In this subtitle the following words have the meanings indicated. “Ceding insurer” means an insurer that procures insurance for itself from another insurer for all or part of an insurance risk. “Covered agreement” means an agreement entered into under the federal Dodd–Frank Wall Street Reform and Consumer Protection Act, 31 U.S.C. §§ 313 and 314, that: is currently in effect or in a period of provisional application; and addresses the elimination, under specified conditions, of collateral requirements as a condition for: entering into a reinsurance agreement with a ceding insurer domiciled in the State; or allowing the ceding insurer to recognize credit for reinsurance. “Primary certifying state” means a state other than Maryland: in which the insurance regulatory agency or its equivalent has designated and assigned a rating to an assuming insurer as a certified reinsurer; and the designation or rating from which the Commissioner has used to designate or assign a rating to the assuming insurer in this State under § 5–910(b) of this subtitle. “Qualified jurisdiction” means a jurisdiction that the Commissioner determines meets the requirements of § 5–909 of this subtitle. “Qualified United States financial institution” means: for purposes of issuance or confirmation of a letter of credit under § 5–914(c)(3) of this subtitle, an institution that: is organized or, in the case of a United States office of a foreign banking organization, licensed under the laws of the United States or any state; is regulated, supervised, and examined by federal or state authorities having regulatory authority over banks and trust companies; and has been determined by either the Commissioner or the securities valuation office of the National Association of Insurance Commissioners to meet the standards of financial condition and standing that are considered necessary and appropriate to regulate the quality of financial institutions whose letters of credit will be acceptable to the Commissioner; or for purposes of eligibility to act as a fiduciary of a trust under this subtitle, an institution that: is organized or, in the case of a United States branch or agency office of a foreign banking organization, licensed under the laws of the United States or any state and has been granted authority to operate with fiduciary powers; and is regulated, supervised, and examined by federal or state authorities having regulatory authority over banks and trust companies. “Reciprocal jurisdiction” means a jurisdiction that is: a jurisdiction outside the United States that: is subject to an in–force covered agreement with the United States, each within its legal authority; or in the case of a covered agreement between the United States and the European Union, is a member state of the European Union; a jurisdiction in the United States that meets the requirements for accreditation under the NAIC financial standards and accreditation program; or a qualified jurisdiction, as determined by the Commissioner under § 5–909 of this article, that: is not otherwise described in item (1) or (2) of this subsection; and meets additional requirements, consistent with the terms and conditions of the in–force covered agreement, as the Commissioner specifies by regulation. “Reinsurer” means an insurer from which a ceding insurer procures insurance for itself for all or part of an insurance risk. “Trusteed surplus” means funds held in a trust account in excess of the reinsurer’s liabilities attributable to reinsurance ceded to the reinsurer by United States ceding insurers in accordance with this subtitle.

This subtitle does not apply to wet marine and transportation insurance. All laws or parts of laws of the State that are inconsistent with this subtitle are superseded to the extent of the inconsistency.

Credit for reinsurance shall be allowed a domestic ceding insurer as either an asset or a reduction from liability on account of reinsurance ceded if the reinsurer meets the requirements of this subtitle.

Except as provided in §§ 3–124 and 3–125 of this article for bulk reinsurance, an insurer may reinsure all or part of a particular risk. Credit shall be allowed under subsection (c), (d), or (e) of this section with respect to cessions of those kinds or classes of business that the assuming insurer is licensed or otherwise allowed to write or assume in its state of domicile or, in the case of a United States branch of an alien assuming insurer, in the state through which it is entered and licensed to transact insurance or reinsurance. Credit shall be allowed under subsection (e) or (f) of this section only if the applicable requirements of § 5–913 of this subtitle have been satisfied. Credit shall be allowed when the reinsurance is ceded to an assuming insurer that is licensed to transact insurance or reinsurance in this State. Credit shall be allowed when the reinsurance is ceded to an assuming insurer that is accredited by the Commissioner as a reinsurer in this State in accordance with § 5–906 of this subtitle. Subject to the requirements of § 5–913 of this subtitle, credit shall be allowed when the reinsurance is ceded to an assuming insurer that maintains a trust fund meeting the requirements of § 5–907 of this subtitle in a qualified United States financial institution for the payment of the valid claims of its United States ceding insurers and their assigns and successors in interest. Credit shall be allowed when the reinsurance is ceded to an assuming insurer that has been certified by the Commissioner as a reinsurer in this State in accordance with §§ 5–908 and 5–909 of this subtitle and secures its obligations in accordance with the requirements of § 5–911 of this subtitle. Credit shall be allowed when the reinsurance is ceded to an assuming insurer not meeting the requirements of subsection (c), (d), (e), or (f) of this section, but only as to the insurance of risks located in jurisdictions where the reinsurance is required by the applicable law or regulation of that jurisdiction.

