{"data":{"id":"us-ok/okla.-stat.-tit.-36-36-5122","jurisdiction":"us-ok","citation":"Okla. Stat. tit. 36, § 36-5122","heading":"Requirements for allowance of credit","body":"A. Credit for reinsurance shall be allowed a domestic ceding\n\ninsurer as either an asset or a reduction from liability on account\n\nof reinsurance ceded only when the reinsurer meets the requirements\n\nof subsection B, C, D, E, F, G or H of this section; provided,\n\nfurther, that the Commissioner may adopt by regulation pursuant to\n\nsubsection B of Section 5124 of this title, specific additional\n\nrequirements relating to or setting forth the valuation of assets or\n\nreserve credits, the amount and forms of security supporting\n\nreinsurance arrangements described in subsection B of Section 5124\n\nof this title and the circumstances pursuant to which credit will be\n\nreduced or eliminated. Credit shall be allowed under subsection B,\n\nC or D of this section only as respects cessions of those kinds or\n\nclasses of business in which the assuming insurer is licensed or\n\notherwise permitted to write or assume in its state of domicile or,\n\nin the case of a United States branch of an alien assuming insurer,\n\nin the state through which it is entered and licensed to transact\n\ninsurance or reinsurance. Credit shall be allowed under subsection\n\nD or E of this section only if the applicable requirements of\n\nsubsection I have been satisfied.\n\nB. Credit shall be allowed when the reinsurance is ceded to an\n\nassuming insurer that is licensed to transact insurance or\n\nreinsurance in this state.\n\nC. Credit shall be allowed when the reinsurance is ceded to an\n\nassuming insurer that is accredited by the Insurance Commissioner as\n\na reinsurer in this state. An accredited reinsurer is one that:\n\n1. Files with the Insurance Commissioner evidence of its\n\nsubmission to this state's jurisdiction;\n\n2. Submits to this state's authority to examine its books and\n\nrecords;\n\n3. Is licensed to transact insurance or reinsurance in at least\n\none state, or in the case of a United States branch of an alien\n\nassuming insurer is entered through and licensed to transact\n\ninsurance or reinsurance in at least one state;\n\n4. Files annually with the Insurance Commissioner a copy of its\n\nannual statement filed with the insurance department of its state of\n\ndomicile and a copy of its most recent audited financial statement;\n\nand\n\n5. Demonstrates to the satisfaction of the Insurance\n\nCommissioner that it has adequate financial capacity to meet its\n\nreinsurance obligations and is otherwise qualified to assume\n\nreinsurance from domestic insurers. An assuming insurer is deemed\n\nto meet this requirement as of the time of its application if it\n\nmaintains a surplus as regards policyholders in an amount not less\n\nthan Twenty Million Dollars ($20,000,000.00) and its accreditation\n\nhas not been denied by the Insurance Commissioner within ninety (90)\n\ndays after submission of its application.\n\nD. Credit shall be allowed when the reinsurance is ceded to an\n\nassuming insurer that is domiciled in, or in the case of a United\n\nStates branch of an alien assuming insurer is entered through, a\n\nstate that employs standards regarding credit for reinsurance\n\nsubstantially similar to those applicable under this statute and the\n\nassuming insurer or United States branch of an alien assuming\n\ninsurer:\n\n1. Maintains a surplus as regards policyholders in an amount\n\nnot less than Twenty Million Dollars ($20,000,000.00); and\n\n2. Submits to the authority of this state to examine its books\n\nand records.\n\nThe requirement of paragraph 1 of this subsection does not apply\n\nto reinsurance ceded and assumed pursuant to pooling arrangements\n\namong insurers in the same holding company system.\n\nE. 1. Credit shall be allowed when the reinsurance is ceded to\n\nan assuming insurer that maintains a trust fund in a qualified\n\nUnited States financial institution, as defined in Section 5123.1 of\n\nthis title, for the payment of the valid claims of its United States\n\nceding insurers, their assigns and successors in interest. To\nling arrangements\n\namong insurers in the same holding company system.\n\nE. 1. Credit shall be allowed when the reinsurance is ceded to\n\nan assuming insurer that maintains a trust fund in a qualified\n\nUnited States financial institution, as defined in Section 5123.1 of\n\nthis title, for the payment of the valid claims of its United States\n\nceding insurers, their assigns and successors in interest. To\n\nenable the Insurance Commissioner to determine the sufficiency of\n\nthe trust fund, the assuming insurer shall report annually to the\n\nInsurance Commissioner information substantially the same as that\n\nrequired to be reported on the National Association of Insurance\n\nCommissioners Annual Statement form by licensed insurers. The\n\nassuming insurer shall submit to examination of its books and\n\nrecords by the Commissioner and bear the expense of examination.\n\n2. Credit for reinsurance shall not be granted under this\n\nsubsection unless the form of the trust and any amendments to the\n\ntrust have been approved by:\n\na. the Commissioner of the state where the trust is\n\ndomiciled, or\n\nb. the Commissioner of another state who, pursuant to the\n\nterms of the trust instrument, has accepted principal\n\nregulatory oversight of the trust.