Okla. Stat. tit. 36, § 36-5122

A. Credit for reinsurance shall be allowed a domestic ceding

insurer as either an asset or a reduction from liability on account

of reinsurance ceded only when the reinsurer meets the requirements

of subsection B, C, D, E, F, G or H of this section; provided,

further, that the Commissioner may adopt by regulation pursuant to

subsection B of Section 5124 of this title, specific additional

requirements relating to or setting forth the valuation of assets or

reserve credits, the amount and forms of security supporting

reinsurance arrangements described in subsection B of Section 5124

of this title and the circumstances pursuant to which credit will be

reduced or eliminated. Credit shall be allowed under subsection B,

C or D of this section only as respects cessions of those kinds or

classes of business in which the assuming insurer is licensed or

otherwise permitted 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

D or E of this section only if the applicable requirements of

subsection I have been satisfied.

B. Credit shall be allowed when the reinsurance is ceded to an

assuming insurer that is licensed to transact insurance or

reinsurance in this state.

C. Credit shall be allowed when the reinsurance is ceded to an

assuming insurer that is accredited by the Insurance Commissioner as

a reinsurer in this state. An accredited reinsurer is one that:

1. Files with the Insurance Commissioner evidence of its

submission to this state's jurisdiction;

2. Submits to this state's authority to examine its books and

records;

3. Is 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 is entered through and licensed to transact

insurance or reinsurance in at least one state;

Oklahoma Statutes - Title 36. Insurance Page 1036

4. Files annually with the Insurance 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

5. Demonstrates to the satisfaction of the Insurance

Commissioner that it 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 this requirement as of the time of its application if it

maintains a surplus as regards policyholders in an amount not less

than Twenty Million Dollars ($20,000,000.00) and its accreditation

has not been denied by the Insurance Commissioner within ninety (90)

days after submission of its application.

D. Credit shall be allowed when the reinsurance is ceded to an

assuming insurer that is domiciled in, or in the case of a United

States branch of an alien assuming insurer is entered through, a

state that employs standards regarding credit for reinsurance

substantially similar to those applicable under this statute and the

assuming insurer or United States branch of an alien assuming

insurer:

1. Maintains a surplus as regards policyholders in an amount

not less than Twenty Million Dollars ($20,000,000.00); and

2. Submits to the authority of this state to examine its books

and records.

The requirement of paragraph 1 of this subsection does not apply

to reinsurance ceded and assumed pursuant to pooling arrangements

among insurers in the same holding company system.

E. 1. Credit shall be allowed when the reinsurance is ceded to

an assuming insurer that maintains a trust fund in a qualified

United States financial institution, as defined in Section 5123.1 of

this title, for the payment of the valid claims of its United States

ceding insurers, their assigns and successors in interest. To
ling arrangements

among insurers in the same holding company system.

E. 1. Credit shall be allowed when the reinsurance is ceded to

an assuming insurer that maintains a trust fund in a qualified

United States financial institution, as defined in Section 5123.1 of

this title, for the payment of the valid claims of its United States

ceding insurers, their assigns and successors in interest. To

enable the Insurance Commissioner to determine the sufficiency of

the trust fund, the assuming insurer shall report annually to the

Insurance Commissioner information substantially the same as that

required to be reported on the National Association of Insurance

Commissioners Annual Statement form by licensed insurers. The

assuming insurer shall submit to examination of its books and

records by the Commissioner and bear the expense of examination.

2. Credit for reinsurance shall not be granted under this

subsection unless the form of the trust and any amendments to the

trust have been approved by:

a. the Commissioner of the state where the trust is

domiciled, or

b. the Commissioner of another state who, pursuant to the

terms of the trust instrument, has accepted principal

regulatory oversight of the trust.

Oklahoma Statutes - Title 36. Insurance Page 1037

3. The form of the trust and any trust amendments also shall be

filed with the Insurance Commissioner of every 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 upon 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, their assigns and

successors in interest. The trust and the assuming insurer shall be

subject to examination as determined by the Insurance Commissioner.

4. The trust shall remain in effect for as long as the assuming

insurer has outstanding obligations due under the reinsurance

agreements subject to the trust.

5. No later than February 28 of each year the trustee of the

trust shall report to the Insurance Commissioner in writing the

balance of the trust and listing the trust's investments at the

preceding year end and shall certify the date of termination of the

trust, if so planned, or certify that the trust shall not expire

prior to the following December 31.

