2009 Iowa Code
Title 13 - Commerce
Subtitle 1 - Insurance and Related Regulation
CHAPTER 521B - CREDIT FOR REINSURANCE
521B.2 - CREDIT ALLOWED A DOMESTIC CEDING INSURER.

        521B.2  CREDIT ALLOWED A DOMESTIC CEDING INSURER.
         Credit for reinsurance is allowed a domestic ceding insurer as
      either an asset or a deduction from liability on account of
      reinsurance ceded only if the reinsurer meets the requirements of
      subsection 1, 2, 3, 4, or 5.  If the reinsurer meets the requirements
      of subsection 3 or 4, the requirements of subsection 6 must also be
      met.
         1.  Credit is allowed if the reinsurance is ceded to an assuming
      insurer which is licensed to transact the business of reinsurance in
      this state.
         2.  Credit is allowed if the reinsurance is ceded to an assuming
      insurer which is accredited as a reinsurer in this state.  An
      accredited reinsurer is one which satisfies all of the following
      conditions:
         a.  Files with the commissioner evidence of submission to the
      jurisdiction of this state.
         b.  Submits to the authority of this state to examine its
      books and records.
         c.  Is licensed to transact reinsurance in at least one state,
      or in the case of a United States branch of an alien assuming
      insurer, is entered through and licensed to transact the business of
      reinsurance in at least one state.
         d.  Files annually with the commissioner a copy of its annual
      statement filed with the insurance department of its state of
      domicile and a copy of its most recent audited financial statement
      and does either of the following:
         (1)  Maintains a surplus with respect to policyholders in an
      amount which is not less than twenty million dollars and whose
      accreditation has not been denied by the commissioner within ninety
      days of its submission to the jurisdiction of this state.
         (2)  Maintains a surplus with respect to policyholders in an
      amount less than twenty million dollars and whose accreditation has
      been approved by the commissioner.  Credit shall not be allowed a
      domestic ceding insurer, if the accreditation of the assuming insurer
      is revoked by the commissioner after notice and hearing.
         To qualify as an accredited reinsurer, an assuming insurer must
      meet all of the requirements and the standards set forth in this
      subsection.  If the commissioner determines that the assuming insurer
      has failed to continue to meet any of these requirements or
      standards, the commissioner may upon written notice and hearing
      revoke accreditation of the assuming insurer.
         This section does not apply to reinsurance ceded and assumed
      pursuant to pooling arrangements among insurers in the same holding
      company system.
         3. a.  Credit is allowed if the reinsurance is ceded to an
      assuming insurer which is domiciled and licensed in, or in the case
      of a United States branch of an alien assuming insurer is entered
      through, a state which employs standards regarding credit for
      reinsurance substantially similar to those applicable under this
      section, and the assuming insurer or United States branch of an alien
      assuming insurer does both of the following:
         (1)  Maintains a surplus with respect to policyholders in an
      amount of not less than twenty million dollars.
         (2)  Submits to the authority of this state to examine its books
      and records.
         b.  However, the requirement of paragraph "a",
      subparagraph (1), does not apply to reinsurance ceded and assumed
      pursuant to a pooling arrangement among insurers in the same holding
      company system.
         4. a.  Credit is allowed if the reinsurance is ceded to an
      assuming insurer which maintains a trust fund in a qualified United
      States financial institution, as defined in section 521B.4,
      subsection 2, for the payment of the valid claims of its United
      States policyholders and ceding insurers, their assigns, and
      successors in interest.  The assuming insurer shall report annually
      to the commissioner information substantially the same as that
      required to be reported on the national association of insurance
      commissioners' annual statement form by licensed insurers to enable
      the commissioner to determine the sufficiency of the trust fund.  In
      the case of a single assuming insurer, the trust shall consist of a
      trusted account representing the liabilities of the assuming insurer
      attributable to business written in the United States and, in
      addition, the assuming insurer shall maintain a trusted surplus of
      not less than twenty million dollars.  In the case of a group
      including individual unincorporated and incorporated underwriters,
      the trust shall consist of a trusted account representing the
      liabilities of the group attributable to business written in the
      United States and, in addition, the group shall maintain a trusted
      surplus of which one hundred million dollars shall be held jointly
      for the benefit of United States ceding insurers of any member of the
      group.  The incorporated members of the group shall not engage in any
      business other than underwriting as a member of the group and shall
      be subject to the same level of solvency regulation and control by
      the group's domiciliary regulator as are the unincorporated members.