Credit may not be allowed, as an asset or deduction from liability, to a ceding insurer for reinsurance unless the reinsurance contract provides, in substance, that in the event of the insolvency of the ceding insurer, the reinsurance shall be payable under the terms of a contract reinsured by the reinsurer on the basis of reported claims allowed by the court in a liquidation proceeding, without diminution because of the insolvency of the ceding insurer. Payments made by a reinsurer under paragraph (1)(ii) of this subsection shall be made directly to the ceding insurer or its domiciliary receiver unless: the reinsurance contract or other written agreement specifically provides another payee of the reinsurance in the event of the insolvency of the ceding insurer; or subject to any contractual or statutory requirement of consent by the policyholder, the reinsurer has assumed the policy obligations of the ceding insurer as direct obligations of the reinsurer to the payees under the policies and in substitution for the ceding insurer’s obligations to the payees. Notwithstanding paragraph (2) of this subsection, if a life and health insurance guaranty association has elected to succeed to the rights and obligations of an insolvent insurer under a reinsurance contract, the reinsurer’s liability to pay covered reinsured claims shall continue under the reinsurance contract, subject to the payment of premiums to the reinsurer for the reinsurance coverage. Payment for a covered reinsured claim under subparagraph (i) of this paragraph shall be made by the reinsurer only at the direction of the life and health insurance guaranty association or its designated successor. Payment for a covered reinsured claim made by the reinsurer at the direction of the life and health insurance guaranty association or its designated successor discharges the reinsurer’s liability to any other person for payment of the covered reinsured claim. A reinsurance contract may provide that the domiciliary receiver of an insolvent ceding insurer shall give written notice to the reinsurer of the pendency of a claim made against the insolvent ceding insurer under the contract reinsured within a reasonable time after the claim is filed in the liquidation proceeding. During the pendency of the claim, the reinsurer, at its own expense, may investigate the claim and interpose, in the liquidation proceeding, any defense that it determines is available to the insolvent ceding insurer or its receiver. The reinsurer may file a claim against the insolvent ceding insurer for any expense incurred by the reinsurer under paragraph (2) of this subsection. The claim may not exceed an amount equal to the proportionate share of the benefit accruing to the insolvent ceding insurer solely as a result of the defense undertaken by the reinsurer. If two or more reinsurers are involved in a claim and a majority in interest elect to interpose a defense to the claim, the expense shall be apportioned in accordance with the terms of the reinsurance contract as though the expense had been incurred by the insolvent ceding insurer. On request of the Commissioner, a ceding insurer shall inform the Commissioner promptly in writing of the cancellation or any other material change of any of its reinsurance contracts or arrangements.

In order for an assuming reinsurer to be eligible for accreditation by the Commissioner, the reinsurer shall: file with the Commissioner evidence of its submission to this State’s jurisdiction; submit to the Commissioner’s authority to examine its books and records; be licensed to transact insurance or reinsurance in at least one state or, in the case of a United States branch of an alien assuming insurer, be entered through and licensed to transact insurance or reinsurance in at least one state; file each year with the Commissioner a copy of its annual statement filed with the insurance department of its state of domicile and a copy of its most recent audited financial statement; and demonstrate to the satisfaction of the Commissioner that the reinsurer has adequate financial capacity to meet its reinsurance obligations and is otherwise qualified to assume reinsurance from domestic insurers. An assuming insurer is deemed to meet the requirement of subsection (a)(5) of this section as of the time of its application if: the assuming insurer maintains a surplus as regards policyholders in an amount not less than $20,000,000; and the Commissioner has not denied the assuming insurer’s accreditation within 90 days after submission of its application.