6. The following requirements apply to the following categories

of assuming insurer:

a. the trust fund for a single assuming insurer 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,

and, in addition, the assuming insurer shall maintain

a trusteed surplus of not less than Twenty Million

Dollars ($20,000,000.00), except as provided in

subparagraph b of this paragraph,

b. at any time after the assuming insurer has permanently

discontinued underwriting new business secured by the

trust for at least three (3) full years, the

Commissioner 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 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 shall

Oklahoma Statutes - Title 36. Insurance Page 1038
cluding 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 shall

Oklahoma Statutes - Title 36. Insurance Page 1038

not be reduced to an amount less than thirty percent

(30%) of the assuming insurer's liabilities

attributable to reinsurance ceded by United States

ceding insurers covered by the trust,

c. (1) in the case of a group including incorporated and

individual unincorporated underwriters:

(a) for reinsurance ceded under reinsurance

agreements 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,

(b) for reinsurance ceded under reinsurance

agreements with an inception date on or

before December 31, 1992, and not amended or

renewed after that date, notwithstanding the

other provisions of the Credit for

Reinsurance Act, 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, and

(c) in addition to these trusts, the group shall

maintain in trust a trusteed surplus of

which One Hundred Million Dollars

($100,000,000.00) 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,

(2) the incorporated members of the group shall 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, and

(3) within ninety (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

Oklahoma Statutes - Title 36. Insurance Page 1039

independent public accountants, of each

underwriter member of the group, and

d. in the case of a group of incorporated underwriters

under common administration, the group shall:

(1) have continuously transacted an insurance

business outside the United States for at least

three (3) years immediately prior to making

application for accreditation,

(2) maintain aggregate policyholders' surplus of at

least Ten Billion Dollars ($10,000,000,000.00),

(3) maintain a trust fund in an amount not less than

the group's several liabilities attributable to

business ceded by United States-domiciled ceding

insurers to any member of the group pursuant to

reinsurance contracts issued in the name of the

group,

(4) in addition, maintain a joint trusteed surplus of

which One Hundred Million Dollars

($100,000,000.00) shall be held jointly for the

benefit of United States-domiciled ceding

insurers of any member of the group as additional

security for these liabilities, and
States-domiciled ceding

insurers to any member of the group pursuant to

reinsurance contracts issued in the name of the

group,

(4) in addition, maintain a joint trusteed surplus of

which One Hundred Million Dollars

($100,000,000.00) shall be held jointly for the

benefit of United States-domiciled ceding

insurers of any member of the group as additional

security for these liabilities, and

(5) within ninety (90) days after its financial

statements are due to be filed with the group's

domiciliary regulator, make available to the

Commissioner an annual certification of each

underwriter member's solvency by the member's

domiciliary regulator and financial statements of

each underwriter member of the group prepared by

its independent public accountant.

F. 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 and secures its obligations in accordance

with the requirements of this subsection.

1. In order to be eligible for certification, the assuming

insurer shall meet the following requirements:

a. the assuming insurer shall be domiciled and licensed

to transact insurance or reinsurance in a qualified

jurisdiction, as determined by the Commissioner

pursuant to paragraph 3 of this subsection,

b. the assuming insurer shall maintain minimum capital

and surplus, or its equivalent, in an amount to be

determined by the Commissioner pursuant to regulation,

c. the assuming insurer shall maintain financial strength

ratings from two or more rating agencies deemed

acceptable by the Commissioner pursuant to regulation,

Oklahoma Statutes - Title 36. Insurance Page 1040

d. the assuming insurer shall agree to submit to the

jurisdiction of this state, appoint the Commissioner

as its agent for service of process in this state and

agree to provide security for one hundred percent

(100%) 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,

e. the assuming insurer shall agree to meet applicable

information filing requirements as determined by the

Commissioner, both with respect to an initial

application for certification and on an ongoing basis,

and

f. the assuming insurer shall satisfy any other

requirements for certification deemed relevant by the

Commissioner.

2. An association including incorporated and individual

unincorporated underwriters, may be a certified reinsurer. In order

to be eligible for certification, in addition to satisfying

requirements of paragraph 1 of this subsection:

a. the association shall satisfy its minimum capital and

surplus requirements through the capital and surplus

equivalents (net of liabilities) of the association

and its members, which shall include a joint central

fund that may be applied to any unsatisfied obligation

of the association or any of its members, in an amount

determined by the Commissioner to provide adequate

protection,

b. the incorporated members of the association shall not

be engaged in any business other than underwriting as

a member of the association and shall be subject to

the same level of regulation and solvency control by

the association's domiciliary regulator as are the

unincorporated members, and

c. within ninety (90) days after its financial statements

are due to be filed with the association's domiciliary

regulator, the association shall provide to the

Commissioner an annual certification by the

association'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 association.