\n\n3. The form of the trust and any trust amendments also shall be\n\nfiled with the Insurance Commissioner of every state in which the\n\nceding insurer beneficiaries of the trust are domiciled. The trust\n\ninstrument shall provide that contested claims shall be valid and\n\nenforceable upon the final order of any court of competent\n\njurisdiction in the United States. The trust shall vest legal title\n\nto its assets in its trustees for the benefit of the assuming\n\ninsurer's United States ceding insurers, their assigns and\n\nsuccessors in interest. The trust and the assuming insurer shall be\n\nsubject to examination as determined by the Insurance Commissioner.\n\n4. The trust shall remain in effect for as long as the assuming\n\ninsurer has outstanding obligations due under the reinsurance\n\nagreements subject to the trust.\n\n5. No later than February 28 of each year the trustee of the\n\ntrust shall report to the Insurance Commissioner in writing the\n\nbalance of the trust and listing the trust's investments at the\n\npreceding year end and shall certify the date of termination of the\n\ntrust, if so planned, or certify that the trust shall not expire\n\nprior to the following December 31.\n\n6. The following requirements apply to the following categories\n\nof assuming insurer:\n\na. the trust fund for a single assuming insurer shall\n\nconsist of funds in trust in an amount not less than\n\nthe assuming insurer's liabilities attributable to\n\nreinsurance ceded by United States ceding insurers,\n\nand, in addition, the assuming insurer shall maintain\n\na trusteed surplus of not less than Twenty Million\n\nDollars ($20,000,000.00), except as provided in\n\nsubparagraph b of this paragraph,\n\nb. at any time after the assuming insurer has permanently\n\ndiscontinued underwriting new business secured by the\n\ntrust for at least three (3) full years, the\n\nCommissioner with principal regulatory oversight of\n\nthe trust may authorize a reduction in the required\n\ntrusteed surplus, but only after a finding, based on\n\nan assessment of the risk, that the new required\n\nsurplus level is adequate for the protection of United\n\nStates ceding insurers, policyholders and claimants in\n\nlight of reasonably foreseeable adverse loss\n\ndevelopment. The risk assessment may involve an\n\nactuarial review including an independent analysis of\n\nreserves and cash flows, and shall consider all\n\nmaterial risk factors including when applicable the\n\nlines of business involved, the stability of the\n\nincurred loss estimates and the effect of the surplus\n\nrequirements on the assuming insurer's liquidity or\n\nsolvency. The minimum required trusteed surplus shall\n\ncluding an independent analysis of\n\nreserves and cash flows, and shall consider all\n\nmaterial risk factors including when applicable the\n\nlines of business involved, the stability of the\n\nincurred loss estimates and the effect of the surplus\n\nrequirements on the assuming insurer's liquidity or\n\nsolvency. The minimum required trusteed surplus shall\n\nnot be reduced to an amount less than thirty percent\n\n(30%) of the assuming insurer's liabilities\n\nattributable to reinsurance ceded by United States\n\nceding insurers covered by the trust,\n\nc. (1) in the case of a group including incorporated and\n\nindividual unincorporated underwriters:\n\n(a) for reinsurance ceded under reinsurance\n\nagreements with an inception, amendment, or\n\nrenewal date on or after January 1, 1993,\n\nthe trust shall consist of a trusteed\n\naccount in an amount not less than the\n\nrespective underwriters' several liabilities\n\nattributable to business ceded by United\n\nStates-domiciled ceding insurers to any\n\nunderwriter of the group,\n\n(b) for reinsurance ceded under reinsurance\n\nagreements with an inception date on or\n\nbefore December 31, 1992, and not amended or\n\nrenewed after that date, notwithstanding the\n\nother provisions of the Credit for\n\nReinsurance Act, the trust shall consist of\n\na trusteed account in an amount not less\n\nthan the respective underwriters' several\n\ninsurance and reinsurance liabilities\n\nattributable to business written in the\n\nUnited States, and\n\n(c) in addition to these trusts, the group shall\n\nmaintain in trust a trusteed surplus of\n\nwhich One Hundred Million Dollars\n\n($100,000,000.00) shall be held jointly for\n\nthe benefit of the United States-domiciled\n\nceding insurers of any member of the group\n\nfor all years of account,\n\n(2) the incorporated members of the group shall not\n\nbe engaged in any business other than\n\nunderwriting as a member of the group and shall\n\nbe subject to the same level of regulation and\n\nsolvency control by the group's domiciliary\n\nregulator as are the unincorporated members, and\n\n(3) within ninety (90) days after its financial\n\nstatements are due to be filed with the group's\n\ndomiciliary regulator, the group shall provide to\n\nthe Commissioner an annual certification by the\n\ngroup's domiciliary regulator of the solvency of\n\neach underwriter member; or if a certification is\n\nunavailable, financial statements, prepared by\n\nindependent public accountants, of each\n\nunderwriter member of the group, and\n\nd. in the case of a group of incorporated underwriters\n\nunder common administration, the group shall:\n\n(1) have continuously transacted an insurance\n\nbusiness