Nac: Chapter 681A - Kinds Of Insurance; Reinsurance

Link to law: http://www.leg.state.nv.us/nac/NAC-681A.html
Published: 2015

[Rev. 11/22/2013 10:23:49

AM--2013]



[NAC-681A Revised Date: 11-13]

CHAPTER 681A - KINDS OF INSURANCE;

REINSURANCE

GENERAL PROVISIONS

681A.005         Definitions.

681A.006         “Commissioner” defined.

681A.007         “Division” defined.

681A.008         “Liabilities” defined.

REINSURANCE INTERMEDIARIES

681A.050         Classes of licenses for

intermediaries.

681A.060         Application for license to act as

intermediary.

681A.070         Intermediary license: Period of

validity; renewal.

681A.080         Manager for reinsurance: Filing of

bond; cancellation of bond; suspension of license if replacement bond not

filed.

681A.090         Manager for reinsurance: Maintenance

of policy of insurance.

681A.100         Manager for reinsurance:

Satisfaction of requirements by nonresident intermediary.

681A.110         Agent or broker acting as

intermediary.

LIFE AND HEALTH REINSURANCE AGREEMENTS

681A.150         Applicability.

681A.160         Prohibited acts regarding financial

statement required of insurer.

681A.170         Taking of reserve credit and

establishment of assets with approval of Commissioner.

681A.180         Filing of agreement regarding

reinsurance of business; financial statement; increase in surplus net of

federal income taxes.

681A.190         Reduction of liability or

establishment of asset in financial statement: Requirements of letter of

intent, reinsurance agreement or amendment.

REINSURANCE TRANSACTIONS

681A.250         Definitions.

681A.260         “Beneficiary” defined.

681A.265         “Financial statement” defined.

681A.270         “Grantor” defined.

681A.280         “Obligation” defined.

681A.290         Requirements of trust agreement for

reduction from liability; insolvency of grantor of trust.

681A.300         Authorized acts that may be included

in trust agreement.

681A.310         Establishment of trust agreement in

conjunction with reinsurance agreement: Acceptable use of trust account by

ceding insurer under certain circumstances; contents of reinsurance agreement.

681A.320         Reinsurance agreement entered into

in conjunction with trust agreement and establishment of trust account:

Acceptable conditions.

681A.325         Reinsurance agreement entered into

in conjunction with trust agreement and establishment of trust account:

Stipulation of value and types of assets deposited in trust account.

681A.330         Use of trust agreement for reduction

of liability for reinsurance.

681A.335         Exhaustion of specific security

required before presentation of claim for payment from trust account.

681A.340         Requirements of letter of credit.

681A.350         Acceptable provisions of reinsurance

agreement.

681A.360         Letter of credit obtained in

conjunction with reinsurance agreement: Requirement that parties enter into

trust agreement under certain circumstances.

681A.370         Authority of ceding insurer to take

credit for unencumbered assets.

681A.375         Requirements for ceding insurer to

be granted credit or allowed asset or reduction from liability: Provisions of

reinsurance agreement.

681A.380         Applicability of requirements before

and after June 28, 1996.

 

 

 

GENERAL PROVISIONS

      NAC 681A.005  Definitions. (NRS 679B.130)  As used

in this chapter, unless the context otherwise requires, the words and terms

defined in NRS 681A.260 to 681A.410, inclusive, and NAC 681A.006, 681A.007

and 681A.008 have the meanings ascribed to them in

those sections.

     (Added to NAC by Comm’r of Insurance, eff. 3-20-96; A 5-13-96;

R027-02, 5-31-2002)

      NAC 681A.006  “Commissioner” defined. (NRS 679B.130)  “Commissioner”

has the meaning ascribed to it in NRS

679A.060.

     (Added to NAC by Comm’r of Insurance by R027-02, eff. 5-31-2002)

      NAC 681A.007  “Division” defined. (NRS 679B.130)  “Division”

has the meaning ascribed to it in NRS

679A.085.

     (Added to NAC by Comm’r of Insurance by R027-02, eff. 5-31-2002)

      NAC 681A.008  “Liabilities” defined. (NRS 679B.130, 681A.130)  “Liabilities”

means the gross liabilities of an assuming insurer which are attributable to

reinsurance ceded by insurers domiciled in the United States and which are not

otherwise secured by acceptable means and includes, without limitation:

     1.  For business ceded by a domestic insurer

authorized to write accident and health insurance and property and casualty

insurance:

     (a) Losses and allocated loss expenses paid by the

ceding insurer that are recoverable from the assuming insurer;

     (b) Reserves for reported losses and outstanding

losses;

     (c) Reserves for losses incurred but not reported;

     (d) Reserves for allocated loss expenses; and

     (e) Unearned premiums.

     2.  For business ceded by a domestic insurer

authorized to write life, health and annuity insurance:

     (a) Aggregate reserves for life policies and

contracts less policy loans and net due and deferred premiums;

     (b) Aggregate reserves for accident and health

policies;

     (c) Deposit funds and other liabilities without

life or disability contingencies; and

     (d) Liabilities for policy and contract claims.

     (Added to NAC by Comm’r of Insurance by R027-02, eff. 5-31-2002)

REINSURANCE INTERMEDIARIES

      NAC 681A.050  Classes of licenses for intermediaries. (NRS 679B.130,

681A.130, 681A.430)

     1.  The Commissioner will issue two classes

of licenses for intermediaries:

     (a) Intermediary broker for reinsurance.

     (b) Intermediary manager for reinsurance.

     2.  A manager for reinsurance may be licensed

also as a broker for reinsurance and be a broker for reinsurance as to

reinsurers for which he or she is not then licensed as a manager for

reinsurance.

     (Added to NAC by Comm’r of Insurance, eff. 3-20-96)

      NAC 681A.060  Application for license to act as intermediary. (NRS 679B.130,

681A.130, 681A.430)

     1.  A person applying for a license to act as

an intermediary must submit an application and any other form prescribed by the

Commissioner.

     2.  A firm, association or corporation which

is applying for a license to act as an intermediary must provide, on a form

prescribed by the Commissioner, an affidavit containing the name, official

position and biographical information for each person named in the application

and in any supplements thereto who will act as an intermediary on behalf of the

firm, association or corporation.

     (Added to NAC by Comm’r of Insurance, eff. 3-20-96)

      NAC 681A.070  Intermediary license: Period of validity; renewal. (NRS 679B.130,

681A.130, 681A.430)

     1.  An intermediary license is valid for 3

years after the date of its issuance, or for any lesser term as determined by

the Commissioner, or until it is suspended, revoked or otherwise terminated.