3. The Commissioner shall create and publish a list of

qualified jurisdictions under which an assuming insurer licensed and
ssioner an annual certification by the

association'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 association.

3. The Commissioner shall create and publish a list of

qualified jurisdictions under which an assuming insurer licensed and

domiciled in such jurisdiction is eligible to be considered for

certification by the Commissioner as a certified reinsurer.

Oklahoma Statutes - Title 36. Insurance Page 1041

a. 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, both initially

and on an ongoing basis, and consider the rights,

benefits and the 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 to share

information and cooperate with the Commissioner with

respect to all certified reinsurers domiciled within

that jurisdiction. A jurisdiction shall not be

recognized as a qualified jurisdiction if the

Commissioner has determined that the jurisdiction does

not adequately and promptly enforce final United

States judgments and arbitration awards. Additional

factors may be considered in the discretion of the

Commissioner.

b. A list of qualified jurisdictions shall be published

through the National Association of Insurance

Commissioners (NAIC) Committee Process. The

Commissioner shall consider this list in determining

qualified jurisdictions. If the Commissioner approves

a jurisdiction as qualified that does not appear on

the list of qualified jurisdictions, the Commissioner

shall provide thoroughly documented justification in

accordance with criteria to be developed under

regulations.

c. United States jurisdictions that meet the requirement

for accreditation under the NAIC financial standards

and accreditation program shall be recognized as

qualified jurisdictions.

d. If a certified reinsurer's domiciliary jurisdiction

ceases to be a qualified jurisdiction, the

Commissioner may at his or her discretion suspend the

reinsurer's certification indefinitely, in lieu of

revocation.

4. The Commissioner shall assign a rating to each certified

reinsurer, giving due consideration to the financial strength

ratings that have been assigned by rating agencies deemed acceptable

to the Commissioner pursuant to regulation. The Commissioner shall

publish a list of all certified reinsurers and their ratings.

5. A certified reinsurer shall secure obligations assumed from

United States ceding insurers under this subsection at a level

Oklahoma Statutes - Title 36. Insurance Page 1042

consistent with its rating, as specified in regulations promulgated

by the Commissioner.

a. 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 acceptable to the

Commissioner and consistent with the provisions of

Section 5123 of this title, or in a multibeneficiary

trust in accordance with subsection E of this section,

except as otherwise provided in this subsection.

b. If a certified reinsurer maintains a trust to fully

secure its obligations subject to subsection E of this

section, 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 agreements issued or

renewed as a certified reinsurer with reduced security

as permitted by this subsection or comparable laws of
subject to subsection E of this

section, 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 agreements issued or

renewed as a certified reinsurer with reduced security

as permitted by this subsection or comparable laws of

other United States jurisdictions and for its

obligations subject to subsection E of this section.

It shall be a condition to the grant of certification

under this subsection that the certified reinsurer

shall have bound itself, by the language of the trust

and agreement with the Commissioner with principal

regulatory oversight of each such trust account, to

fund, upon termination of any such trust account, out

of the remaining surplus of such trust any deficiency

of any other such trust account.

c. The minimum trusteed surplus requirements provided in

subsection E of this section are not applicable with

respect to a multibeneficiary trust maintained by a

certified reinsurer for the purpose of securing

obligations incurred under this subsection, except

that such trust shall maintain a minimum trusteed

surplus of Ten Million Dollars ($10,000,000.00).

d. With respect to obligations incurred by a certified

reinsurer under this subsection, if the security is

insufficient, the Commissioner shall reduce the

allowable credit by an amount proportionate to the

deficiency, and may at his or her discretion impose

further reductions in allowable credit upon finding

that there is a material risk that the certified

reinsurer's obligations will not be paid in full when

due.

6. If an applicant for certification has been certified as a

reinsurer in an NAIC-accredited jurisdiction, the Commissioner may

Oklahoma Statutes - Title 36. Insurance Page 1043

at his or her discretion defer to that jurisdiction's certification,

and may in his or her discretion defer to the rating assigned by

that jurisdiction, and such assuming insurer shall be considered to

be a certified reinsurer in this state.