outside the United States for at least\n\nthree (3) years immediately prior to making\n\napplication for accreditation,\n\n(2) maintain aggregate policyholders' surplus of at\n\nleast Ten Billion Dollars ($10,000,000,000.00),\n\n(3) maintain a trust fund in an amount not less than\n\nthe group's several liabilities attributable to\n\nbusiness ceded by United States-domiciled ceding\n\ninsurers to any member of the group pursuant to\n\nreinsurance contracts issued in the name of the\n\ngroup,\n\n(4) in addition, maintain a joint trusteed surplus of\n\nwhich One Hundred Million Dollars\n\n($100,000,000.00) shall be held jointly for the\n\nbenefit of United States-domiciled ceding\n\ninsurers of any member of the group as additional\n\nsecurity for these liabilities, and\nStates-domiciled ceding\n\ninsurers to any member of the group pursuant to\n\nreinsurance contracts issued in the name of the\n\ngroup,\n\n(4) in addition, maintain a joint trusteed surplus of\n\nwhich One Hundred Million Dollars\n\n($100,000,000.00) shall be held jointly for the\n\nbenefit of United States-domiciled ceding\n\ninsurers of any member of the group as additional\n\nsecurity for these liabilities, and\n\n(5) within ninety (90) days after its financial\n\nstatements are due to be filed with the group's\n\ndomiciliary regulator, make available to the\n\nCommissioner an annual certification of each\n\nunderwriter member's solvency by the member's\n\ndomiciliary regulator and financial statements of\n\neach underwriter member of the group prepared by\n\nits independent public accountant.\n\nF. Credit shall be allowed when the reinsurance is ceded to an\n\nassuming insurer that has been certified by the Commissioner as a\n\nreinsurer in this state and secures its obligations in accordance\n\nwith the requirements of this subsection.\n\n1. In order to be eligible for certification, the assuming\n\ninsurer shall meet the following requirements:\n\na. the assuming insurer shall be domiciled and licensed\n\nto transact insurance or reinsurance in a qualified\n\njurisdiction, as determined by the Commissioner\n\npursuant to paragraph 3 of this subsection,\n\nb. the assuming insurer shall maintain minimum capital\n\nand surplus, or its equivalent, in an amount to be\n\ndetermined by the Commissioner pursuant to regulation,\n\nc. the assuming insurer shall maintain financial strength\n\nratings from two or more rating agencies deemed\n\nacceptable by the Commissioner pursuant to regulation,\n\nd. the assuming insurer shall agree to submit to the\n\njurisdiction of this state, appoint the Commissioner\n\nas its agent for service of process in this state and\n\nagree to provide security for one hundred percent\n\n(100%) of the assuming insurer's liabilities\n\nattributable to reinsurance ceded by United States\n\nceding insurers if it resists enforcement of a final\n\nUnited States judgment,\n\ne. the assuming insurer shall agree to meet applicable\n\ninformation filing requirements as determined by the\n\nCommissioner, both with respect to an initial\n\napplication for certification and on an ongoing basis,\n\nand\n\nf. the assuming insurer shall satisfy any other\n\nrequirements for certification deemed relevant by the\n\nCommissioner.\n\n2. An association including incorporated and individual\n\nunincorporated underwriters, may be a certified reinsurer. In order\n\nto be eligible for certification, in addition to satisfying\n\nrequirements of paragraph 1 of this subsection:\n\na. the association shall satisfy its minimum capital and\n\nsurplus requirements through the capital and surplus\n\nequivalents (net of liabilities) of the association\n\nand its members, which shall include a joint central\n\nfund that may be applied to any unsatisfied obligation\n\nof the association or any of its members, in an amount\n\ndetermined by the Commissioner to provide adequate\n\nprotection,\n\nb. the incorporated members of the association shall not\n\nbe engaged in any business other than underwriting as\n\na member of the association and shall be subject to\n\nthe same level of regulation and solvency control by\n\nthe association's domiciliary regulator as are the\n\nunincorporated members, and\n\nc. within ninety (90) days after its financial statements\n\nare due to be filed with the association's domiciliary\n\nregulator, the association shall provide to the\n\nCommissioner an annual certification by the\n\nassociation's domiciliary regulator of the solvency of\n\neach underwriter member; or if a certification is\n\nunavailable, financial statements, prepared by\n\nindependent public accountants, of each underwriter\n\nmember of the association.\n\n3. The Commissioner shall create and publish a list of\n\nqualified jurisdictions under which an assuming insurer licensed and\nssioner an annual certification by the\n\nassociation's domiciliary regulator of the solvency of\n\neach underwriter member; or if a certification is\n\nunavailable, financial statements, prepared by\n\nindependent public accountants, of each underwriter\n\nmember of the association.\n\n3. The Commissioner shall create and publish a list of\n\nqualified jurisdictions under which an assuming insurer licensed and\n\ndomiciled in such jurisdiction is eligible to be considered for\n\ncertification by the Commissioner as a certified reinsurer.