     2.  A license may be renewed for an

additional 3-year period by submitting to the Commissioner an application on a

form prescribed by the Commissioner, accompanied by the applicable fees

required pursuant to NRS 680B.010

and 680C.110.

     (Added to NAC by Comm’r of Insurance, eff. 3-20-96; A

by R110-10, 9-14-2012)

      NAC 681A.080  Manager for reinsurance: Filing of bond; cancellation of bond;

suspension of license if replacement bond not filed. (NRS 679B.130,

681A.130, 681A.420)

     1.  For each reinsurer represented by a

manager for reinsurance, the manager shall file with the Commissioner a bond

issued by an insurer authorized under title 57 of NRS, continuous in form and

in an amount determined by the Commissioner of not less than $50,000 for the

protection of the reinsurer.

     2.  The bond must inure to the benefit of the

reinsurer for damage caused by any fraudulent act or conduct of the manager.

     3.  The surety may cancel the bond upon 90

days’ advance notice to the manager and the Commissioner. The license of the

manager must automatically be suspended if he or she does not file with the

Commissioner a replacement bond before the date of cancellation of the previous

bond. A replacement bond must meet all of the requirements of this section for

the initial bond.

     (Added to NAC by Comm’r of Insurance, eff. 3-20-96)

      NAC 681A.090  Manager for reinsurance: Maintenance of policy of insurance. (NRS 679B.130,

681A.130, 681A.420)  A

manager for reinsurance shall maintain an insurance policy that covers errors

and omissions, issued by an insurer authorized under title 57 of NRS, in an

amount determined by the Commissioner of not less than $1,000,000.

     (Added to NAC by Comm’r of Insurance, eff. 3-20-96)

      NAC 681A.100  Manager for reinsurance: Satisfaction of requirements by

nonresident intermediary. (NRS 679B.130, 681A.130, 681A.420)  A

manager for reinsurance licensed as a nonresident intermediary may satisfy the

requirements of NAC 681A.080 and 681A.090 by providing evidence that the bonds and

insurance policy required pursuant to those sections are filed with the

appropriate regulatory officer of the state in which the intermediary is

domiciled. The bonds and insurance policy must be issued by an insurer

authorized under title 57 of NRS and in amounts required pursuant to NAC 681A.080 and 681A.090.

     (Added to NAC by Comm’r of Insurance, eff. 3-20-96)

      NAC 681A.110  Agent or broker acting as intermediary. (NRS 679B.130,

681A.130, 681A.420)  An agent

or broker licensed pursuant to title 57 of NRS may act as an intermediary, if

the agent or broker complies with all laws, rules and regulations relating to

intermediaries when engaged in the activities of an intermediary.

     (Added to NAC by Comm’r of Insurance, eff. 3-20-96)

LIFE AND HEALTH REINSURANCE AGREEMENTS

      NAC 681A.150  Applicability. (NRS 679B.130, 681A.130)

     1.  The provisions of NAC

681A.150 to 681A.190, inclusive, apply to all

domestic life and accident insurers and health insurers and to:

     (a) All other authorized life and accident insurers

and health insurers which are not subject to a substantially similar regulation

in their state of domicile; and

     (b) All authorized property insurers and casualty

insurers with respect to their accident and health business.

     2.  The provisions of NAC

681A.150 to 681A.190, inclusive, do not apply

to assumption reinsurance, yearly renewable term reinsurance, or stop-loss or

catastrophe reinsurance.

     (Added to NAC by Comm’r of Insurance, eff. 5-13-96)

      NAC 681A.160  Prohibited acts regarding financial statement required of

insurer. (NRS 679B.130, 681A.130)

     1.  An insurer shall not, in any financial

statement required to be filed with the Division, reduce any liability or

establish any asset for reinsurance ceded if, by the terms of the reinsurance

agreement, renewal expense allowances provided or to be provided to the ceding

insurer by the reinsurer in any accounting period are not sufficient to cover

anticipated allocable renewal expenses of the ceding insurer on the portion of

the business reinsured, unless a liability is established for the present value

of the shortfall using assumptions equal to the applicable statutory reserve

basis on the business reinsured. For the purposes of this subsection, renewal

expenses include commissions, premium taxes and direct expenses including, but

not limited to, billing, valuation, claims and maintenance expected by the

company at the time the business is reinsured.

     2.  An insurer shall not, in any financial

statement required to be filed with the Division, reduce any liability or

establish any asset for reinsurance ceded if, by the terms of the reinsurance

agreement, the ceding insurer can be deprived of surplus or assets at the

reinsurer’s option or automatically upon the occurrence of some event,

including the insolvency of the ceding insurer. For the purposes of this

subsection, deprivation of surplus or assets does not include the termination

of the reinsurance agreement by the reinsurer for nonpayment of reinsurance

premiums or other amounts due, including modified coinsurance reserve

adjustments, interest and adjustments on money withheld, and tax

reimbursements.

     3.  An insurer shall not, in any financial

statement required to be filed with the Division, reduce any liability or

establish any asset for reinsurance ceded if, by the terms of the reinsurance

agreement, the ceding insurer is required to reimburse the reinsurer for

negative experience under the reinsurance agreement. For the purposes of this

subsection:

     (a) Reimbursement for negative experience does not

include:

          (1) Offsetting experience refunds against

current and prior years’ losses under the agreement; or

          (2) Payment by the ceding insurer of an amount

equal to the current and prior years’ losses under the agreement upon voluntary

termination of reinsurance in force by the ceding insurer.

     (b) Voluntary termination does not include

termination because of unreasonable provisions which allow the reinsurer to

reduce its risk under the agreement, including a provision which authorizes the

reinsurer to increase reinsurance premiums or risk and expense charges to

excessive levels and thereby force the ceding company to terminate prematurely

the reinsurance agreement.

     4.  An insurer shall not, in any financial

statement required to be filed with the Division, reduce any liability or

establish any asset for reinsurance ceded if, by the terms of the reinsurance

agreement, the ceding insurer must, at specific times scheduled in the

agreement, terminate or automatically recapture all or part of the reinsurance

ceded.

     5.  An insurer shall not, in any financial

statement required to be filed with the Division, reduce any liability or

establish any asset for reinsurance ceded if, by the terms of the reinsurance

agreement, the ceding insurer must pay money to the reinsurer other than from

income realized from the reinsured policies, such as a provision which requires

the ceding insurer to pay reinsurance premiums, or other fees or charges which

are greater than the direct premium collected by the ceding company.