To enable the Commissioner to determine the sufficiency of the trust fund provided for in § 5–904(e) of this subtitle, the assuming insurer shall report each year to the Commissioner information substantially the same as that required to be reported on the National Association of Insurance Commissioners annual statement form by authorized insurers. The assuming insurer shall submit to examination of its books and records by the Commissioner and bear the expense of examination. Credit for reinsurance may not be granted under this section unless the form of the trust and any amendments to the trust have been approved by: the insurance regulatory agency of the state where the trust is domiciled; or the insurance regulatory agency of another state who, under the terms of the trust instrument, has accepted principal regulatory oversight of the trust. The form of the trust and any trust amendments shall be filed with the insurance regulatory agency of each state in which the ceding insurer beneficiaries of the trust are domiciled. The trust instrument shall provide that contested claims shall be valid and enforceable on the final order of any court of competent jurisdiction in the United States. The trust shall vest legal title to its assets in its trustees for the benefit of the assuming insurer’s United States ceding insurers and their assigns and successors in interest. The trust and the assuming insurer shall be subject to examination as determined by the Commissioner. The trust shall remain in effect for as long as the assuming insurer has outstanding obligations due under the reinsurance contracts subject to the trust. Not later than February 28 of each year, the trustee of the trust shall: report to the Commissioner in writing the balance of the trust and list the trust’s investments at the preceding year–end; and certify the date of termination of the trust, if so planned, or certify that the trust will not expire before the following December 31. This subsection applies to ceding to a single assuming insurer. The trust fund shall consist of funds in trust in an amount not less than the assuming insurer’s liabilities attributable to reinsurance ceded by United States ceding insurers. Except as provided in paragraph (4) of this subsection, the assuming insurer shall maintain a trusteed surplus of not less than $20,000,000. Subject to subparagraphs (ii) and (iii) of this paragraph, at any time after the assuming insurer has permanently discontinued underwriting new business secured by the trust for at least 3 full years, the insurance regulatory agency with principal regulatory oversight of the trust may authorize a reduction in the required trusteed surplus, but only after a finding, based on an assessment of the risk, that the new required surplus level is adequate for the protection of United States ceding insurers, policyholders, and claimants in light of reasonably foreseeable adverse loss development. The risk assessment under subparagraph (i) of this paragraph: may involve an actuarial review, including an independent analysis of reserves and cash flows; and shall consider all material risk factors, including, when applicable, the lines of business involved, the stability of the incurred loss estimates, and the effect of the surplus requirements on the assuming insurer’s liquidity or solvency. The minimum required trusteed surplus under subparagraph (i) of this paragraph may not be reduced to an amount less than 30% of the assuming insurer’s liabilities attributable to reinsurance ceded by United States ceding insurers covered by the trust. This subsection applies to ceding to a group that includes incorporated and individual unincorporated underwriters. For reinsurance ceded under reinsurance contracts with an inception, amendment, or renewal date on or after January 1, 1993, the trust shall consist of a trusteed account in an amount not less than the respective underwriters’ several liabilities attributable to business ceded by United States domiciled ceding insurers to any underwriter of the group. For reinsurance ceded under reinsurance contracts with an inception date on or before December 31, 1992, and not amended or renewed after that date, notwithstanding any other provisions of this section, the trust shall consist of a trusteed account in an amount not less than the respective underwriters’ several insurance and reinsurance liabilities attributable to business written in the United States. In addition to these trusts, the group shall maintain in trust a trusteed surplus of which $100,000,000 shall be held jointly for the benefit of the United States domiciled ceding insurers of any member of the group for all years of account. The incorporated members of the group: may not be engaged in any business other than underwriting as a member of the group; and shall be subject to the same level of regulation and solvency control by the group’s domiciliary regulator as are the unincorporated members. Within 90 days after its financial statements are due to be filed with the group’s domiciliary regulator, the group shall provide to the Commissioner: an annual certification by the group’s domiciliary regulator of the solvency of each underwriter member; or if a certification is unavailable, financial statements, prepared by independent public accountants, of each underwriter member of the group.

