{"data":{"id":"us-ky/krs-304.7-453","jurisdiction":"us-ky","citation":"KRS 304.7-453","heading":"Asset and reserve requirements -- Reconciliation and summary --","body":"Commissioner's actions if insurer is not in compliance.\n(1) Subject to all other limitations and requirements of this subtitle, a property and\ncasualty, financial guaranty, mortgage guaranty, or accident and health insurer shall\nmaintain an amount at least equal to one hundred percent (100%) of adjusted loss\nreserves and loss adjustment expense reserves, one hundred percent (100%) of\nadjusted unearned premium reserves, and one hundred percent (100%) of statutorily\nrequired policy and contract reserves in:\n(a) Cash and cash equivalents;\n(b) High and medium grade investments that qualify under KRS 304.7 -457 or\n304.7-459;\n(c) Equity interests that qualify under KRS 304.7 -461 and that are tra ded on a\nqualified exchange;\n(d) Investments of the type set forth in KRS 304.7 -469, if the investments are\nrated in the highest generic rating category by a nationally recognized\nstatistical rating organization recognized by the SVO for rating foreign\njurisdictions and if any foreign currency exposure is effectively hedged\nthrough the maturity date of the investments;\n(e) Qualifying investments of the type set forth in paragraph (b), (c), or (d) of this\nsubsection that are acquired under KRS 304.7-473;\n(f) Interest and dividends receivable on qualifying investments of the type set\nforth in paragraphs (a) to (e) of this subsection; or\n(g) Reinsurance recoverable on paid losses.\n(2) Determination of the reserve requirement amount shall be as follows:\n(a) For purposes of determining the amount of assets to be maintained under this\nsubsection, the calculation of adjusted loss reserves and loss adjustment\nexpense reserves, adjusted unearned premium reserves, and statutorily\nrequired policy and contract reserves s hall be based on the amounts reported\nas of the most recent annual or quarterly statement date;\n(b) Adjusted loss reserves and loss adjustment expense reserves shall be equal to\nthe sum of the amounts derived from the following calculations:\n1. The result of each amount reported by the insurer as losses and loss\nadjustment expenses unpaid for each accident year for each individual\nline of business; multiplied by\n2. The discount factor that is applicable to the line of business and accident\nyear published by the Internal Revenue Service under Internal Revenue\nCode Section 846 (26 U.S.C. sec. 846), as amended, for the calendar\nyear that corresponds to the most recent annual statement of the insurer;\nminus\n3. Accrued retrospective premiums discounted by an aver age discount\nfactor. The discount factor shall be calculated by dividing the losses and\nloss adjustment expenses unpaid after discounting (the product of\nsubparagraphs 1. and 2. of this paragraph) by loss and loss adjustment\nexpense reserves before discoun ting subparagraph 1. of this paragraph;\nand\n4. For purposes of these calculations, the losses and loss adjustment\nexpenses unpaid shall be determined net of anticipated salvage and\nsubrogation, and gross of any discount for the time value of money or\ntabular discount;\n(c) Adjusted unearned premium reserves shall be equal to the result of the\nfollowing calculation:\n1. The amount reported by the insurer as unearned premium reserves;\nminus\n2. The admitted asset amounts reported by the insurer as:\na. Premiums i n and agents' balances in the course of collection,\naccident and health premiums due and unpaid, and uncollected\npremiums for accident and health premiums;\nb. Premiums, agents' balances, and installments booked but deferred\nand not yet due; and\nc. Bills receivable, taken for premium; and\n(d) Statutorily required policy and contract reserves also shall include, in the case\nof a title insurer, the amounts required by KRS 304.6 -080 and, in the case of a\nmortgage guaranty insurer, the amounts required by KRS 30 4.6-090 and, in\nthe case of an accident and health insurer, the amounts required by KRS\n304.6-070.\n(3) A property and casualty, financial guaranty, mortgage guaranty, or accident and\nhealth insurer shall supplement its annual statement with a reconciliatio n and\nsummary of its assets and reserve requirements as required in subsection (1) of this\nsection. A reconciliation and summary showing that an insurer's assets as required\nin subsection (1) of this section are greater than or equal to its undiscounted\nreserves referred to in subsection (1) of this section shall be sufficient to satisfy this\nrequirement. Upon prior notification, the commissioner may require an insurer to\nsubmit a reconciliation and summary with any quarterly statement filed during the\ncalendar year.\n(4) If a property and casualty, financial guaranty, mortgage guaranty, or accident and\nhealth insurer's assets and reserves do not comply with subsection (1) of this\nsection, the insurer shall notify the commissioner immediately of the amount by\nwhich the reserve requirements exceed the annual statement value of the qualifying\nassets, explain why the deficiency exists, and within thirty (30) days of the date of\nthe notice propose a plan of action to remedy the deficiency.\n(5) If the commissioner determines that an insurer is not in compliance with subsection\n(1) of this section, the commissioner shall require the insurer to eliminate the\ncondition causing the noncompliance within a specified time from the date the\nnotice of the commissioner's requirement is mailed or delivered to the insurer.\n(6) If an insurer fails to comply with the commissioner's requirement under subsection\n(5) of this section, the insurer is deemed to be in hazardous financial condition, and\nthe commissioner shall take one (1) or more of the actions authorized by Subtitle 33\nof KRS Chapter 304, and KRS 304.3-200.","path":[],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=16853","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:57:39Z","sha256":"2ba026023c7ed96c2470a0b4e7702fe933c3dd520baa3d650688ca32870840e6","source_id":"us-ky","stale":false,"prev":"us-ky/krs-304.7-451","next":"us-ky/krs-304.7-455"},"notice":"GroundRules: Original legal text. Not legal advice."}