     6.  An insurer shall not, in any financial

statement required to be filed with the Division, reduce any liability or

establish any asset for reinsurance ceded if the reinsurance agreement does not

transfer all of the significant risks inherent in the business being reinsured.

The following categories of risk are considered to be significant:

     (a) Morbidity.

     (b) Mortality.

     (c) Lapse, which is the risk that a policy will

voluntarily terminate before the recoupment of any unearned premium reserve

required pursuant to NRS 692A.160.

     (d) Credit quality, which is the risk that invested

assets supporting the reinsured business will decrease in value, including the

default of assets or a decrease in earning power, but excluding market value

declines caused by changes in interest rates.

     (e) Reinvestment, which is the risk that interest

rates will fall and therefore money which has been reinvested, including coupon

payments or money received upon asset maturity or call, will earn less than

expected.

     (f) Disintermediation, which is the risk that

interest rates will rise and policy loans and surrenders will increase, or that

maturing contracts will not renew at anticipated rates of renewal. Disintermediation

includes the risk that policyholders will move their assets into new products

offering higher rates and the company may have to sell assets at a loss to

provide for these withdrawals.

     7.  The categories of significant risk

identified in subsection 6 apply in accordance with the following table to a

business being reinsured:

 



Business

Being Reinsured





Significant Risk







 





 







Health

Insurance:





 







     Long-Term

Care Insurance or





 







          Long-Term

Disability Insurance





a, c, d, e







     All other

types of Health Insurance





a, c







Annuities:





 







     Immediate

Annuities





b, d, e







     Single

Premium Deferred Annuities





c, d, e, f







     Flexible

Premium Deferred Annuities





c, d, e, f







     Guaranteed

Interest Contracts





d, e, f







     Other

Annuity Deposit Business





c, d, e, f







Life Insurance:





 







     Single Premium

Whole Life





b, c, d, e, f







     Traditional

Non-Par Permanent





b, c, d, e, f







     Traditional

Non-Par Term





b, c







     Traditional

Par Permanent





b, c, d, e, f







     Traditional

Par Term





b, c







     Adjustable

Premium Permanent





b, c, d, e, f







     Indeterminate

Premium Permanent





b, c, d, e, f







     Universal

Life Flexible Premium





b, c, d, e, f







     Universal Life Fixed Premium, in which dump-in premiums are

allowed





 

b, c, d, e, f





 

If a product or type of business is not specifically included

in the table, the risks determined to be significant for that product or type

of business must be consistent with the table in a manner satisfactory to the

Commissioner.

     8.  Except as otherwise provided in this

subsection, an insurer shall not, in any financial statement required to be

filed with the Division, reduce any liability or establish any asset for

reinsurance ceded if, by the terms of the reinsurance agreement, the credit

quality, reinvestment, or disintermediation risk is significant for the

business reinsured and the ceding company does not either transfer the

underlying assets to the reinsurer or legally segregate the assets in a trust

account or escrow account, or otherwise establish a mechanism satisfactory to

the Commissioner which legally segregates the underlying assets by contract or

contract provision. The assets supporting the reserves for the following

classes of business and any classes of business which do not have a significant

credit quality, reinvestment or disintermediation risk may be held by the

ceding company without segregation of the underlying assets:

     (a) Long-Term Care Insurance and Long-Term

Disability Insurance.

     (b) Traditional Non-Par Permanent Life Insurance.

     (c) Traditional Par Permanent Life Insurance.

     (d) Adjustable Premium Permanent Life Insurance.

     (e) Indeterminate Premium Permanent Life Insurance.

     (f) Universal Life Fixed Premium Life Insurance, in

which dump-in premiums are not allowed.

Ê The

associated formula for determining the reserve interest rate adjustment must

use a formula which reflects the ceding company’s investment earnings and

incorporates all realized and unrealized gains and losses reflected in the

financial statement.

     9.  An insurer shall not, in any financial

statement required to be filed with the Division, reduce any liability or

establish any asset for reinsurance ceded if, by the terms of the reinsurance

agreement, settlements are made more than quarterly or payments due from the

reinsurer are not made in cash within 90 days after the settlement date.

     10.  An insurer shall not, in any financial

statement required to be filed with the Division, reduce any liability or

establish any asset for reinsurance ceded if, by the terms of the reinsurance

agreement, the ceding insurer is required to make representations or warranties

which:

     (a) Are not reasonably related to the business

being reinsured; or

     (b) Concern the future performance of the business

being reinsured.

     11.  An insurer shall not, in any financial

statement required to be filed with the Division, reduce any liability or

establish any asset for reinsurance ceded if the reinsurance agreement is

entered into for the principal purpose of producing significant surplus revenue

for the ceding insurer, typically on a temporary basis, while not transferring

all of the significant risks inherent in the business reinsured and the

expected potential liability to the ceding insurer remains unchanged.

     (Added to NAC by Comm’r of Insurance, eff. 5-13-96)

      NAC 681A.170  Taking of reserve credit and establishment of assets with

approval of Commissioner. (NRS 679B.130, 681A.130)  Notwithstanding

the provisions of NAC 681A.160 to the contrary, an

insurer may, with the prior approval of the Commissioner, take such reserve

credit or establish such assets as the Commissioner deems consistent with title

57 of NRS, including actuarial interpretations or standards adopted by the

Division.

     (Added to NAC by Comm’r of Insurance, eff. 5-13-96)

      NAC 681A.180  Filing of agreement regarding reinsurance of business; financial

statement; increase in surplus net of federal income taxes. (NRS 679B.130,

681A.130)

     1.  An agreement entered into on or after May

13, 1996, for the reinsurance of a business, including any amendments thereto,

must be filed with the Commissioner by the ceding company within 30 days after

the date of the execution of the agreement. Each filing must include

information detailing the financial impact of the transaction. The ceding

insurer’s actuary who signs the actuarial opinion of the financial statement

shall, with respect to the valuation of reserves, consider the provisions of NAC 681A.150 to 681A.190,

inclusive, and any applicable actuarial standards of practice when determining

the proper credit in financial statements filed with the Division. The actuary

shall maintain adequate documentation and be prepared, upon request, to

describe the actuarial work performed for inclusion in the financial statements

and to demonstrate that such work complies with the provisions of NAC 681A.150 to 681A.190,

inclusive.