In order to be eligible for certification in accordance with § 5–904(f) of this subtitle, the assuming insurer shall: be domiciled and licensed to transact insurance or reinsurance in a qualified jurisdiction, as determined under § 5–909 of this subtitle; maintain minimum capital and surplus, or its equivalent, in an amount the Commissioner determines in accordance with regulations the Commissioner adopts; maintain financial strength ratings from two or more rating agencies that the Commissioner considers acceptable in accordance with regulations the Commissioner adopts; agree to submit to the jurisdiction of this State; appoint the Commissioner as its agent for service of process in this State; agree to provide security for all of the assuming insurer’s liabilities attributable to reinsurance ceded by United States ceding insurers if it resists enforcement of a final United States judgment; agree to meet applicable information filing requirements as the Commissioner determines both for the initial application for certification and on an ongoing basis; and satisfy any other requirements for certification that the Commissioner considers relevant. A group, including incorporated and individual unincorporated underwriters, may be a certified reinsurer if the group, including incorporated and individual unincorporated underwriters, meets all the requirements of this section. The group shall satisfy its minimum capital and surplus equivalents, net of liabilities, of the group and its members, which shall include a joint central fund that may be applied to any unsatisfied obligation of the group or any of its members, in an amount that the Commissioner determines will provide adequate protection. The incorporated members of the group may not be engaged in any business other than underwriting as a member of the group. The incorporated members of the group shall be subject to the same level of regulation and solvency control by the group’s domiciliary regulator as are the unincorporated members. Within 90 days after its financial statements are due to be filed with the group’s domiciliary regulator, the group shall provide to the Commissioner: an annual certification by the group’s domiciliary regulator of the solvency of each underwriter member; or if a certification is unavailable, financial statements, prepared by independent public accountants, of each underwriter member of the group.

The Commissioner shall maintain and publish a list of qualified jurisdictions under which an assuming insurer, licensed and domiciled in that jurisdiction, is eligible to be considered for certification by the Commissioner as a certified reinsurer. In order to determine whether the domiciliary jurisdiction of a non–United States assuming insurer is eligible to be recognized as a qualified jurisdiction, the Commissioner shall: evaluate the appropriateness and effectiveness of the reinsurance supervisory system of the jurisdiction, initially and on an ongoing basis; and consider the rights, benefits, and extent of reciprocal recognition afforded by the non–United States jurisdiction to reinsurers licensed and domiciled in the United States. A qualified jurisdiction shall agree in writing to share information and cooperate with the Commissioner with respect to all certified reinsurers domiciled in that jurisdiction. The Commissioner may not recognize a jurisdiction as a qualified jurisdiction unless the Commissioner has determined that the jurisdiction adequately and promptly enforces final United States judgments and arbitration awards. The Commissioner may consider other factors in determining the jurisdiction’s eligibility to be recognized as a qualified jurisdiction. The Commissioner shall consider the list of conditionally qualified and qualified jurisdictions published through the National Association of Insurance Commissioners committee process in determining the qualified jurisdictions in this State. In determining whether a jurisdiction is a qualified jurisdiction, the Commissioner shall consider the National Association of Insurance Commissioners list of conditionally qualified and qualified jurisdictions: when the jurisdiction has been evaluated for inclusion on the list; and whenever the list is amended. If the Commissioner approves a jurisdiction as qualified that does not appear on the National Association of Insurance Commissioners list of qualified jurisdictions, the Commissioner shall provide information related to the approval to the National Association of Insurance Commissioners as provided in regulations the Commissioner adopts. The Commissioner shall recognize as a qualified jurisdiction in this State any state that meets the requirement for accreditation under the National Association of Insurance Commissioners financial standards and accreditation program. If a certified reinsurer’s domiciliary jurisdiction ceases to be a qualified jurisdiction, the Commissioner may indefinitely suspend or revoke the reinsurer’s certification.

The Commissioner shall assign a rating to each certified reinsurer based on factors the Commissioner considers relevant, giving due consideration to the financial strength ratings that have been assigned by rating agencies in accordance with regulations the Commissioner adopts. The Commissioner shall publish a list of all certified reinsurers and their ratings. If an applicant for certification has been certified as a reinsurer by the insurance regulatory agency of a state accredited by the National Association of Insurance Commissioners, the Commissioner may defer to that insurance regulatory agency or the National Association of Insurance Commissioners committee process to: designate the assuming insurer as a certified reinsurer in this State; assign a rating to the assuming insurer; or both. A certified reinsurer that ceases to assume new business in this State may request to maintain its certification in inactive status in order to continue to qualify for a reduction in security for its in–force business. An inactive certified reinsurer shall continue to comply with all applicable requirements of § 5–911 of this subtitle. The Commissioner shall assign a rating that takes into account, if relevant, the reasons why the reinsurer is not assuming new business.

