 52.24
Ins 52.24 Requirements applicable to covered policies to obtain credit for reinsurance: opportunity for remediation. Ins 52.24(1)(1)
Requirements. Subject to the exemptions in s.
Ins 52.21 and sub.
(2), credit for reinsurance shall be allowed with respect to ceded liabilities pertaining to covered policies pursuant to ss.
Ins 52.02 or
52.04 if, and only if, in addition to all other requirements imposed by law or regulation, the following requirements are met on a treaty-by-treaty basis:
Ins 52.24(1)(a)
(a) The ceding insurer's statutory policy reserves with respect to the covered policies are established in full and in accordance with the applicable requirements of s.
623.06, Stats., and related regulations and actuarial guidelines, and credit claimed for any reinsurance treaty subject to this regulation does not exceed the proportionate share of those reserves ceded under the contract, and
Ins 52.24(1)(b)
(b) The ceding insurer determines the required level of primary security with respect to each reinsurance treaty subject to this regulation and provides support for its calculation as determined to be acceptable to the commissioner; and
Ins 52.24(1)(c)
(c) Funds consisting of primary security, in an amount at least equal to the required level of primary security, are held by or on behalf of the ceding insurer, as security under the reinsurance treaty within the meaning of s.
Ins 52.04, on a funds withheld, trust, or modified coinsurance basis; and
Ins 52.24(1)(d)
(d) Funds consisting of other security, in an amount at least equal to any portion of the statutory reserves as to which primary security is not held pursuant to par.
(c) are held by or on behalf of the ceding insurer as security under the reinsurance treaty within the meaning of s.
Ins 52.04; and
Ins 52.24(1)(e)
(e) Any trust used to satisfy the requirements of this section shall comply with all of the conditions and qualifications of ss.
Ins 52.04 and
52.05, except that:
Ins 52.24(1)(e)1.
1. Funds consisting of primary security or other security held in trust, shall for the purposes identified in s.
Ins 52.23 (2), be valued according to the valuation rules set forth in s.
Ins 52.23 (2), as applicable; and
Ins 52.24(1)(e)2.
2. There are no affiliate investment limitations with respect to any security held in such trust if such security is not needed to satisfy the requirements of par.
(c); and
Ins 52.24(1)(e)3.
3. The reinsurance treaty must prohibit withdrawals or substitutions of trust assets that would leave the fair market value of the primary security within the trust, when aggregated with primary security outside the trust that is held by or on behalf of the ceding insurer in the manner required by par.
(c), below 102% of the level required by par.
(c) at the time of the withdrawal or substitution; and
Ins 52.24(1)(f)
(f) The reinsurance treaty has been approved by the commissioner.
Ins 52.24(2)
(2)
Requirements at inception date and on an on-going basis: remediation. Ins 52.24(2)(a)
(a) The requirements of sub.
(1) must be satisfied as of the date that risks under covered policies are ceded, if such date is on or after June 1, 2022, and on an ongoing basis thereafter. Under no circumstances shall a ceding insurer take or consent to any action or series of actions that would result in a deficiency under sub.
(1) (c) or
(d) with respect to any reinsurance treaty under which covered policies have been ceded, and in the event that a ceding insurer becomes aware at any time that such a deficiency exists, it shall use its best efforts to arrange for the deficiency to be eliminated as expeditiously as possible.
Ins 52.24(2)(b)
(b) Prior to the due date of each quarterly or annual statement, each life insurance company that has ceded reinsurance within the scope of s.
Ins 52.20 (2) shall perform an analysis, on a treaty-by-treaty basis, to determine, as to each reinsurance treaty under which covered policies have been ceded, whether as of the end of the immediately preceding calendar quarter, the valuation date, the requirements of sub.
(1) (c) and
(d) were satisfied. The ceding insurer shall establish a liability equal to the excess of the credit for reinsurance taken over the amount of primary security actually held pursuant to sub.
(1) (c), unless either of the following are met:
Ins 52.24(2)(b)1.
1. The requirements of sub.
(1) (c) and
(d) were fully satisfied as of the valuation date as to such reinsurance treaty; or
Ins 52.24(2)(b)2.
2. Any deficiency has been eliminated before the due date of the quarterly or annual statement to which the valuation date relates through the addition of primary security and/or other security, as the case may be, in such amount and in such form as would have caused the requirements of sub.
(1) (c) and
(d) to be fully satisfied as of the valuation date.
Ins 52.24(2)(c)
(c) Nothing in par.
(b) shall be construed to allow a ceding company to maintain any deficiency under sub.
(1) (c) or
(d) for any period of time longer than is reasonably necessary to eliminate it.
Ins 52.24 History
History: CR 21-066: cr. Register May 2022 No. 797, eff. 6-1-22. Ins 52.25
Ins 52.25 Severability. If a provision of this regulation is held invalid, the remainder shall not be affected.
Ins 52.25 History
History: CR 21-066: cr. Register May 2022 No. 797, eff. 6-1-22. Ins 52.26
Ins 52.26 Prohibition against avoidance. No insurer that has covered policies as to which this subchapter applies, as set forth in s.
Ins 52.20 (2), shall take any action or series of actions or enter into any transaction or arrangement or series of transactions or arrangements if the purpose of such action, transaction or arrangement or series thereof is to avoid the requirements of this regulation, or to circumvent its purpose and intent, as set forth in s.
Ins 52.20 (1).
Ins 52.26 History
History: CR 21-066: cr. Register May 2022 No. 797, eff. 6-1-22.
