New Mexico SB 150: CREDIT FOR REINSURANCE ACT

Bill Text

SB 150
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AN ACT
RELATING TO INSURANCE; ENACTING THE CREDIT FOR REINSURANCE
ACT; PROVIDING FOR CREDIT TO INSURERS OBTAINING REINSURANCE;
REPEALING AND ENACTING SECTIONS OF THE NMSA 1978; DECLARING
AN EMERGENCY.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. SHORT TITLE.--This act may be cited as the
"Credit for Reinsurance Act".
SECTION 2. DEFINITIONS.--As used in the Credit for
Reinsurance Act:
A. "accredited jurisdiction" means a jurisdiction
that meets the accreditation standards established by the
national association of insurance commissioners;
B. "alien assuming insurer" means an assuming
insurer that is formed according to the laws of a foreign
country;
C. "assuming insurer" means an insurer assuming
risk from another insurer;
D. "ceding insurer" means an insurer that
transfers risk by purchasing reinsurance;
E. "qualified United States financial institution"
means an institution that:
(1) for purposes of Paragraphs (3) and (4)
of Subsection B of Section 16 of the Credit for Reinsurance

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Act:
(a) is organized, or in the case of a
United States office of a foreign banking organization,
licensed pursuant to laws of the United States or any state
thereof;
(b) is regulated, supervised and
examined by federal or state authorities having regulatory
authority over banks and trust companies; and
(c) has been determined by either the
superintendent or the securities valuation office of the
national association of insurance commissioners to meet such
standards of financial condition and standing as are
considered necessary and appropriate to regulate the quality
of financial institutions whose letters of credit will be
acceptable to the superintendent; or
(2) for purposes of those provisions of the
Credit for Reinsurance Act specifying those institutions that
are eligible to act as a fiduciary of a trust:
(a) is organized, or in the case of
a United States branch or agency office of a foreign banking
organization, licensed, pursuant to the laws of the
United States or any state thereof and has been granted
authority to operate with fiduciary powers; and
(b) is regulated, supervised and
examined by federal or state authorities having regulatory

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authority over banks and trust companies;
F. "reciprocal jurisdiction" means a jurisdiction
that meets one of the following descriptions:
(1) a non-United-States jurisdiction that
is subject to an in-force covered agreement with the
United States, each within its legal authority, or, in the
case of a covered agreement between the United States and the
European Union, is a member state of the European Union. For
purposes of this paragraph, a "covered agreement" is an
agreement entered into pursuant to the Dodd-Frank Wall Street
Reform and Consumer Protection Act that is currently in
effect or in a period of provisional application and
addresses the elimination, under specified conditions, of
collateral requirements as a condition for entering into any
reinsurance agreement with a ceding insurer domiciled in this
state or for allowing the ceding insurer to recognize credit
for reinsurance;
(2) a United States jurisdiction that meets
the requirements for accreditation pursuant to the national
association of insurance commissioners financial standards
and accreditation program; or
(3) a qualified jurisdiction, as determined
by the superintendent pursuant to Section 8 and Subsection A
of Section 9 of the Credit for Reinsurance Act, which is not
otherwise described in Paragraph (1) or (2) of Subsection F

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of Section 2 of the Credit for Reinsurance Act and which
meets certain additional requirements, consistent with the
terms and conditions of in-force covered agreements, as
specified by the superintendent in rule; and
G. "superintendent" means the superintendent of
insurance.
SECTION 3. CREDIT ALLOWED A DOMESTIC CEDING INSURER.--
A. Credit for reinsurance shall be allowed a
domestic ceding insurer as either an asset or a reduction
from liability on account of reinsurance ceded only when the
reinsurer meets the requirements of the Credit for
Reinsurance Act. The superintendent shall adopt and
promulgate rules for:
(1) specific additional requirements
relating to or setting forth the valuation of assets or
reserve credits;
(2) the amount and forms of security
supporting reinsurance arrangements described in Section 17
of the Credit for Reinsurance Act; and
(3) the circumstances pursuant to which
credit shall be reduced or eliminated.
B. Credit for reinsurance shall be allowed a
domestic ceding insurer pursuant to this section only for
cessions of those kinds or classes of business for which the
assuming insurer is licensed or otherwise permitted to