A certified reinsurer shall secure obligations assumed from United States ceding insurers under this subtitle at a level consistent with its rating, as specified in regulations the Commissioner adopts. Except as otherwise provided in this section, in order for a domestic ceding insurer to qualify for full financial statement credit for reinsurance ceded to a certified reinsurer, the certified reinsurer shall maintain security in a form the Commissioner considers acceptable and consistent with § 5–914 of this subtitle, or in a multibeneficiary trust in accordance with § 5–907 of this subtitle. If a certified reinsurer maintains a trust to fully secure its obligations consistent with § 5–907 of this subtitle and chooses to secure its obligations incurred as a certified reinsurer in the form of a multibeneficiary trust, the certified reinsurer shall maintain separate trust accounts for its obligations incurred under reinsurance contracts issued or renewed as a certified reinsurer with reduced security as allowed by this section or comparable laws of other United States jurisdictions and for its obligations subject to § 5–907 of this subtitle. As a condition of certification under § 5–908 of this subtitle, the certified reinsurer shall bind itself, by the language of the trust and agreement with the commissioner with principal regulatory oversight of each trust account, to fund, on termination of the trust account, out of the remaining surplus of the trust, any deficiency of any other trust account. The minimum trusteed surplus requirements provided in § 5–907 of this subtitle do not apply with respect to a multibeneficiary trust maintained by a certified reinsurer for the purpose of securing obligations incurred under this section, except that the trust shall maintain a minimum trusteed surplus of $10,000,000. With respect to obligations incurred by a certified reinsurer under this section, if the security is insufficient, the Commissioner: shall reduce the allowable credit by an amount proportionate to the deficiency; and may impose further reductions in allowable credit on finding that there is a material risk that the certified reinsurer’s obligations will not be paid in full when due. For purposes of this section, a certified reinsurer whose certification the Commissioner has revoked, suspended, or placed on inactive status, or has been voluntarily surrendered, for any reason shall be treated as a certified reinsurer required to secure all of its obligations. If the Commissioner continues to assign a higher rating as allowed by other provisions of this section, the requirement of paragraph (1) of this subsection does not apply to a certified reinsurer in inactive status or to a reinsurer whose certification has been suspended.

After providing notice and an opportunity for hearing to the reinsurer, the Commissioner may suspend or revoke a reinsurer’s accreditation or certification if the reinsurer ceases to meet the requirements for accreditation or certification. The revocation or suspension may not take effect until after the Commissioner’s order on hearing unless: the reinsurer waives its right to a hearing; the Commissioner’s order is based on a regulatory action by the reinsurer’s domiciliary jurisdiction or primary certifying state suspending or revoking the reinsurer’s eligibility to transact insurance or reinsurance; the reinsurer voluntarily surrenders its license or certification to transact insurance or reinsurance business in its domiciliary jurisdiction or primary certifying state; or the Commissioner finds that an emergency requires immediate action by the Commissioner; and a court of competent jurisdiction has not stayed the Commissioner’s action. While a reinsurer’s accreditation or certification is suspended, a reinsurance contract issued or renewed after the effective date of the suspension does not qualify for credit except to the extent the reinsurer’s obligations under the contract are secured in accordance with § 5–914 of this subtitle. If a reinsurer’s accreditation or certification is revoked, credit for reinsurance may not be granted after the effective date of the revocation except to the extent that the reinsurer’s obligations under the contract are secured in accordance with § 5–911 or § 5–914 of this subtitle.

