CODING: Words stricken are deletions; words underlined are additions.
HOUSE AMENDMENT
Bill No. HB 743
Amendment No. 1 (for drafter's use only)
CHAMBER ACTION
Senate House
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11 The Committee on Financial Services offered the following:
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13 Amendment
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17 Section 1. Section 624.22, Florida Statutes, is
18 created to read:
19 624.22 Purpose of chapter.--The purpose of this
20 chapter is to protect the interest of insureds, claimants,
21 ceding insurers, assuming insurers, and the public. It is the
22 intent of the Legislature to ensure adequate regulation of
23 insurers and reinsurers and adequate protection for those to
24 whom they owe obligations. In furtherance of that state
25 interest, the Legislature requires that upon the insolvency of
26 a non-United States insurer or reinsurer which provides
27 security to fund its United States obligations in accordance
28 with this chapter, such security shall be maintained in the
29 United States and claims shall be filed with and valued by the
30 state insurance commissioner with regulatory oversight, and
31 the assets shall be distributed in accordance with the
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HOUSE AMENDMENT
Bill No. HB 743
Amendment No. 1 (for drafter's use only)
1 insurance laws of the state in which the trust is domiciled
2 that are applicable to the liquidation of domestic United
3 States insurance companies. The Legislature declares that the
4 matters contained in this chapter are fundamental to the
5 business of insurance in accordance with 15 U.S.C. ss.
6 1011-1012.
7 Section 2. Paragraph (b) of subsection (2) of section
8 624.610, Florida Statutes, is amended to read:
9 624.610 Reinsurance.--
10 (2)
11 (b) Credit in accounting and financial statements on
12 account of reinsurance ceded to a nonapproved reinsurer may be
13 allowed only:
14 1. When it is demonstrated by the ceding insurer to
15 the satisfaction of the department that such reinsurer
16 maintains the standards and meets the financial requirements
17 applicable to an authorized insurer;
18 2. To the extent of deposits by, or funds withheld
19 from, such reinsurer pursuant to express provision therefor in
20 the reinsurance contract as security for the payment of the
21 obligations thereunder if such deposits or funds are held
22 subject to withdrawal by, and under the control of, the ceding
23 insurer or such deposits or funds are placed in trust for such
24 purposes in a bank which is a member of the Federal Reserve
25 System if withdrawals from the trust cannot be made without
26 the consent of the ceding insurer. The funds withheld may be
27 cash or securities which are qualified as admitted assets
28 under part II of chapter 625 and which have a market value
29 equal to or greater than the credit taken; or
30 3. To the extent that the amount of a clean,
31 unconditional, evergreen, and irrevocable letter of credit,
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HOUSE AMENDMENT
Bill No. HB 743
Amendment No. 1 (for drafter's use only)
1 issued for a term of not less than 1 year and in conformity
2 with the requirements set forth in this subparagraph, equals
3 or exceeds the liability of an unauthorized or unapproved
4 reinsurer for unearned premiums, outstanding losses, and an
5 adequate reserve for incurred but not reported losses under a
6 specific reinsurance agreement. The requirements are that such
7 a clean and irrevocable letter of credit be issued under
8 arrangements satisfactory to the department as constituting
9 security to the ceding insurer substantially equal to that of
10 a deposit under subparagraph 2. and that the letter be issued
11 by a banking institution which is a member of the Federal
12 Reserve System and which has financial standing satisfactory
13 to the commissioner. The department may adopt rules requiring
14 that the letter adhere in its wording to a format for letters
15 of credit as the format has been or may be adopted or approved
16 by the National Association of Insurance Commissioners.
17 4. When the reinsurance is ceded to a reinsurer which
18 maintains a trust fund, in a bank or trust company that is
19 subject to supervision by any state of the United States or
20 that is a member of the Federal Reserve System, for the
21 payment of the valid claims for business written in the United
22 States. The trust shall consist of a trusteed account in an
23 amount not less than the reinsurer's liabilities attributable
24 to reinsurance by ceding insurers for business written in the
25 United States and, in addition, the reinsurer shall maintain a
26 trusteed surplus of not less than $20 million. Such trust
27 shall be established in a form approved, and any amendments to
28 the trust approved, by the insurance commissioner where the
29 trust is domiciled, or the insurance commissioner of another
30 state who, pursuant to the terms of the trust agreement, has
31 accepted principal regulatory oversight of the trust. The
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HOUSE AMENDMENT
Bill No. HB 743
Amendment No. 1 (for drafter's use only)
1 trust shall remain in effect for as long as the reinsurer has
2 outstanding obligations due under the reinsurance agreements
3 subject to the trust. The trust assets must be in cash or
4 securities which are qualified as admitted assets under part
5 II of chapter 625 and which have a market value of the
6 required liabilities and trusteed surplus. The reinsurer shall
7 report quarterly to the insurance commissioner information
8 substantially the same as that required to be reported on the
9 National Association of Insurance Commissioners Annual
10 Statement form by licensed insurers to enable the insurance
11 commissioner to determine the sufficiency of the trust fund.
12 The trust and the reinsurer shall be subject to examination as
13 determined by the commissioner.
14 5. The credit permitted by subparagraph 4. and the
15 credit permitted by subparagraph 2. shall not be allowed
16 unless the assuming insurer in substance agrees in the trust
17 agreement to the following conditions:
18 a. Notwithstanding any other provisions in the trust
19 instrument, if the trust fund is inadequate because it
20 contains an amount less than the amount required by the
21 department or, if the grantor of the trust has been declared
22 insolvent or placed into receivership, rehabilitation,
23 liquidation, or similar proceedings under the laws of its
24 state or country of domicile, the trustee shall comply with an
25 order of the superintendent with regulatory oversight over the
26 trust or with an order of a court of competent jurisdiction
27 directing the trustee to transfer to the superintendent with
28 regulatory oversight all of the assets of United States trust
29 beneficiaries.
30 b. The assets shall be distributed by, and claims of
31 United States trust beneficiaries shall be filed with and
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HOUSE AMENDMENT
Bill No. HB 743
Amendment No. 1 (for drafter's use only)
1 valued by, the superintendent with regulatory oversight in
2 accordance with the laws of the state in which the trust is
3 domiciled that are applicable to the liquidation of domestic
4 insurance companies.
5 c. If the superintendent with regulatory oversight
6 determines that the assets of the trust fund or any part
7 thereof are not necessary to satisfy the claims for business
8 written in the United States, the assets or any part thereof
9 shall be returned by the superintendent with regulatory
10 oversight to the trustee for distribution in accordance with
11 the trust agreement.
12 d. The grantor shall waive any right otherwise
13 available to it under United States law that is inconsistent
14 with this provision.
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