     2.  Any increase in surplus net of federal

income taxes resulting from agreements described in subsection 1 must be

identified separately on the insurer’s annual financial statement as a surplus

item. Recognition of such surplus as income must be reflected on a net of tax

basis on the financial statement as reinsurance ceded as earnings are generated

from the business reinsured.

     (Added to NAC by Comm’r of Insurance, eff. 5-13-96)

      NAC 681A.190  Reduction of liability or establishment of asset in financial

statement: Requirements of letter of intent, reinsurance agreement or

amendment. (NRS 679B.130, 681A.130)

     1.  No reinsurance agreement or amendment

thereto may be used to reduce any liability or to establish any asset in any

financial statement filed with the Division, unless the agreement, amendment or

a binding letter of intent has been duly executed by both parties no later than

the last day covered by the financial statement.

     2.  A letter of intent, a reinsurance

agreement or an amendment thereto must be executed within a reasonable time,

not to exceed 90 days after the date of execution of the letter of intent for

credit to be granted for the reinsurance ceded.

     3.  A reinsurance agreement must provide

that:

     (a) The agreement constitutes the entire agreement

between the parties with respect to the business being reinsured thereunder and

that there are no understandings between the parties other than as expressed in

the agreement; and

     (b) Any change or modification to the agreement is

void unless it is made by written amendment to the agreement and signed by both

parties.

     (Added to NAC by Comm’r of Insurance, eff. 5-13-96; A

by R027-02, 5-31-2002; R169-03, 2-12-2004)

REINSURANCE TRANSACTIONS

      NAC 681A.250  Definitions. (NRS 679B.130, 681A.130)  As used

in NAC 681A.250 to 681A.380,

inclusive, unless the context otherwise requires, the words and terms defined

in NAC 681A.260 to 681A.280,

inclusive, have the meanings ascribed to them in those sections.

     (Added to NAC by Comm’r of Insurance, eff. 6-28-96; A

by R027-02, 5-31-2002; R169-03, 2-12-2004)

      NAC 681A.260  “Beneficiary” defined. (NRS 679B.130, 681A.130)  “Beneficiary”

includes any successor of the named beneficiary by operation of law, including,

without limitation, any receiver, conservator, rehabilitator or liquidator.

     (Added to NAC by Comm’r of Insurance, eff. 6-28-96)

      NAC 681A.265  “Financial statement” defined. (NRS 679B.130, 681A.130)  “Financial

statement” means a quarterly, annual or other financial statement required to

be filed pursuant to state law.

     (Added to NAC by Comm’r of Insurance by R027-02, eff. 5-31-2002)

      NAC 681A.270  “Grantor” defined. (NRS 679B.130, 681A.130)  “Grantor”

means the entity that has established a trust for the sole benefit of the

beneficiary. When established in conjunction with a reinsurance agreement, the

grantor is the unlicensed, unaccredited assuming insurer.

     (Added to NAC by Comm’r of Insurance, eff. 6-28-96)

      NAC 681A.280  “Obligation” defined. (NRS 679B.130, 681A.130)  “Obligation”

includes:

     1.  Reinsured losses and allocated loss

expenses paid by the ceding company, but not recovered from the assuming

insurer;

     2.  Reserves for reinsured losses reported

and outstanding;

     3.  Reserves for reinsured losses incurred

but not reported; and

     4.  Reserves for allocated reinsured loss expenses

and unearned premiums.

     (Added to NAC by Comm’r of Insurance, eff. 6-28-96)

      NAC 681A.290  Requirements of trust agreement for reduction from liability;

insolvency of grantor of trust. (NRS 679B.130, 681A.130)

     1.  A trust agreement established for the

purposes of NRS 681A.240 must

provide for the creation of a trust account for the deposit of assets.

     2.  A trust agreement must be entered into

between the beneficiary, the grantor and a trustee that is a qualified

financial institution in the United States. The failure of a trust agreement to

identify specifically the beneficiary does not affect any rights or actions

which the Commissioner has or is authorized to take.

     3.  Except as otherwise provided in this

subsection, all assets in the trust account must be held by the trustee at an

office of the trustee in the United States. A bank may apply to the

Commissioner for permission to use a foreign branch office of the bank as

trustee. If the Commissioner approves the use of a foreign branch office as

trustee:

     (a) The written consent of the beneficiary must be

obtained; and

     (b) The trust agreement must provide that the

beneficiary may deliver the written notice described in paragraph (a) of

subsection 4 to the trustee at the principal office of the trustee in the

United States.

     4.  A trust agreement must:

     (a) Authorize the beneficiary to withdraw assets

from the trust account at any time without notice to the grantor, subject only

to written notice by the beneficiary to the trustee;

     (b) Provide that no other statement or document is

required to be presented to withdraw assets, except that the beneficiary may be

required to acknowledge receipt of withdrawn assets;

     (c) Not be subject to any conditions or

qualifications outside of the trust agreement, except in conjunction with a

reinsurance agreement as set forth in NAC 681A.310;

     (d) Be established for the sole benefit of the

beneficiary;

     (e) Require that notice of termination be delivered

by the trustee to the beneficiary at least 30 days, but not more than 45 days,

before termination of the trust account;

     (f) Be made subject to and governed by the laws of

the state in which the trust is established;

     (g) Prohibit invasion of the trust corpus for the

purpose of paying compensation to or reimbursing the expenses of the trustee;

and

     (h) Make the trustee liable for its own negligence,

willful misconduct or lack of good faith.

     5.  A trust agreement must require the

trustee to:

     (a) Receive and hold all assets in a safe place;

     (b) Determine that all assets are in such form that

the beneficiary, or the trustee upon direction of the beneficiary, may

negotiate any assets whenever necessary without the consent or signature of the

grantor or any other person or entity;

     (c) Furnish to the grantor and beneficiary a

statement of all assets in the trust account upon its creation and at intervals

of not less than the end of each calendar quarter;

     (d) Notify the grantor and the beneficiary of any

deposits to or withdrawals from the trust account within 10 days after the

deposit or withdrawal is made;

     (e) Upon written demand of the beneficiary,

immediately take all steps necessary to transfer absolutely and unequivocally

to the beneficiary all right, title and interest in the assets held in the trust

account and deliver physical custody of the assets to the beneficiary; and

     (f) Except as otherwise provided in subsection 6,

allow no substitutions or withdrawals of assets from the trust account without

written instructions from the beneficiary.