If the assuming insurer is not licensed, accredited, or certified to transact insurance or reinsurance in this State, the credit allowed by § 5–904(e) of this subtitle may not be allowed unless the assuming insurer agrees in the reinsurance contracts: that in the event of the failure of the assuming insurer to perform its obligations under the terms of the reinsurance contract, the assuming insurer, at the request of the ceding insurer, shall: submit to the jurisdiction of any court of competent jurisdiction in any state; comply with all requirements necessary to give the court jurisdiction; and abide by the final decision of the court or of any appellate court in case of an appeal; and to designate the Commissioner as its resident agent on whom any lawful process may be served in any action, suit, or proceeding instituted by or on behalf of the ceding insurer. Subsection (a) of this section is not intended to conflict with or override the obligation of the parties to a reinsurance contract to arbitrate their disputes, if this obligation is created in the reinsurance contract. If the assuming insurer does not meet the requirements of § 5–904(c) or (d) of this subtitle, the credit allowed by § 5–904(e) and (f) of this subtitle may not be allowed unless the assuming insurer agrees in the trust agreements to the following conditions: notwithstanding any other provision in the trust instrument, if the trust fund is inadequate because it contains an amount less than the amount required by § 5–907(j) of this subtitle, or 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 insurance regulatory agency with regulatory oversight over the trust or with an order of a court of competent jurisdiction directing the trustee to transfer to the insurance regulatory agency with regulatory oversight all of the assets of the trust fund; the assets shall be distributed by and claims shall be filed with and valued by the insurance regulatory agency with regulatory oversight over the trust in accordance with the laws of the state in which the trust is domiciled that are applicable to the liquidation of domestic insurers; if the insurance regulatory agency with regulatory oversight over the trust determines that the assets of the trust fund or any part of the assets are not necessary to satisfy the claims of the United States ceding insurers of the grantor of the trust, the assets or part shall be returned by the insurance regulatory agency with regulatory oversight to the trustee for distribution in accordance with the trust agreement; and the grantor shall waive any right otherwise available to it under United States law that is inconsistent with this subsection.

An asset or a reduction from liability for the reinsurance ceded by a domestic insurer to an assuming insurer not meeting the requirements of § 5–904 of this subtitle shall be allowed in an amount not exceeding the liabilities carried by the ceding insurer. The reduction shall be in the amount of funds held by or on behalf of the ceding insurer, including funds held in trust for the ceding insurer, under a reinsurance contract with the assuming insurer as security for the payment of obligations under the contract, if the security is held: in the United States subject to withdrawal solely by, and under the exclusive control of, the ceding insurer; or in the case of a trust, held in a qualified United States financial institution. The security may be in the form of: cash; 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; subject to subsection (d) of this section, clean, irrevocable, unconditional letters of credit, issued or confirmed by a qualified United States financial institution, effective no later than December 31 of the year for which the filing is being made, and in the possession of, or in trust for, the ceding insurer on or before the filing date of the ceding insurer’s annual statement; or any other form of security acceptable to the Commissioner. Notwithstanding the subsequent failure of the issuing or confirming institution to meet applicable standards of issuer acceptability, a letter of credit meeting applicable standards of issuer acceptability as of the date of its issuance or confirmation under subsection (c)(3) of this section shall continue to be acceptable as security until the letter of credit expires or is extended, renewed, modified, or amended, whichever occurs first.

A ceding insurer shall take steps to manage its reinsurance recoverables proportionate to its own book of business. A domestic ceding insurer shall notify the Commissioner within 30 days after reinsurance recoverables from any single assuming insurer, or group of affiliated assuming insurers, exceeds or is likely to exceed 50% of the domestic ceding insurer’s last reported surplus to policyholders. The notification required by subparagraph (i) of this paragraph shall demonstrate that the domestic ceding insurer is safely managing the exposure. A ceding insurer shall take steps to diversify its reinsurance program. A domestic ceding insurer shall notify the Commissioner within 30 days after ceding or being likely to cede to any single assuming insurer, or group of affiliated assuming insurers, more than 20% of the ceding insurer’s gross written premium in the prior calendar year. The notification required by subparagraph (i) of this paragraph shall demonstrate that the domestic ceding insurer is safely managing the exposure.