\n\na. In order to determine whether the domiciliary\n\njurisdiction of a non-United-States assuming insurer\n\nis eligible to be recognized as a qualified\n\njurisdiction, the Commissioner shall evaluate the\n\nappropriateness and effectiveness of the reinsurance\n\nsupervisory system of the jurisdiction, both initially\n\nand on an ongoing basis, and consider the rights,\n\nbenefits and the extent of reciprocal recognition\n\nafforded by the non-United-States jurisdiction to\n\nreinsurers licensed and domiciled in the United\n\nStates. A qualified jurisdiction shall agree to share\n\ninformation and cooperate with the Commissioner with\n\nrespect to all certified reinsurers domiciled within\n\nthat jurisdiction. A jurisdiction shall not be\n\nrecognized as a qualified jurisdiction if the\n\nCommissioner has determined that the jurisdiction does\n\nnot adequately and promptly enforce final United\n\nStates judgments and arbitration awards. Additional\n\nfactors may be considered in the discretion of the\n\nCommissioner.\n\nb. A list of qualified jurisdictions shall be published\n\nthrough the National Association of Insurance\n\nCommissioners (NAIC) Committee Process. The\n\nCommissioner shall consider this list in determining\n\nqualified jurisdictions. If the Commissioner approves\n\na jurisdiction as qualified that does not appear on\n\nthe list of qualified jurisdictions, the Commissioner\n\nshall provide thoroughly documented justification in\n\naccordance with criteria to be developed under\n\nregulations.\n\nc. United States jurisdictions that meet the requirement\n\nfor accreditation under the NAIC financial standards\n\nand accreditation program shall be recognized as\n\nqualified jurisdictions.\n\nd. If a certified reinsurer's domiciliary jurisdiction\n\nceases to be a qualified jurisdiction, the\n\nCommissioner may at his or her discretion suspend the\n\nreinsurer's certification indefinitely, in lieu of\n\nrevocation.\n\n4. The Commissioner shall assign a rating to each certified\n\nreinsurer, giving due consideration to the financial strength\n\nratings that have been assigned by rating agencies deemed acceptable\n\nto the Commissioner pursuant to regulation. The Commissioner shall\n\npublish a list of all certified reinsurers and their ratings.\n\n5. A certified reinsurer shall secure obligations assumed from\n\nUnited States ceding insurers under this subsection at a level\n\nconsistent with its rating, as specified in regulations promulgated\n\nby the Commissioner.\n\na. In order for a domestic ceding insurer to qualify for\n\nfull financial statement credit for reinsurance ceded\n\nto a certified reinsurer, the certified reinsurer\n\nshall maintain security in a form acceptable to the\n\nCommissioner and consistent with the provisions of\n\nSection 5123 of this title, or in a multibeneficiary\n\ntrust in accordance with subsection E of this section,\n\nexcept as otherwise provided in this subsection.\n\nb. If a certified reinsurer maintains a trust to fully\n\nsecure its obligations subject to subsection E of this\n\nsection, and chooses to secure its obligations\n\nincurred as a certified reinsurer in the form of a\n\nmultibeneficiary trust, the certified reinsurer shall\n\nmaintain separate trust accounts for its obligations\n\nincurred under reinsurance agreements issued or\n\nrenewed as a certified reinsurer with reduced security\n\nas permitted by this subsection or comparable laws of\nsubject to subsection E of this\n\nsection, and chooses to secure its obligations\n\nincurred as a certified reinsurer in the form of a\n\nmultibeneficiary trust, the certified reinsurer shall\n\nmaintain separate trust accounts for its obligations\n\nincurred under reinsurance agreements issued or\n\nrenewed as a certified reinsurer with reduced security\n\nas permitted by this subsection or comparable laws of\n\nother United States jurisdictions and for its\n\nobligations subject to subsection E of this section.\n\nIt shall be a condition to the grant of certification\n\nunder this subsection that the certified reinsurer\n\nshall have bound itself, by the language of the trust\n\nand agreement with the Commissioner with principal\n\nregulatory oversight of each such trust account, to\n\nfund, upon termination of any such trust account, out\n\nof the remaining surplus of such trust any deficiency\n\nof any other such trust account.\n\nc. The minimum trusteed surplus requirements provided in\n\nsubsection E of this section are not applicable with\n\nrespect to a multibeneficiary trust maintained by a\n\ncertified reinsurer for the purpose of securing\n\nobligations incurred under this subsection, except\n\nthat such trust shall maintain a minimum trusteed\n\nsurplus of Ten Million Dollars ($10,000,000.00).\n\nd. With respect to obligations incurred by a certified\n\nreinsurer under this subsection, if the security is\n\ninsufficient, the Commissioner shall reduce the\n\nallowable credit by an amount proportionate to the\n\ndeficiency, and may at his or her discretion impose\n\nfurther reductions in allowable credit upon finding\n\nthat there is a material risk that the certified\n\nreinsurer's obligations will not be paid in full when\n\ndue.\n\n6. If an applicant for certification has been certified as a\n\nreinsurer in an NAIC-accredited jurisdiction, the Commissioner may\n\nat his or her discretion defer to that jurisdiction's certification,\n\nand may in his or her discretion defer to the rating assigned by\n\nthat jurisdiction, and such assuming insurer shall be considered to\n\nbe a certified reinsurer in this state.