     6.  The trustee may, upon call or maturity of

any trust asset, withdraw the asset without the consent of the beneficiary if

the proceeds are paid into the trust account and the beneficiary is notified.

     7.  Notwithstanding any provision in the

trust instrument to the contrary, if the grantor of the trust has been declared

insolvent or placed into receivership, rehabilitation, liquidation or similar

proceedings under the laws of its state or country of domicile, the trustee

shall comply with an order of the Commissioner with regulatory oversight over

the trust or a court of competent jurisdiction directing the trustee to

transfer to the Commissioner with regulatory oversight or other designated

receiver all the assets of the trust fund. If the grantor of the trust has been

declared insolvent or placed into receivership, rehabilitation, liquidation or

similar proceedings under the laws of its state or country of domicile:

     (a) The assets must be applied in accordance with

the priority statutes and other laws of the state in which the trust is

domiciled applicable to the assets of insurance companies in liquidation; and

     (b) If the Commissioner with regulatory oversight

over the trust or a similar authority determines that the assets of the trust,

or any part thereof, are not necessary to satisfy claims of the beneficiaries

of the trust in the United States, the assets or any part thereof must be

returned to the trustee for distribution in accordance with the trust

agreement.

     (Added to NAC by Comm’r of Insurance, eff. 6-28-96; A

by R027-02, 5-31-2002)

      NAC 681A.300  Authorized acts that may be included in trust agreement. (NRS 679B.130,

681A.130)

     1.  A trust agreement may authorize:

     (a) The trustee to resign by delivering written

notice to the beneficiary and grantor. Except as otherwise provided in

subsection 2, a resignation is effective on the date specified in the written

notice, but not less than 90 days after receipt of the notice by the

beneficiary and grantor.

     (b) The grantor to remove the trustee by delivering

written notice to the trustee and the beneficiary. Except as otherwise provided

in subsection 2, a written notice of removal is effective on the date specified

in the notice, but not less than 90 days after receipt of the notice by the

trustee and beneficiary.

     2.  A notice of resignation or removal is not

effective until a successor trustee has been appointed and approved by the

beneficiary and grantor, and all assets in the trust have been transferred to

the new trustee.

     3.  A trust agreement may authorize the

beneficiary to designate a natural person or entity to which all or part of the

trust assets are to be transferred. Such a transfer may be conditioned upon the

trustee receiving other specific assets before the transfer or simultaneously

with the transfer.

     4.  A trust agreement may authorize the

grantor to vote any shares of stock in the trust account and to receive

payments of any dividends or interest upon any shares of stock or obligations

included in the trust account. All such interest or dividends must be promptly

forwarded to the grantor upon receipt or deposited in a separate account

established in the name of the grantor.

     5.  A trust agreement may authorize the

trustee to invest and accept substitutions of any assets in the trust account

if the consent of the beneficiary is obtained before the investment or

substitution is made. The consent of the beneficiary is not necessary if the

trust agreement:

     (a) Specifies categories of investments which are

acceptable to the beneficiary; and

     (b) Authorizes the trustee to invest assets and

accept substitutions which the trustee determines are at least equal in market

value to the assets withdrawn and are consistent with the restrictions set

forth in NAC 681A.325.

     6.  A trust agreement may provide that, upon

termination of the trust account, all assets not previously withdrawn by the

beneficiary must, upon written approval of the beneficiary, be delivered to the

grantor.

     (Added to NAC by Comm’r of Insurance, eff. 6-28-96; A

by R027-02, 5-31-2002)

      NAC 681A.310  Establishment of trust agreement in conjunction with reinsurance

agreement: Acceptable use of trust account by ceding insurer under certain

circumstances; contents of reinsurance agreement. (NRS 679B.130,

681A.130)

     1.  If a trust agreement is established in

conjunction with a reinsurance agreement covering risks other than life,

annuities or accident and health, and it is customary practice to provide a

trust agreement for a specific purpose, such a trust agreement may,

notwithstanding the provisions of NAC 681A.250 to 681A.380, inclusive, to the contrary, provide that

the ceding insurer shall use and apply amounts drawn upon the trust account,

without diminution because of the insolvency of the ceding insurer or the

assuming insurer, for the following purposes:

     (a) To pay or reimburse the ceding insurer for the

assuming insurer’s share under the specific reinsurance agreement for:

          (1) Any losses and allocated loss expenses

paid by the ceding insurer but not recovered from the assuming insurer; or

          (2) Any unearned premiums due to the ceding

insurer if not otherwise paid by the assuming insurer;

     (b) To pay to the assuming insurer any amounts held

in the trust account that exceed 102 percent of the actual amount required to

fund the assuming insurer’s obligations under the specific reinsurance

agreement; or

     (c) If the ceding insurer has received notification

of termination of the trust account and the assuming insurer’s entire

obligations under the reinsurance agreement remain unliquidated and

undischarged 10 days before the termination date, to withdraw an amount equal

to those obligations and deposit the amount in a qualified financial

institution in the United States in a separate account in the name of the

ceding insurer, apart from its general assets, in trust for such uses and

purposes specified in paragraphs (a) and (b) as remain executory after the

withdrawal and for any period after the termination date.

     2.  The reinsurance agreement entered into in

conjunction with the trust agreement may contain the provisions set forth in NAC 681A.325 if the requirements of this section are

included in the trust agreement.

     (Added to NAC by Comm’r of Insurance, eff. 6-28-96; A

by R027-02, 5-31-2002)

      NAC 681A.320  Reinsurance agreement entered into in conjunction with trust

agreement and establishment of trust account: Acceptable conditions. (NRS 679B.130,

681A.130)  A

reinsurance agreement entered into in conjunction with a trust agreement and

the establishment of a trust account may:

     1.  Require the assuming insurer to enter

into a trust agreement and establish a trust account for the benefit of the

ceding insurer and specify what the trust agreement is to cover;

     2.  Require the assuming insurer, before he

or she deposits assets with the trustee, to execute assignments or endorsements

in blank, or to transfer legal title to the trustee of all shares, obligations

or any other assets requiring assignments, so that the ceding insurer, or the

trustee upon the direction of the ceding insurer, may whenever necessary

negotiate the assets without the consent or signature of the assuming insurer

or any other entity;

     3.  Require that all settlements of account

between the ceding insurer and the assuming insurer be made in cash or its

equivalent;