7. 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 this

subsection, and the Commissioner shall assign a rating that takes

into account, if relevant, the reasons why the reinsurer is not

assuming new business.

8. For purposes of this subsection:

a. a certified reinsurer whose certification has been

terminated for any reason shall be treated as a

certified reinsurer required to secure one hundred

percent (100%) of its obligations, and

b. the term "terminated" refers to revocation,

suspension, voluntary surrender and inactive status.

If the Commissioner continues to assign a higher

rating as permitted by this section, the requirement

to secure one hundred percent (100%) of its

obligations shall not apply to a certified reinsurer

in inactive status or to a reinsurer whose

certification has been suspended.

G. 1. Credit shall be allowed when the reinsurance is ceded to

an assuming insurer meeting all of the following conditions:

a. the assuming insurer shall have its head office or be

domiciled, as applicable, and licensed in a reciprocal

jurisdiction. For purposes of this subparagraph,

"reciprocal jurisdiction" is a jurisdiction that is

one of the following:
certification has been suspended.

G. 1. Credit shall be allowed when the reinsurance is ceded to

an assuming insurer meeting all of the following conditions:

a. the assuming insurer shall have its head office or be

domiciled, as applicable, and licensed in a reciprocal

jurisdiction. For purposes of this subparagraph,

"reciprocal jurisdiction" is a jurisdiction that is

one of the following:

(1) a non-United States jurisdiction 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. For purposes of

this subparagraph, a "covered agreement" is an

agreement entered into pursuant to Dodd-Frank

Wall Street Reform and Consumer Protection Act,

31 U.S.C. Sections 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 any reinsurance

agreement with a ceding insurer domiciled in this

Oklahoma Statutes - Title 36. Insurance Page 1044

state or for allowing the ceding insurer to

recognize credit for reinsurance,

(2) a United States jurisdiction that meets the

requirements for accreditation under the National

Association of Insurance Commissioners financial

standards and accreditation program, or

(3) a qualified jurisdiction, as determined by the

Commissioner pursuant to paragraph 3 of

subsection F of this section, that is not

otherwise described in division 1 or 2 of

subparagraph a of paragraph 1 of this subsection

and meets additional requirements consistent with

the terms and conditions of in-force, covered

agreements, as specified by the Commissioner in

rules,

b. the assuming insurer shall have and maintain, 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 Insurance Department rules. If the assuming

insurer is an association including incorporated and

individual unincorporated underwriters, it shall have

and maintain, on an ongoing basis, 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 amounts to be set forth in

Department rules,

c. the assuming insurer shall have and maintain, on an

ongoing basis, a minimum solvency or capital ratio, as

applicable, which will be set forth in Department

rules. If the assuming insurer is an association

including incorporated and individual unincorporated

underwriters, it shall have and maintain, on an

ongoing basis, a minimum solvency or capital ratio in

the reciprocal jurisdiction where the assuming insurer

has its head office or is domiciled and is also

licensed,

d. the assuming insurer shall agree and provide adequate

assurance to the Insurance Commissioner, in a form

specified by the Commissioner, as follows:

(1) the assuming insurer shall provide prompt written

notice and explanation to the Commissioner if it

falls below the minimum requirements set forth in

subparagraph b or c of this paragraph, or if any

regulatory action is taken against it for serious

noncompliance with applicable law,

Oklahoma Statutes - Title 36. Insurance Page 1045
r, in a form

specified by the Commissioner, as follows:

(1) the assuming insurer shall provide prompt written

notice and explanation to the Commissioner if it

falls below the minimum requirements set forth in

subparagraph b or c of this paragraph, or if any

regulatory action is taken against it for serious

noncompliance with applicable law,

Oklahoma Statutes - Title 36. Insurance Page 1045

(2) the assuming insurer shall consent in writing to

the jurisdiction of the courts of this state and

to the appointment of the Commissioner as agent

for service of process. The Commissioner may

require that consent for service of process be

provided to the Commissioner and included in each

reinsurance agreement. Nothing in this provision

shall be construed to limit, or in any way alter,

the capacity of parties to a reinsurance

agreement to agree to alternative dispute

resolution mechanisms, except to the extent such

agreements are unenforceable under applicable

insolvency or delinquency laws,

(3) the assuming insurer shall consent 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,