\n\n7. A certified reinsurer that ceases to assume new business in\n\nthis state may request to maintain its certification in inactive\n\nstatus in order to continue to qualify for a reduction in security\n\nfor its in-force business. An inactive certified reinsurer shall\n\ncontinue to comply with all applicable requirements of this\n\nsubsection, and the Commissioner shall assign a rating that takes\n\ninto account, if relevant, the reasons why the reinsurer is not\n\nassuming new business.\n\n8. For purposes of this subsection:\n\na. a certified reinsurer whose certification has been\n\nterminated for any reason shall be treated as a\n\ncertified reinsurer required to secure one hundred\n\npercent (100%) of its obligations, and\n\nb. the term \"terminated\" refers to revocation,\n\nsuspension, voluntary surrender and inactive status.\n\nIf the Commissioner continues to assign a higher\n\nrating as permitted by this section, the requirement\n\nto secure one hundred percent (100%) of its\n\nobligations shall not apply to a certified reinsurer\n\nin inactive status or to a reinsurer whose\n\ncertification has been suspended.\n\nG. 1. Credit shall be allowed when the reinsurance is ceded to\n\nan assuming insurer meeting all of the following conditions:\n\na. the assuming insurer shall have its head office or be\n\ndomiciled, as applicable, and licensed in a reciprocal\n\njurisdiction. For purposes of this subparagraph,\n\n\"reciprocal jurisdiction\" is a jurisdiction that is\n\none of the following:\ncertification has been suspended.\n\nG. 1. Credit shall be allowed when the reinsurance is ceded to\n\nan assuming insurer meeting all of the following conditions:\n\na. the assuming insurer shall have its head office or be\n\ndomiciled, as applicable, and licensed in a reciprocal\n\njurisdiction. For purposes of this subparagraph,\n\n\"reciprocal jurisdiction\" is a jurisdiction that is\n\none of the following:\n\n(1) a non-United States jurisdiction that is subject\n\nto an in-force, covered agreement with the United\n\nStates, each within its legal authority, or, in\n\nthe case of a covered agreement between the\n\nUnited States and the European Union, is a member\n\nstate of the European Union. For purposes of\n\nthis subparagraph, a \"covered agreement\" is an\n\nagreement entered into pursuant to Dodd-Frank\n\nWall Street Reform and Consumer Protection Act,\n\n31 U.S.C. Sections 313 and 314, that is currently\n\nin effect or in a period of provisional\n\napplication and addresses the elimination, under\n\nspecified conditions, of collateral requirements\n\nas a condition for entering into any reinsurance\n\nagreement with a ceding insurer domiciled in this\n\nstate or for allowing the ceding insurer to\n\nrecognize credit for reinsurance,\n\n(2) a United States jurisdiction that meets the\n\nrequirements for accreditation under the National\n\nAssociation of Insurance Commissioners financial\n\nstandards and accreditation program, or\n\n(3) a qualified jurisdiction, as determined by the\n\nCommissioner pursuant to paragraph 3 of\n\nsubsection F of this section, that is not\n\notherwise described in division 1 or 2 of\n\nsubparagraph a of paragraph 1 of this subsection\n\nand meets additional requirements consistent with\n\nthe terms and conditions of in-force, covered\n\nagreements, as specified by the Commissioner in\n\nrules,\n\nb. the assuming insurer shall have and maintain, on an\n\nongoing basis, minimum capital and surplus, or its\n\nequivalent, calculated according to the methodology of\n\nits domiciliary jurisdiction, in an amount to be set\n\nforth in Insurance Department rules. If the assuming\n\ninsurer is an association including incorporated and\n\nindividual unincorporated underwriters, it shall have\n\nand maintain, on an ongoing basis, minimum capital and\n\nsurplus equivalents (net of liabilities), calculated\n\naccording to the methodology applicable in its\n\ndomiciliary jurisdiction, and a central fund\n\ncontaining a balance in amounts to be set forth in\n\nDepartment rules,\n\nc. the assuming insurer shall have and maintain, on an\n\nongoing basis, a minimum solvency or capital ratio, as\n\napplicable, which will be set forth in Department\n\nrules. If the assuming insurer is an association\n\nincluding incorporated and individual unincorporated\n\nunderwriters, it shall have and maintain, on an\n\nongoing basis, a minimum solvency or capital ratio in\n\nthe reciprocal jurisdiction where the assuming insurer\n\nhas its head office or is domiciled and is also\n\nlicensed,\n\nd. the assuming insurer shall agree and provide adequate\n\nassurance to the Insurance Commissioner, in a form\n\nspecified by the Commissioner, as follows:\n\n(1) the assuming insurer shall provide prompt written\n\nnotice and explanation to the Commissioner if it\n\nfalls below the minimum requirements set forth in\n\nsubparagraph b or c of this paragraph, or if any\n\nregulatory action is taken against it for serious\n\nnoncompliance with applicable law,\n\nr, in a form\n\nspecified by the Commissioner, as follows:\n\n(1) the assuming insurer shall provide prompt written\n\nnotice and explanation to the Commissioner if it\n\nfalls below the minimum requirements set forth in\n\nsubparagraph b or c of this paragraph, or if any\n\nregulatory action is taken