Ins 52.03(1)(a) (a) Agrees that if the reinsurer fails to perform its obligations under the terms of the reinsurance agreement, the reinsurer, at the request of the ceding insurer, shall submit to the jurisdiction of any court of competent jurisdiction in any state of the United States, will comply with all requirements necessary to give the court jurisdiction, and will abide by the final decision of such court or of any appellate court in the event of an appeal.

Ins 52.03(1)(b) (b) Designates the commissioner or a designated attorney upon whom may be served any lawful process in any action, suit or proceeding instituted by or on behalf of the ceding insurer.

Ins 52.03(2) (2) Subsection (1) (a) and (b) do not affect or supersede the obligation of the parties to a reinsurance agreement to arbitrate their disputes, if the obligation is created in the agreement and complies with ch. 645, Stats.

Ins 52.03(2m) (2m) Except as permitted by s. Ins 52.02 (5), a ceding domestic insurer may take credit for reinsurance under a reinsurance agreement effective on or after January 1, 1980, only if the agreement provides that the reinsurer assumes all credit risks of an intermediary relating to payments to an intermediary if the agreement by its terms requires payment to an intermediary.

Ins 52.03(3) (3) A ceding domestic insurer may not take credit for reinsurance unless the assuming insurer in the reinsurance contract:

Ins 52.03(3)(a) (a) Undertakes to protect the ceding insurer from loss or liability on coverage the ceding insurer issues not only in form but in fact; and

Ins 52.03(3)(b) (b) Includes a proper insolvency clause under s. 645.58 (1), Stats., or for an alien or nondomestic insurer includes an insolvency clause which guarantees payment of the liability of the reinsurer without diminution because of the insolvency of the ceding insurer.

Ins 52.03(4) (4) A ceding domestic insurer may take credit for reinsurance ceded only to the extent the ceding insurer has established adequate gross reserves on the business ceded.

Ins 52.03(5) (5) A ceding domestic insurer may not take credit for reinsurance ceded in excess of the amount of the gross reserves carried on the business, or portion of the business, ceded.

Ins 52.03 History History: Cr. Register, July, 1993, No. 451, eff. 8-1-93; am. (1) (intro.), (b) and (2), renum. (1) (c) to be (2m) and am., cr. (4) and (5), Register, December, 1995, No. 480, eff. 1-1-96; CR 17-004: am. (1) Register December 2017 No. 744, eff. 1-1-18.

Ins 52.04 Ins 52.04 Reduction from liability for reinsurance ceded by a licensed insurer to an assuming insurer. Unless otherwise ordered by the commissioner, an insurer may take credit for a reduction in liability for reinsurance ceded to a reinsurer even if the credit is not permitted under s. Ins 52.02 in an amount not exceeding the lesser of the liabilities carried by the ceding insurer or the amount of funds held by or on behalf of the ceding insurer, but only if the funds are held in the United States and are security for the payment of obligations under the reinsurance contract and if the funds meet one of the following:

Ins 52.04(1) (1) Are included under a security arrangement and are subject to withdrawal solely by, and are under the exclusive control of, the ceding insurer, and the form of the funds and the security agreement are approved by the commissioner or the equivalent official of the state of domicile or entry of the ceding insurer.

Ins 52.04(2) (2) Are unencumbered, are securities listed by the securities valuation office of the national association of insurance commissioners and qualifying as admitted assets or cash, are withheld by the ceding insurer, and are subject to withdrawal solely by, and are under the exclusive control of, the ceding insurer;

Ins 52.04(3) (3) Are securities listed by the securities valuation office of the national association of insurance commissioners, including those deemed exempt from filing as defined by the purposes and procedures manual of the securities valuation office, and qualifying as admitted assets or cash, are held in a trust for the exclusive benefit of the ceding insurer and the ceding insurer, reinsurer, reinsurance contract and trust comply with s. Ins 52.05; or

Ins 52.04(4) (4) Are available under a clean, irrevocable, unconditional and evergreen letter of credit which is issued or confirmed by a qualified United States institution and are subject to withdrawal solely by, and are under the exclusive control of, the ceding insurer and the letter of credit is in the possession of the ceding insurer and the ceding insurer, reinsurer and letter of credit comply with s. Ins 52.06. A letter of credit meeting applicable standards of issuer acceptability as of the date of issue or confirmation continues to meet those standards for the purpose of this subsection if after issuance or confirmation the financial institution fails to meet applicable standards of issuer acceptability. The letter of credit continues to be acceptable as funds until its expiration, extension, renewal, modification or amendment, whichever first occurs.

Ins 52.04 History History: Cr. Register, July, 1993, No. 451, eff. 8-1-93; CR 17-004: am. (3) Register December 2017 No. 744, eff. 1-1-18.

Ins 52.05 Ins 52.05 Trust agreements qualifying for security.

Ins 52.05(1) (1) In this section:

Ins 52.05(1)(a) (a) “Beneficiary” means the person for whose sole benefit the trust has been established and any successor of the beneficiary by operation of law, including, but not limited to, any liquidator, rehabilitator, receiver, or conservator.

Ins 52.05(1)(b) (b) “Grantor” means the person that has established a trust, including, but not limited to, an unlicensed, unaccredited assuming insurer that establishes a trust.

Ins 52.05(1)(c) (c) “Reinsurance obligations” means:

Ins 52.05(1)(c)1. 1. Reinsured losses and allocated loss expenses paid by the ceding insurer, but not recovered from the assuming insurer;

Ins 52.05(1)(c)2. 2. Reserves for reinsured losses reported and outstanding;

Ins 52.05(1)(c)3. 3. Reserves for reinsured losses incurred but not reported; and

Ins 52.05(1)(c)4. 4. Reserves for allocated reinsured loss expenses and unearned premiums.

Ins 52.05(2) (2) A ceding insurer may take credit under s. Ins 52.04 (3) only if:

Ins 52.05(2)(a) (a) There is a written trust agreement between the beneficiary, the grantor and a trustee and the trustee is a qualified fiduciary United States financial institution.

Ins 52.05(2)(b) (b) The trust agreement creates a trust account and all the assets are deposited in the trust account.

Ins 52.05(2)(c) (c) The trustee holds all assets in the trust account at the trustee’s office in the United States, except that a bank may apply for the permission of the commissioner or equivalent official of the ceding insurer’s state of domicile or entry to use a foreign branch office of the bank as trustee for trust agreements established under this section. If the commissioner or equivalent official approves the use of a foreign branch office as trustee, then its use must be approved by the beneficiary in writing and the trust agreement must provide that the written notice described in par. (d) 1. must also be presentable, as a matter of legal right, at the trustee’s principal office in the United States.