(4) each reinsurance agreement shall include a

provision requiring the assuming insurer to

provide security in an amount equal to one

hundred percent (100%) of the liabilities of the

assuming insurer attributable to reinsurance

ceded pursuant to that agreement if the assuming

insurer resists enforcement of a final judgment

that is enforceable under the law of the

jurisdiction in which it was obtained or a

properly enforceable arbitration award, whether

obtained by the ceding insurer or by its legal

successor on behalf of its resolution estate, and

(5) the assuming insurer shall confirm that it is not

presently participating in any solvent scheme of

arrangement that involves the ceding insurers of

this state, and agree to notify the ceding

insurer and the Commissioner and to provide

security in an amount equal to one hundred

percent (100%) of the liabilities of the assuming

insurer to the ceding insurer, should the

assuming insurer enter into such a solvent scheme

of arrangement. The security shall be in a form

consistent with the provisions of subsection F of

Section 5122 and Section 5123 of this title,

specified by the Commissioner in rule,

e. the assuming insurer or its legal successor shall

provide, on behalf of itself and any legal

predecessors, any additional documentation requested

by the Commissioner in regulation,

Oklahoma Statutes - Title 36. Insurance Page 1046

f. the assuming insurer shall maintain a practice of

prompt payment of claims under reinsurance agreements,

pursuant to criteria set forth in rule,

g. the supervisory authority of the assuming insurer

shall confirm to the Commissioner on an annual basis,

as of the preceding December 31 or at the annual date

otherwise statutorily reported to the reciprocal

jurisdiction, that the assuming insurer complies with

the requirements set forth in subparagraphs b and c of

this paragraph, and

h. nothing in this provision shall be construed to

preclude an assuming insurer from providing the

Commissioner with information on a voluntary basis.

2. The Commissioner shall timely create and publish a list of

reciprocal jurisdictions.

a. A list of reciprocal jurisdictions is published

through the National Association of Insurance

Commissioners Committee Process. The list shall

include any reciprocal jurisdiction as defined under

subparagraph a of paragraph 1 of this subsection and

shall consider any other reciprocal jurisdiction

included on the National Association of Insurance

Commissioners list. The Commissioner may approve a

jurisdiction that does not appear on the list of

reciprocal jurisdictions in accordance with criteria

to be developed through rules issued by the
any reciprocal jurisdiction as defined under

subparagraph a of paragraph 1 of this subsection and

shall consider any other reciprocal jurisdiction

included on the National Association of Insurance

Commissioners list. The Commissioner may approve a

jurisdiction that does not appear on the list of

reciprocal jurisdictions in accordance with criteria

to be developed through rules issued by the

Commissioner.

b. The Commissioner may remove a jurisdiction from the

list of reciprocal jurisdictions upon a determination

that the jurisdiction no longer meets the requirements

of a reciprocal jurisdiction, in accordance with a

process set forth in rules issued by the Commissioner,

except that the Commissioner shall not remove from the

list a reciprocal jurisdiction as defined under

subparagraph a of paragraph 1 of this subsection.

Upon removal of a reciprocal jurisdiction from this

list, 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 pursuant to this act.

3. The Commissioner shall timely create and publish a list of

assuming insurers that have satisfied the conditions set forth in

this subsection and to which cessions shall be granted credit in

accordance with this subsection. The Commissioner may add an

assuming insurer to such list if a National Association of Insurance

Commissioners accredited jurisdiction has added the assuming insurer

to a list of such assuming insurers or if, upon initial eligibility,

Oklahoma Statutes - Title 36. Insurance Page 1047

the assuming insurer submits the information to the Commissioner as

required under subparagraph d of paragraph 1 of this subsection and

complies with any additional requirements that the Commissioner may

impose by regulation, except to the extent that they conflict with

an applicable covered agreement.

4. If the Commissioner determines that an assuming insurer no

longer meets one or more of the requirements under this subsection,

the Commissioner may revoke or suspend the eligibility of the

assuming insurer for recognition under this subsection in accordance

with procedures set forth in Department rules.

a. While the eligibility of an assuming insurer is

suspended, no reinsurance agreement issued, amended or

renewed after the effective date of the suspension

qualifies for credit except to the extent that the

obligations of the assuming insurer under the contract

are secured in accordance with the provisions of

Section 5123 of this title.

b. If the eligibility of an assuming insurer is revoked,

no credit for reinsurance may be granted after the

effective date of the revocation with respect to any

reinsurance agreements entered into by the assuming

insurer including reinsurance agreements entered into

prior to the date of revocation, except to the extent

that the obligations of the assuming insurer under the

contract are secured in a form acceptable to the

Commissioner.