     4.  Stipulate that the assuming insurer and

the ceding insurer agree that the assets in the trust account, which was

established pursuant to the provisions of the reinsurance agreement, may be

withdrawn by the ceding insurer at any time, notwithstanding any other

provisions in the reinsurance agreement, and must be used and applied by the ceding

insurer or its successor in interest by operation of law, including, without

limitation, any liquidator, rehabilitator, receiver or conservator, without

diminution because of insolvency on the part of the ceding insurer or the

assuming insurer, only:

     (a) To reimburse the ceding insurer for the

assuming insurer’s share of premiums returned to the owners of policies

reinsured under the reinsurance agreement because of cancellations of such

policies;

     (b) To reimburse the ceding insurer for the

assuming insurer’s share of surrenders and benefits or losses paid by the

ceding insurer pursuant to the provisions of the policies reinsured under the

reinsurance agreement;

     (c) To fund an account with the ceding insurer in

an amount at least equal to the deduction, for reinsurance ceded, from the

ceding insurer’s liabilities for policies ceded under the agreement. The

account must include, but is not limited to, amounts for policy reserves,

claims and losses incurred, including losses incurred but not reported, loss

adjustment expenses and unearned premium reserves; and

     (d) To pay any other amounts the ceding insurer

claims are due under the reinsurance agreement;

     5.  Grant the assuming insurer the right to

seek approval, which may not be unreasonably or arbitrarily withheld, from the

ceding insurer to withdraw from the trust account any of the trust assets and

transfer those assets to the assuming insurer if:

     (a) At the time of withdrawal, the assuming insurer

replaces the withdrawn assets with other qualified assets having a market value

equal to the market value of the assets withdrawn so as to maintain at all

times the deposit in the amount required by the trust agreement; or

     (b) After withdrawal and transfer, the market value

of the trust account is not less than 102 percent of the required amount;

     6.  Provide for:

     (a) The return of any amount withdrawn for the

purposes specified in paragraphs (a), (b) and (c) of subsection 4 which are in

excess of the actual amounts required for those purposes;

     (b) The return of any amount withdrawn for the

purpose specified in paragraph (d) of subsection 4 which is subsequently

determined not to be due under the reinsurance agreement; and

     (c) Interest payments, at a rate not in excess of

the prime rate of interest at the time of withdrawal, on the amounts held

pursuant to paragraph (c) of subsection 4; and

     7.  Permit the award by any arbitration panel

or court of competent jurisdiction of:

     (a) Interest at a rate different from the rate

provided in paragraph (c) of subsection 6;

     (b) Court or arbitration costs;

     (c) Attorney’s fees; and

     (d) Any other reasonable expenses.

     (Added to NAC by Comm’r of Insurance, eff. 6-28-96; A

by R027-02, 5-31-2002)

      NAC 681A.325  Reinsurance agreement entered into in conjunction with trust

agreement and establishment of trust account: Stipulation of value and types of

assets deposited in trust account. (NRS 679B.130, 681A.130)

     1.  A reinsurance agreement entered into in

conjunction with a trust agreement and the establishment of a trust account may

stipulate that assets deposited in the trust account must be valued according

to their current fair market value and must consist only of:

     (a) Cash in United States legal tender.

     (b) Certificates of deposit issued by a United

States bank and payable in United States legal tender.

     (c) Investments of the types permitted by chapter 681B of NRS, if the investments

are issued by an institution that is not the parent, subsidiary or affiliate of

either the grantor or the beneficiary.

     (d) Obligations that are issued in the United

States, and obligations issued in a market outside the United States that are

dollar denominated, by a solvent institution located in the United States other

than an insurance company, or which are assumed or guaranteed by a solvent

institution located in the United States other than an insurance company and

which are not in default as to principal or interest, if the obligations:

          (1) Are rated “A” or higher, or its

equivalent, by a securities rating agency recognized by the Securities

Valuation Office, or if not so rated, are similar in structure and other

material respects to other obligations of the same institution so rated;

          (2) Are insured by at least one authorized

insurer, other than the investing insurer or a parent, subsidiary or affiliate

of the investing insurer, that is licensed to insure obligations in this State

and, after considering the insurance, are rated “AAA” or its equivalent by a

securities rating agency recognized by the Securities Valuation Office; or

          (3) Have been designated as Class One or Class

Two by the Securities Valuation Office.

     (e) The following equity interests:

          (1) Investments in common shares or interests

in a partnership of a solvent institution located in the United States if:

               (I) The obligations and preferred shares,

if any, of the solvent institution are eligible as investments pursuant to this

section; and

               (II) For solvent institutions that are

not insurance companies, the equity interests of the solvent institution are

registered on a national securities exchange as provided in the Securities

Exchange Act of 1934, 15 U.S.C. §§ 78a to 78kk, or otherwise registered

pursuant to that Act, and if otherwise registered, price quotations for the

equity interests are furnished through a nationwide automated quotations system

approved by the National Association of Securities Dealers, Inc. A trust shall

not invest in equity interests pursuant to this sub-subparagraph in an amount

exceeding 1 percent of the assets of the trust, even though the equity

interests are not so registered and are not issued by an insurance company.

          (2) Investments in common shares of a solvent

institution organized under the laws of a country that is a member of the

Organization for Economic Cooperation and Development, if:

               (I) All the obligations of the solvent

institution are rated “A” or higher, or its equivalent, by a rating agency

recognized by the Securities Valuation Office; and

               (II) The equity interests of the solvent

institution are registered on a securities exchange regulated by the government

of a country that is a member of the Organization for Economic Cooperation and

Development.

     (f) Obligations issued, assumed or guaranteed by a

multinational development bank if the obligations are rated “A” or higher, or

its equivalent, by a rating agency recognized by the Securities Valuation

Office.

     (g) Securities of an investment company that is

registered pursuant to the Investment Company Act of 1940, 15 U.S.C. §§ 80a-1

et seq., if the investment company:

          (1) Invests at least 90 percent of its assets

in the types of securities that qualify as an investment under paragraph (d) or

subparagraph (2) of paragraph (e) or NRS 682A.070, or if the

investment company invests in securities that are determined by the

Commissioner to be substantively similar to the types of securities set forth

in those provisions; or

          (2) Invests at least 90 percent of its assets

in the types of equity interests that qualify as an investment under

subparagraph (1) of paragraph (e).

     (h) Other types of investments specified by the

reinsurance agreement.