against it for serious\n\nnoncompliance with applicable law,\n\n(2) the assuming insurer shall consent in writing to\n\nthe jurisdiction of the courts of this state and\n\nto the appointment of the Commissioner as agent\n\nfor service of process. The Commissioner may\n\nrequire that consent for service of process be\n\nprovided to the Commissioner and included in each\n\nreinsurance agreement. Nothing in this provision\n\nshall be construed to limit, or in any way alter,\n\nthe capacity of parties to a reinsurance\n\nagreement to agree to alternative dispute\n\nresolution mechanisms, except to the extent such\n\nagreements are unenforceable under applicable\n\ninsolvency or delinquency laws,\n\n(3) the assuming insurer shall consent in writing to\n\npay all final judgments, wherever enforcement is\n\nsought, obtained by a ceding insurer or its legal\n\nsuccessor, that have been declared enforceable in\n\nthe jurisdiction where the judgment was obtained,\n\n(4) each reinsurance agreement shall include a\n\nprovision requiring the assuming insurer to\n\nprovide security in an amount equal to one\n\nhundred percent (100%) of the liabilities of the\n\nassuming insurer attributable to reinsurance\n\nceded pursuant to that agreement if the assuming\n\ninsurer resists enforcement of a final judgment\n\nthat is enforceable under the law of the\n\njurisdiction in which it was obtained or a\n\nproperly enforceable arbitration award, whether\n\nobtained by the ceding insurer or by its legal\n\nsuccessor on behalf of its resolution estate, and\n\n(5) the assuming insurer shall confirm that it is not\n\npresently participating in any solvent scheme of\n\narrangement that involves the ceding insurers of\n\nthis state, and agree to notify the ceding\n\ninsurer and the Commissioner and to provide\n\nsecurity in an amount equal to one hundred\n\npercent (100%) of the liabilities of the assuming\n\ninsurer to the ceding insurer, should the\n\nassuming insurer enter into such a solvent scheme\n\nof arrangement. The security shall be in a form\n\nconsistent with the provisions of subsection F of\n\nSection 5122 and Section 5123 of this title,\n\nspecified by the Commissioner in rule,\n\ne. the assuming insurer or its legal successor shall\n\nprovide, on behalf of itself and any legal\n\npredecessors, any additional documentation requested\n\nby the Commissioner in regulation,\n\nf. the assuming insurer shall maintain a practice of\n\nprompt payment of claims under reinsurance agreements,\n\npursuant to criteria set forth in rule,\n\ng. the supervisory authority of the assuming insurer\n\nshall confirm to the Commissioner on an annual basis,\n\nas of the preceding December 31 or at the annual date\n\notherwise statutorily reported to the reciprocal\n\njurisdiction, that the assuming insurer complies with\n\nthe requirements set forth in subparagraphs b and c of\n\nthis paragraph, and\n\nh. nothing in this provision shall be construed to\n\npreclude an assuming insurer from providing the\n\nCommissioner with information on a voluntary basis.\n\n2. The Commissioner shall timely create and publish a list of\n\nreciprocal jurisdictions.\n\na. A list of reciprocal jurisdictions is published\n\nthrough the National Association of Insurance\n\nCommissioners Committee Process. The list shall\n\ninclude any reciprocal jurisdiction as defined under\n\nsubparagraph a of paragraph 1 of this subsection and\n\nshall consider any other reciprocal jurisdiction\n\nincluded on the National Association of Insurance\n\nCommissioners list. The Commissioner may approve a\n\njurisdiction that does not appear on the list of\n\nreciprocal jurisdictions in accordance with criteria\n\nto be developed through rules issued by the\nany reciprocal jurisdiction as defined under\n\nsubparagraph a of paragraph 1 of this subsection and\n\nshall consider any other reciprocal jurisdiction\n\nincluded on the National Association of Insurance\n\nCommissioners list. The Commissioner may approve a\n\njurisdiction that does not appear on the list of\n\nreciprocal jurisdictions in accordance with criteria\n\nto be developed through rules issued by the\n\nCommissioner.\n\nb. The Commissioner may remove a jurisdiction from the\n\nlist of reciprocal jurisdictions upon a determination\n\nthat the jurisdiction no longer meets the requirements\n\nof a reciprocal jurisdiction, in accordance with a\n\nprocess set forth in rules issued by the Commissioner,\n\nexcept that the Commissioner shall not remove from the\n\nlist a reciprocal jurisdiction as defined under\n\nsubparagraph a of paragraph 1 of this subsection.\n\nUpon removal of a reciprocal jurisdiction from this\n\nlist, credit for reinsurance ceded to an assuming\n\ninsurer that has its home office or is domiciled in\n\nthat jurisdiction shall be allowed, if otherwise\n\nallowed pursuant to this act.\n\n3. The Commissioner shall timely create and publish a list of\n\nassuming insurers that have satisfied the conditions set forth in\n\nthis subsection and to which cessions shall be granted credit in\n\naccordance with this subsection. The Commissioner may add an\n\nassuming insurer to such list if a National Association of Insurance\n\nCommissioners accredited jurisdiction has added the assuming insurer\n\nto a list of such assuming insurers or if, upon initial eligibility,\n\nthe assuming insurer submits the information to the Commissioner as\n\nrequired under subparagraph d of paragraph 1 of this subsection and\n\ncomplies with any additional requirements that the Commissioner may\n\nimpose by regulation, except to the extent that they conflict with\n\nan applicable covered agreement.