OAR 836-012-0060: Asset or Reduction from Liability for Reinsurance Ceded to an Unauthorized Assuming Insurer Not Meeting the Requirements of OAR 836-012-0011 to 836-012-0051

(1) Pursuant to ORS 731.510, the director shall allow a reduction from liability for reinsurance ceded by a domestic insurer to an assuming insurer not meeting the requirements of ORS 731.509 in an amount not exceeding the liabilities carried by the ceding insurer. The reduction shall be in the amount of funds held by or on behalf of the ceding insurer, including funds held in trust for the exclusive benefit of the ceding insurer, under a reinsurance contract with such assuming insurer as security for the payment of obligations under the reinsurance contract. The 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 U.S. financial institution as defined in ORS 731.510(1). The security may be in the form of any of the following: (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 allowed assets; (c) Clean, irrevocable, unconditional and "evergreen" letters of credit issued or confirmed by a qualified U.S. institution, as defined in ORS 731.510(2), effective no later than December 31 of the year for which filing is being made, and in the possession of, or in trust for, the ceding insurer on or before the filing date of its annual statement. Letters of credit meeting applicable standards of issuer 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 issuer acceptability, continue to be acceptable as security until their expiration, extension, renewal, modification or amendment, whichever first occurs; or (d) Any other form of security acceptable to the director. (2) An allowed asset or a reduction from liability for reinsurance ceded to an unauthorized assuming insurer pursuant to section (1) of this rule shall be allowed only when the requirements of OAR 836-012-0100 and the applicable provisions of OAR 836-012-0070, 836-012-0080 and 836-012-0090 are met.