The Commissioner may adopt: regulations to carry out this subtitle; and rules and regulations applicable to reinsurance arrangements described in subsection (b) of this section. A rule or regulation adopted under subsection (a)(2) of this section may apply only to reinsurance relating to: life insurance policies with guaranteed nonlevel gross premiums or guaranteed nonlevel benefits; universal life insurance policies with provisions resulting in the ability of a policyholder to keep a policy in force over a secondary guarantee period; variable annuities with guaranteed death or living benefits; long–term care insurance policies; or other life and health insurance and annuity products as to which the National Association of Insurance Commissioners adopts model regulatory requirements with respect to credit for reinsurance. A rule or regulation adopted under subsection (a)(2) of this section that applies to reinsurance relating to policies specified under paragraph (1)(i) or (ii) of this subsection may apply to any treaty containing: policies issued on or after January 1, 2015; or policies issued before January 1, 2015, if the risk pertaining to the pre–2015 policies is ceded in connection with the treaty, in whole or in part, on or after January 1, 2015. A rule or regulation adopted under subsection (a)(2) of this section may require the ceding insurer, in calculating the amounts or forms of security required to be held under regulations adopted under subsection (a)(2) of this section, to use the valuation manual adopted by the National Association of Insurance Commissioners in accordance with § 5–313 of this title, including all amendments adopted by the National Association of Insurance Commissioners and in effect on the date the calculation is made, to the extent applicable. A rule or regulation adopted under subsection (a)(2) of this section may not apply to a cession to an assuming insurer that: meets the conditions set forth in § 5–917 of this subtitle; is certified in this State in accordance with § 5–904(f) of this subtitle; or maintains at least $250,000,000 in capital and surplus when determined in accordance with the National Association of Insurance Commissioners Accounting Practices and Procedures Manual, including all amendments adopted by the National Association of Insurance Commissioners, excluding the impact of any permitted or prescribed practices; and is licensed in at least 26 states; or is licensed in at least 10 states and is licensed or accredited in a total of at least 35 states. The authority of the Commissioner to adopt regulations under subsection (a)(2) of this section does not limit the Commissioner’s general authority to adopt regulations under subsection (a)(1) of this section.