\n\n4. If the Commissioner determines that an assuming insurer no\n\nlonger meets one or more of the requirements under this subsection,\n\nthe Commissioner may revoke or suspend the eligibility of the\n\nassuming insurer for recognition under this subsection in accordance\n\nwith procedures set forth in Department rules.\n\na. While the eligibility of an assuming insurer is\n\nsuspended, no reinsurance agreement issued, amended or\n\nrenewed after the effective date of the suspension\n\nqualifies for credit except to the extent that the\n\nobligations of the assuming insurer under the contract\n\nare secured in accordance with the provisions of\n\nSection 5123 of this title.\n\nb. If the eligibility of an assuming insurer is revoked,\n\nno credit for reinsurance may be granted after the\n\neffective date of the revocation with respect to any\n\nreinsurance agreements entered into by the assuming\n\ninsurer including reinsurance agreements entered into\n\nprior to the date of revocation, except to the extent\n\nthat the obligations of the assuming insurer under the\n\ncontract are secured in a form acceptable to the\n\nCommissioner.\n\n5. If subject to a legal process of rehabilitation, liquidation\n\nor conservation, as applicable, the ceding insurer or its\n\nrepresentative may seek and, if determined appropriate by the court\n\nin which the proceedings are pending, may obtain an order requiring\n\nthat the assuming insurer post security for all outstanding ceded\n\nliabilities.\n\n6. Nothing in this subsection shall be construed to limit or in\n\nany way alter the capacity of parties to a reinsurance agreement to\n\nagree on requirements for security or other terms in that\n\nreinsurance agreement, except as expressly prohibited by this act or\n\nother applicable law or rule.\n\n7. Credit may be taken under this subsection only for\n\nreinsurance agreements entered into, amended or renewed on or after\n\nthe effective date of this act, and only with respect to losses\n\nincurred and reserves reported on or after the later of (1) the date\n\non which the assuming insurer has met all eligibility requirements\nept as expressly prohibited by this act or\n\nother applicable law or rule.\n\n7. Credit may be taken under this subsection only for\n\nreinsurance agreements entered into, amended or renewed on or after\n\nthe effective date of this act, and only with respect to losses\n\nincurred and reserves reported on or after the later of (1) the date\n\non which the assuming insurer has met all eligibility requirements\n\npursuant to paragraph 1 of this subsection, and (2) the effective\n\ndate of the new reinsurance agreement, amendment or renewal.\n\na. This paragraph does not alter or impair the right of a\n\nceding insurer to take credit for reinsurance, to the\n\nextent that credit is not available under this\n\nsubsection, as long as the reinsurance qualifies for\n\ncredit under any other applicable provision of this\n\nact.\n\nb. Nothing in this subsection shall be construed to\n\nauthorize an assuming insurer to withdraw or reduce\n\nthe security provided under any reinsurance agreement,\n\nexcept as permitted by the terms of the agreement.\n\nc. Nothing in this subsection shall be construed to\n\nlimit, or in any way alter, the capacity of parties to\n\nany reinsurance agreement to renegotiate the\n\nagreement.\n\nH. Credit shall be allowed when the reinsurance is ceded to an\n\nassuming insurer not meeting the requirements of subsection B, C, D,\n\nE, F or G of this section but only as the insurance of risks located\n\nin jurisdictions where the reinsurance is required by applicable law\n\nor regulation of that jurisdiction.\n\nI. If the assuming insurer is not licensed, accredited or\n\ncertified to transact insurance or reinsurance in this state, the\n\ncredit permitted by subsections D and E of this section shall not be\n\nallowed unless the assuming insurer agrees in the reinsurance\n\nagreements:\n\n1. That in the event of the failure of the assuming insurer to\n\nperform its obligations under the terms of the reinsurance\n\nagreement, the assuming insurer, at the request of the ceding\n\ninsurer, shall submit to the jurisdiction of any court of competent\n\njurisdiction in any state of the United States, will comply with all\n\nrequirements necessary to give the court jurisdiction, and will\n\nabide by the final decision of the court or of any appellate court\n\nin the event of an appeal; and\n\n2. To designate the Insurance Commissioner or a designated\n\nattorney as its true and lawful attorney upon whom may be served any\n\nlawful process in any action, suit or proceeding instituted by or on\n\nbehalf of the ceding insurer. This subsection is not intended to\n\nconflict with or override the obligation of the parties to a\n\nreinsurance agreement to arbitrate their disputes, if this\n\nobligation is created in the agreement.