      The group shall make available to the commissioner an annual
      certification of the solvency of each underwriter by the group's
      domiciliary regulator and its independent public accountants.
         b.  In the case of a group of incorporated insurers under
      common administration which complies with the filing requirements
      contained in paragraph "a", which is under the supervision of the
      department of trade and industry of the United Kingdom, which submits
      to the authority of this state to examine its books and records and
      bears the expense of the examination, and which has aggregate
      policyholders' surplus of at least ten billion dollars, the trust
      shall be in an amount equal to the several liabilities of the group
      attributable to business written in the United States.  The group
      shall also maintain a joint trusteed surplus of which one hundred
      million dollars shall be held jointly for the benefit of United
      States ceding insurers of any member of the group, and each member of
      the group shall make available to the commissioner an annual
      certification of the member's solvency by the member's domiciliary
      regulator and its independent public accountant.
         c.  Such trust shall be established in a form approved by the
      commissioner.  The trust instrument shall provide that contested
      claims are valid and enforceable upon the final order of any court of
      competent jurisdiction in the United States.  The trust vests legal
      title to its assets in the trustees of the trust for its United
      States policyholders and ceding insurers, their assigns, and
      successors in interest.  The trust and the assuming insurer are
      subject to examination as determined by the commissioner.  The trust
      described in this paragraph must remain in effect for as long as the
      assuming insurer has outstanding obligations due under the
      reinsurance agreements subject to the trust.
         d.  No later than February 28 of each year the trustees of the
      trust shall report to the commissioner in writing setting forth the
      balance of the trust and listing the trust's investments at the end
      of the preceding calendar year and shall certify the date of
      termination of the trust, if so planned, or certify that the trust
      shall not expire prior to the following December 31.
         5.  Credit is allowed if the reinsurance is ceded to an assuming
      insurer not meeting the requirements of subsection 1, 2, 3, or 4, but
      only with respect to the insurance of risks located in a jurisdiction
      where such reinsurance is required by applicable law or regulation of
      that jurisdiction.  For purposes of this subsection, jurisdiction
      refers to a jurisdiction other than the United States, and any state,
      district, or territory of the United States.  This subsection allows
      credit to ceding insurers which are mandated by such a jurisdiction
      to cede reinsurance to state owned or controlled insurance or
      reinsurance companies or to participate in pools, guaranty funds, or
      joint underwriting associations.
         6. a.  If the assuming insurer is not licensed or accredited
      to transact insurance or reinsurance in this state, the credit
      permitted by subsection 3 or 4 is not allowed unless the assuming
      insurer agrees in the reinsurance agreements to both of the
      following:
         (1)  That in the event of the failure of the assuming insurer to
      perform its obligations under the terms of the reinsurance agreement,
      the assuming insurer, at the request of the ceding insurer, shall
      submit to the jurisdiction of any court of competent jurisdiction in
      any state of the United States, shall comply with all requirements
      necessary to give such court jurisdiction, and shall abide by the
      final decision of such court or of any appellate court in the event
      of an appeal.
         (2)  That the commissioner or an attorney designated in the
      agreement is the true and lawful attorney of the assuming insurer
      upon whom may be served any lawful process in any action, suit, or
      proceeding instituted by or on behalf of the ceding company.
         b.  This subsection is not intended to conflict with or
      override the obligation of the parties to a reinsurance agreement to
      arbitrate their disputes, if such an obligation is created in the
      agreement.  

         91 Acts, ch 26, §15; 91 Acts, ch 258, § 60; 95 Acts, ch 185, §45
         Referred to in § 521B.3