     2.  For the purposes of paragraph (d) of

subsection 1:

     (a) An investment in or a loan upon the obligations

of an institution other than an institution that issues mortgage-related

securities must not exceed 5 percent of the assets of the trust;

     (b) An investment in any one mortgage-related

security must not exceed 5 percent of the assets of the trust;

     (c) The aggregate total investment in

mortgage-related securities must not exceed 25 percent of the assets of the

trust; and

     (d) Preferred or guaranteed shares issued or

guaranteed by a solvent institution located in the United States are

permissible if all the obligations of the solvent institution qualify as

investments under subparagraph (1) or (3) of paragraph (d) of subsection 1 and

the investment in the shares does not exceed 2 percent of the assets of the

trust.

     3.  For the purposes of paragraph (e) of

subsection 1, investments in or loans upon the equity interests in any one

institution must not exceed 1 percent of the assets of the trust. The cost of

an investment in equity interests made pursuant to paragraph (e) of subsection

1, when added to the aggregate cost of other investments in equity interests

then held pursuant to paragraph (e) of subsection 1, must not exceed 10 percent

of the assets in the trust.

     4.  For the purposes of paragraph (g) of

subsection 1:

     (a) An investment in an investment company

qualifying under subparagraph (1) of paragraph (g) of subsection 1 must not

exceed 10 percent of the assets in the trust and the aggregate amount of

investment in qualifying investment companies must not exceed 25 percent of the

assets in the trust; and

     (b) Investments in an investment company qualifying

under subparagraph (2) of paragraph (g) of subsection 1 must not exceed 5

percent of the assets in the trust and the aggregate amount of investment in

qualifying investment companies must be included when calculating the

permissible aggregate value of equity interests pursuant to subparagraph (1) of

paragraph (e) of subsection 1.

     5.  As used in this section:

     (a) “Manufactured home” has the meaning ascribed to

it in 42 U.S.C. § 5402(6).

     (b) “Mortgage-related security” means an obligation

which is rated “AA” or higher, or its equivalent, by a securities rating agency

recognized by the Securities Valuation Office and which:

          (1) Represents ownership of one or more

promissory notes or certificates of interest or represents participation in

promissory notes, including any rights designed to ensure the servicing, or the

receipt or timeliness of receipt by the holders of the notes, certificates or

participation, of amounts payable under the notes, certificates or

participation, that:

               (I) Are directly secured by a first lien

on a single parcel of real estate, including stock allocated to a dwelling unit

in a residential cooperative housing corporation, upon which is located a

dwelling, a mixed residential and commercial structure, or a residential

manufactured home, regardless of whether the manufactured home is considered

real or personal property under the laws of the state in which the manufactured

home is located; and

               (II) Were originated by:

                   (i) A savings and loan association,

savings bank, commercial bank, credit union, insurance company or any other

similar institution that is supervised and examined by a federal or state

housing authority; or

                   (ii) A mortgage approved by the

Secretary of Housing and Urban Development pursuant to 12 U.S.C. §§ 1709 and

1715b or, if the notes involve a lien on the manufactured home, by an

institution or by a financial institution approved for insurance by the

Secretary of Housing and Urban Development pursuant to 12 U.S.C. § 1703; or

          (2) Is secured by:

               (I) One or more promissory notes or

certificates of deposit or by participations in the notes, with or without

recourse to the insurer of the notes and, by its terms, provides for payments

or reasonable projections of payments; or

               (II) Notes meeting the requirements of

sub-subparagraphs (I) and (II) of subparagraph (1).

     (c) “Promissory notes,” when used in connection

with a manufactured home, includes a loan, an advance or a credit sale as

evidenced by a retail installment sales contract or other instrument.

     (d) “Securities Valuation Office” means the

Securities Valuation Office of the National Association of Insurance

Commissioners.

     (Added to NAC by Comm’r of Insurance by R027-02, eff. 5-31-2002)

      NAC 681A.330  Use of trust agreement for reduction of liability for

reinsurance. (NRS 679B.130, 681A.130)  A trust

agreement may be used to reduce any liability for reinsurance ceded to an

unauthorized assuming insurer in financial statements required to be filed with

the Division, if the trust account is established on or before the date the

financial statement of the ceding insurer is filed. The allowable reduction for

the existence of an acceptable trust account is the current fair market value

of the acceptable assets available to be withdrawn from the trust account at

the time of filing, except that the reduction may not exceed the specific

obligations under the reinsurance agreement that the trust account was

established to secure.

     (Added to NAC by Comm’r of Insurance, eff. 6-28-96)

      NAC 681A.335  Exhaustion of specific security required before presentation of

claim for payment from trust account. (NRS 679B.130, 681A.130)  A

specific security provided to a ceding insurer by an assuming insurer in

accordance with NRS 681A.240

must be applied, until exhausted, for the payment of liabilities of the

assuming insurer to the ceding insurer holding the specific security before,

and as a condition precedent to, the presentation of a claim by the ceding

insurer for payment by a trustee of a trust established by the assuming insurer

in accordance with NAC 681A.320 and 681A.325.

     (Added to NAC by Comm’r of Insurance by R027-02, eff. 5-31-2002)

      NAC 681A.340  Requirements of letter of credit. (NRS 679B.130,

681A.130)

     1.  A letter of credit issued for the

purposes of NRS 681A.240 must

stipulate that:

     (a) To obtain money the beneficiary need only draw

and present a sight draft under the letter of credit;

     (b) The letter is not subject to any conditions or

qualifications outside of the letter of credit, except as provided in a

reinsurance agreement in conjunction with which the letter of credit is

obtained; and

     (c) The obligation of the qualified financial

institution in the United States under the letter of credit is not contingent

upon reimbursement with respect thereto.

     2.  A letter of credit must be clean,

irrevocable, unconditional and issued or confirmed by a qualified financial

institution in the United States, as described in NRS 681A.240, which is authorized

to issue letters of credit. If a letter of credit is issued by a financial

institution other than a qualified financial institution in the United States:

     (a) The financial institution shall formally

designate a qualified financial institution in the United States to confirm the

letter of credit and to act as an agent for the receipt and payment of drafts;

and

     (b) The letter of credit must comply with the

provisions of this section.

     3.  A letter of credit must contain a date of

issuance and a date of expiration. The term of a letter of credit must be for

at least 1 year. A letter of credit must contain a clause which prevents the

expiration of the letter of credit without due notice from the issuer. The

clause must require at least 30 days’ notice before the expiration or

nonrenewal of the letter of credit.