\n\nJ. If the assuming insurer does not meet the requirements of\n\nsubsection B, C, D, or G of this section, the credit permitted by\n\nsubsection E or F of this section shall not be allowed unless the\n\nassuming insurer agrees in the trust agreements to the following\n\nconditions:\n\n1. Notwithstanding any other provisions in the trust\n\ninstrument, if the trust fund is inadequate because it contains an\n\namount less than the amount required by paragraph 6 of subsection E\n\nof this section, or if the grantor of the trust has been declared\n\ninsolvent or placed into receivership, rehabilitation, liquidation\n\nor similar proceedings under the laws of its state or country of\n\ndomicile, the trustee shall comply with an order of the Commissioner\n\nwith regulatory oversight over the trust or with an order of a court\n\nof competent jurisdiction directing the trustee to transfer to the\n\nCommissioner with regulatory oversight all of the assets of the\n\ntrust fund;\n\n2. The assets shall be distributed by and claims shall be filed\n\nwith and valued by the Commissioner with regulatory oversight in\n\naccordance with the laws of the state in which the trust is\n\ndomiciled that are applicable to the liquidation of domestic\nof competent jurisdiction directing the trustee to transfer to the\n\nCommissioner with regulatory oversight all of the assets of the\n\ntrust fund;\n\n2. The assets shall be distributed by and claims shall be filed\n\nwith and valued by the Commissioner with regulatory oversight in\n\naccordance with the laws of the state in which the trust is\n\ndomiciled that are applicable to the liquidation of domestic\n\ninsurance companies;\n\n3. If the Commissioner with regulatory oversight determines\n\nthat the assets of the trust fund or any part thereof are not\n\nnecessary to satisfy the claims of the United States ceding insurers\n\nof the grantor of the trust, the assets or part thereof shall be\n\nreturned by the Commissioner with regulatory oversight to the\n\ntrustee for distribution in accordance with the trust agreement; and\n\n4. The grantor shall waive any right otherwise available to it\n\nunder United States law that is inconsistent with this provision.\n\nK. If an accredited or certified reinsurer ceases to meet the\n\nrequirements for accreditation or certification, the Commissioner\n\nmay suspend or revoke the reinsurer's accreditation or\n\ncertification.\n\n1. The Commissioner shall give the reinsurer notice and\n\nopportunity for hearing. The suspension or revocation shall not\n\ntake effect until after the Commissioner's order on hearing, unless:\n\na. the reinsurer waives its right to hearing,\n\nb. the Commissioner's order is based on regulatory action\n\nby the reinsurer's domiciliary jurisdiction or the\n\nvoluntary surrender or termination of the reinsurer's\n\neligibility to transact insurance or reinsurance\n\nbusiness in its domiciliary jurisdiction or in the\n\nprimary certifying state of the reinsurer under\n\nparagraph 6 of subsection F of this section, or\n\nc. the Commissioner finds that an emergency requires\n\nimmediate action and a court of competent jurisdiction\n\nhas not stayed the Commissioner's action.\n\n2. While a reinsurer's accreditation or certification is\n\nsuspended, no reinsurance contract issued or renewed after the\n\neffective date of the suspension qualifies for credit except to the\n\nextent that the reinsurer's obligations under the contract are\n\nsecured in accordance with Section 5123 of this title. If a\n\nreinsurer's accreditation or certification is revoked, no credit for\n\nreinsurance shall be granted after the effective date of the\n\nrevocation except to the extent that the reinsurer's obligations\n\nunder the contract are secured in accordance with paragraph 5 of\n\nsubsection F of this section or Section 5123 of this title.\n\nL. Concentration Risk.\n\n1. A ceding insurer shall take steps to manage its reinsurance\n\nrecoverables proportionate to its own book of business. A domestic\n\nceding insurer shall notify the Commissioner within thirty (30) days\n\nafter reinsurance recoverables from any single assuming insurer, or\n\ngroup of affiliated assuming insurers, exceeds fifty percent (50%)\n\nof the domestic ceding insurer's last reported surplus to\n\npolicyholders, or after it is determined that reinsurance\n\nrecoverables from any single assuming insurer, or group of\n\naffiliated assuming insurers, is likely to exceed this limit. The\n\nnotification shall demonstrate that the exposure is safely managed\n\nby the domestic ceding insurer.\n\n2. A ceding insurer shall take steps to diversify its\n\nreinsurance program. A domestic ceding insurer shall notify the\n\nCommissioner within thirty (30) days after ceding to any single\n\nassuming insurer, or group of affiliated assuming insurers, more\n\nthan twenty percent (20%) of the ceding insurer's gross written\n\npremium in the prior calendar year, or after it has determined that\n\nthe reinsurance ceded to any single assuming insurer, or group of\n\naffiliated assuming insurers, is likely to exceed this limit. The\n\nnotification shall demonstrate that the exposure is safely managed\n\nby the domestic ceding insurer.","path":["OK Code","Title 36"],"source_url":"https://www.oklegislature.gov/OK_Statutes/CompleteTitles/os36.pdf","current_through":"2026-08-14","vintage":"open-us-law v2026.08, retrieved 2026-09-14","retrieved_at":"2026-09-14T18:32:36Z","sha256":"79967d4b9c4af6f3d629a244e3289e67261900c6107fbb33ca883d6cdaeac38d","source_id":"us-ok","stale":false,"prev":"us-ok/okla.-stat.-tit.-36-36-5121","next":"us-ok/okla.-stat.-tit.-36-36-5123"},"notice":"GroundRules: Original legal text. Not legal advice."}