Credit shall be allowed when reinsurance is ceded to an assuming insurer that: has its head office or is domiciled in and licensed in a reciprocal jurisdiction; has and maintains on an ongoing basis: minimum capital and surplus, or its equivalent, calculated according to the methodology of its domiciliary jurisdiction, in an amount to be set forth in regulation; or if the assuming insurer is an association, including incorporated and individual unincorporated underwriters: minimum capital and surplus equivalents, net of liabilities, calculated according to the methodology applicable in its domiciliary jurisdiction; and a central fund containing a balance in an amount the Commissioner requires by regulation; maintains a minimum solvency or capital ratio, as the Commissioner requires by regulation; if the assuming insurer is an association, including incorporated and individual unincorporated underwriters, maintains a minimum solvency or capital ratio: in the reciprocal jurisdiction where the assuming insurer has its head office or is domiciled; and where it is also licensed; agrees and provides adequate assurance to the Commissioner, in a form the Commissioner specifies by regulation, to provide prompt written notice and explanation to the Commissioner: if the assuming insurer falls below any minimum requirement set forth in item (2), (3), or, if applicable, (4) of this subsection; or if any regulatory action is taken against the assuming insurer for serious noncompliance with applicable law; consents in writing to: the jurisdiction of the courts of the State; the appointment of the Commissioner as agent for service of process; and if the Commissioner requires, include in the reinsurance agreement the appointment of the Commissioner as agent for service of process; consents in writing to pay all final judgments, wherever enforcement is sought, obtained by a ceding insurer or its legal successor, that have been declared enforceable in the jurisdiction where the judgment was obtained; agrees to include in each reinsurance agreement a provision requiring the assuming insurer to provide security in an amount equal to 100% of the assuming insurer’s liabilities attributable to reinsurance ceded under that agreement if the assuming insurer resists: enforcement of a final judgment that is enforceable under the law of the jurisdiction where the judgment was obtained; or a properly enforceable arbitration award, whether obtained by the ceding insurer or by its legal successor on behalf of the ceding insurer’s resolution estate; confirms that: the assuming insurer is not participating in any solvent scheme of arrangement that involves the State’s ceding insurers; or if the assuming insurer enters into a solvent scheme of arrangement: the assuming insurer agrees to notify the ceding insurer and the Commissioner; and the assuming insurer will provide security in an amount equal to 100% of the assuming insurer’s liabilities to the ceding insurer, in a form consistent with the requirements of §§ 5–908 through 5–911 and 5–914 of this subtitle and as the Commissioner specifies by regulation; on request by the Commissioner, provides, on behalf of the assuming insurer and any legal predecessors, documentation to the Commissioner required under regulations the Commissioner adopts; maintains a practice of prompt payment of claims under reinsurance agreements, in accordance with regulations the Commissioner adopts; and has a supervisory authority that confirms to the Commissioner on an annual basis that the assuming insurer complies with the requirements of items (2), (3), and, if applicable, (4) of this subsection: as of the immediately preceding December 31; or at the annual date otherwise statutorily reported to the reciprocal jurisdiction. The Commissioner shall timely create and publish a list of reciprocal jurisdictions. The Commissioner’s list shall: include any reciprocal jurisdiction as defined in § 5–901(g)(1) and (2) of this subtitle; and consider any other reciprocal jurisdiction included on the NAIC list of reciprocal jurisdictions published through the NAIC committee process. The Commissioner may approve a jurisdiction that does not appear on the NAIC list of reciprocal jurisdictions in accordance with regulations the Commissioner adopts. The Commissioner may not remove a jurisdiction that meets the requirements of a reciprocal jurisdiction from the list of reciprocal jurisdictions. Except as provided in subsubparagraph 2 of this subparagraph, the Commissioner may remove a jurisdiction from the list of reciprocal jurisdictions on a determination that the jurisdiction no longer meets the requirements of a reciprocal jurisdiction in accordance with a process set forth in regulations the Commissioner adopts. The Commissioner may not remove from the list of reciprocal jurisdictions a jurisdiction as defined in § 5–901(g)(1) or (2) of this subtitle. On removal of a jurisdiction from the list of reciprocal jurisdictions, credit for reinsurance ceded to an assuming insurer that has its home office or is domiciled in that jurisdiction shall be allowed, if otherwise allowed under this subtitle. The Commissioner shall timely create and publish a list of assuming insurers that have satisfied the conditions set forth in this section and to which cessions shall be granted credit in accordance with this section. The Commissioner may add an assuming insurer to the list under paragraph (1) of this subsection: if an NAIC–accredited jurisdiction has added the assuming insurer to a list of assuming insurers; or if, on initial eligibility, the assuming insurer submits information to the Commissioner: as required under subsection (a)(5) through (9) of this section; and complies with any additional requirements that the Commissioner may impose by regulation, except to the extent that the requirements conflict with an applicable covered agreement. If the Commissioner determines that an assuming insurer no longer meets one or more of the requirements under this section, the Commissioner may revoke or suspend the eligibility of the assuming insurer for recognition under this subsection in accordance with procedures set forth in regulation. While an assuming insurer’s eligibility is suspended: a reinsurance agreement issued, amended, or renewed after the effective date of the suspension may not qualify for credit; but credit may be allowed only to the extent that the assuming insurer’s obligations under the contract are secured in accordance with § 5–914 of this subtitle. If an assuming insurer’s eligibility is revoked: credit for reinsurance may not be granted after the effective date of the revocation with respect to: any reinsurance agreements entered into by the assuming insurer after the date of revocation; or any reinsurance agreements entered into prior to the date of revocation; but credit for reinsurance may be granted to the extent that the assuming insurer’s obligations under the contract are secured in a form acceptable to the Commissioner and consistent with § 5–914 of this subtitle. Subject to a legal process of rehabilitation, liquidation, or conservation, the ceding insurer or its representative may seek or obtain an order requiring the assuming insurer to post security for all outstanding liabilities if the court in which proceedings are pending determines the order appropriate. Except as expressly prohibited by this subtitle or other law, this section does not limit or alter the capacity of parties to a reinsurance agreement to agree on requirements for security or other terms in that reinsurance agreement. Credit may be taken under this section: only for reinsurance agreements entered into, amended, or renewed on or after the date when the assuming insurer has satisfied the requirements to assume reinsurance under this section; and only with respect to losses incurred and reserves reported on or after the later of: the date when the assuming insurer has met all eligibility requirements under subsection (a) of this section; or the effective date of the new reinsurance agreement, amendment, or renewal. If credit is not available under this section, this section does not alter or impair a ceding insurer’s right to take credit for reinsurance if the reinsurance qualifies for credit under another provision of this subtitle. Except as allowed by the terms of the agreement, this section does not authorize an assuming insurer to withdraw or reduce the security provided under any reinsurance agreement. This section does not limit or in any way alter the capacity of parties to any reinsurance agreement to renegotiate the agreement. This section does not preclude an assuming insurer from providing the Commissioner with information on a voluntary basis. Subsection (a)(6) of this section does not limit or alter the capacity of parties to a reinsurance agreement to agree to alternative dispute resolution mechanisms, except to the extent those agreements are unenforceable under insolvency or delinquency laws.