     4.  A letter of credit must state whether it

is subject to and governed by the laws of this State or Publication 500 of the Uniform

Customs and Practice for Documentary Credits of the International Chamber

of Commerce, and all drafts drawn thereunder must be presentable at an office

in the United States of a qualified financial institution in the United States.

A copy of Publication 500 may be obtained from the International Chamber of

Commerce Publishing, Inc., 156 Fifth Avenue, Suite 417, New York, New York

10010, for the price of $14.95.

     5.  If a letter of credit is made subject to

Publication 500 of the Uniform Customs and Practice for Documentary Credits

of the International Chamber of Commerce, the letter of credit must provide for

an extension of time to draw against the letter of credit if one or more of the

events specified in Article 19 of Publication 500 occurs.

     6.  A letter of credit may be used to reduce

any liability for reinsurance ceded to an unauthorized assuming insurer in

financial statements required to be filed with the Division, if an acceptable

letter of credit with the ceding insurer as beneficiary has been issued on or

before the date the financial statement of the ceding insurer is filed. The

allowable reduction for the letter of credit is the amount available under the

letter of credit, except that the reduction may not exceed the specific

obligation under the reinsurance agreement which the letter of credit was

intended to secure.

     7.  A letter of credit must not contain a

reference to any other agreements, documents or entities except as otherwise

provided in NAC 681A.350. The heading of a letter

of credit may include a boxed section containing the name of the applicant and

other appropriate notations to provide a reference for the letter of credit.

Such a boxed section must be clearly marked to indicate that the information

contained within the boxed section is for internal identification purposes

only.

     (Added to NAC by Comm’r of Insurance, eff. 6-28-96; A

by R027-02, 5-31-2002)

      NAC 681A.350  Acceptable provisions of reinsurance agreement. (NRS 679B.130,

681A.130)

     1.  A reinsurance agreement, in conjunction

with which a letter of credit is obtained, may contain provisions which:

     (a) Require the assuming insurer to provide letters

of credit to the ceding insurer and specify what they are to cover; and

     (b) Stipulate that the assuming insurer and ceding

insurer agree that the letter of credit provided by the assuming insurer

pursuant to the provisions of the reinsurance agreement may be drawn upon at

any time, notwithstanding any other provisions in the agreement to the

contrary, and may be used by the ceding insurer or its successors in interest,

without diminution because of insolvency on the part of the ceding insurer or

the assuming insurer, only:

          (1) To reimburse the ceding insurer for the

assuming insurer’s share of premiums returned to the owners of policies

reinsured under the reinsurance agreement because of cancellations of such

policies;

          (2) To reimburse the ceding insurer for the

assuming insurer’s share of surrenders and benefits or losses paid by the

ceding insurer under the terms and provisions of the policies reinsured under

the reinsurance agreement;

          (3) To fund an account with the ceding insurer

in an amount at least equal to the deduction, for reinsurance ceded, from the

ceding insurer’s liabilities for policies ceded under the agreement. The

account must include, but is not limited to, amounts for policy reserves,

claims and losses incurred and unearned premium reserves; and

          (4) To pay any other amounts the ceding

insurer claims are due under the reinsurance agreement.

     2.  This section does not prohibit the ceding

insurer and assuming insurer from providing for:

     (a) An interest payment, at a rate not in excess of

the prime rate of interest at the time of withdrawal, on the amounts held pursuant

to subparagraph (3) of paragraph (b) of subsection 1.

     (b) The return of any amounts drawn down on the

letters of credit in excess of the actual amounts required or, in the case of

subparagraph (4) of paragraph (b) of subsection 1, any amounts that are

subsequently determined not to be due.

     (Added to NAC by Comm’r of Insurance, eff. 6-28-96)

      NAC 681A.360  Letter of credit obtained in conjunction with reinsurance

agreement: Requirement that parties enter into trust agreement under certain

circumstances. (NRS 679B.130, 681A.130)  If a

letter of credit is obtained in conjunction with a reinsurance agreement

covering risks other than life, annuities and health, and it is customary

practice to provide a letter of credit for a specific purpose, the reinsurance

agreement may, in lieu of containing any provision authorized by NAC 681A.350, require that the parties to the

reinsurance agreement enter into a trust agreement which may be incorporated

into the reinsurance agreement or be a separate document.

     (Added to NAC by Comm’r of Insurance, eff. 6-28-96)

      NAC 681A.370  Authority of ceding insurer to take credit for unencumbered

assets. (NRS 679B.130, 681A.130)  A ceding

insurer may take credit for unencumbered assets withheld by the ceding insurer

in the United States which are subject to withdrawal solely by the ceding

insurer and are under its exclusive control.

     (Added to NAC by Comm’r of Insurance, eff. 6-28-96)

      NAC 681A.375  Requirements for ceding insurer to be granted credit or allowed

asset or reduction from liability: Provisions of reinsurance agreement. (NRS 679B.130,

681A.130)  Credit

will not be granted, or an asset or reduction from liability allowed, to a

ceding insurer for reinsurance transacted with assuming insurers that meet the

requirements of NRS 681A.140

to 681A.240, inclusive, and NAC 681A.250 to 681A.380,

inclusive, unless the reinsurance agreement includes:

     1.  A proper insolvency clause pursuant to NRS 681A.230; and

     2.  If the assuming insurer is an

unauthorized assuming insurer, a provision in accordance with NRS 681A.210 whereby the assuming

insurer has:

     (a) Agreed to submit to the jurisdiction of an

alternative dispute panel or court of competent jurisdiction within the United

States;

     (b) Agreed to comply with all requirements

necessary to give the court or panel jurisdiction;

     (c) Designated an agent upon whom all legal process

may be served; and

     (d) Agreed to abide by the final decision of the

court or panel.

     (Added to NAC by Comm’r of Insurance by R169-03, eff. 2-12-2004)

      NAC 681A.380  Applicability of requirements before and after June 28, 1996. (NRS 679B.130,

681A.130)

     1.  All new and renewal reinsurance

transactions entered into after June 28, 1996, must conform to the requirements

of chapter 681A of NRS and the

provisions of NAC 681A.250 to 681A.380, inclusive, if credit is to be given to the

ceding insurer for such reinsurance.

     2.  All trust agreements or underlying

reinsurance agreements in existence before June 28, 1996, will continue to be

acceptable until December 31, 1996, at which time the agreements must be in

full compliance with the provisions of NAC 681A.250

to 681A.380, inclusive, for them to be acceptable.

     (Added to NAC by Comm’r of Insurance, eff. 6-28-96)
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