5. If subject to a legal process of rehabilitation, liquidation

or conservation, as applicable, the ceding insurer or its

representative may seek and, if determined appropriate by the court

in which the proceedings are pending, may obtain an order requiring

that the assuming insurer post security for all outstanding ceded

liabilities.

6. Nothing in this subsection shall be construed to limit or in

any way alter the capacity of parties to a reinsurance agreement to

agree on requirements for security or other terms in that

reinsurance agreement, except as expressly prohibited by this act or

other applicable law or rule.

7. Credit may be taken under this subsection only for

reinsurance agreements entered into, amended or renewed on or after

the effective date of this act, and only with respect to losses

incurred and reserves reported on or after the later of (1) the date

on which the assuming insurer has met all eligibility requirements
ept as expressly prohibited by this act or

other applicable law or rule.

7. Credit may be taken under this subsection only for

reinsurance agreements entered into, amended or renewed on or after

the effective date of this act, and only with respect to losses

incurred and reserves reported on or after the later of (1) the date

on which the assuming insurer has met all eligibility requirements

pursuant to paragraph 1 of this subsection, and (2) the effective

date of the new reinsurance agreement, amendment or renewal.

a. This paragraph does not alter or impair the right of a

ceding insurer to take credit for reinsurance, to the

extent that credit is not available under this

Oklahoma Statutes - Title 36. Insurance Page 1048

subsection, as long as the reinsurance qualifies for

credit under any other applicable provision of this

act.

b. Nothing in this subsection shall be construed to

authorize an assuming insurer to withdraw or reduce

the security provided under any reinsurance agreement,

except as permitted by the terms of the agreement.

c. Nothing in this subsection shall be construed to

limit, or in any way alter, the capacity of parties to

any reinsurance agreement to renegotiate the

agreement.

H. Credit shall be allowed when the reinsurance is ceded to an

assuming insurer not meeting the requirements of subsection B, C, D,

E, F or G of this section but only as the insurance of risks located

in jurisdictions where the reinsurance is required by applicable law

or regulation of that jurisdiction.

I. If the assuming insurer is not licensed, accredited or

certified to transact insurance or reinsurance in this state, the

credit permitted by subsections D and E of this section shall not be

allowed unless the assuming insurer agrees in the reinsurance

agreements:

1. That in the event of the failure of the assuming insurer to

perform its obligations under the terms of the reinsurance

agreement, the assuming insurer, 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 the court or of any appellate court

in the event of an appeal; and

2. To designate the Insurance Commissioner or a designated

attorney as its true and lawful attorney upon whom may be served any

lawful process in any action, suit or proceeding instituted by or on

behalf of the ceding insurer. This subsection is not intended to

conflict with or override the obligation of the parties to a

reinsurance agreement to arbitrate their disputes, if this

obligation is created in the agreement.

J. If the assuming insurer does not meet the requirements of

subsection B, C, D, or G of this section, the credit permitted by

subsection E or F of this section shall not be allowed unless the

assuming insurer agrees in the trust agreements to the following

conditions:

1. Notwithstanding any other provisions in the trust

instrument, if the trust fund is inadequate because it contains an

amount less than the amount required by paragraph 6 of subsection E

of this section, 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

Oklahoma Statutes - Title 36. Insurance Page 1049

domicile, the trustee shall comply with an order of the Commissioner

with regulatory oversight over the trust or with an order of a court

of competent jurisdiction directing the trustee to transfer to the

Commissioner with regulatory oversight all of the assets of the

trust fund;

2. The assets shall be distributed by and claims shall be filed

with and valued by the Commissioner with regulatory oversight in

accordance with the laws of the state in which the trust is

domiciled that are applicable to the liquidation of domestic
of competent jurisdiction directing the trustee to transfer to the

Commissioner with regulatory oversight all of the assets of the

trust fund;

2. The assets shall be distributed by and claims shall be filed

with and valued by the Commissioner with regulatory oversight in

accordance with the laws of the state in which the trust is

domiciled that are applicable to the liquidation of domestic

insurance companies;

3. If the Commissioner with regulatory oversight determines

that the assets of the trust fund or any part thereof are not

necessary to satisfy the claims of the United States ceding insurers

of the grantor of the trust, the assets or part thereof shall be

returned by the Commissioner with regulatory oversight to the

trustee for distribution in accordance with the trust agreement; and

4. The grantor shall waive any right otherwise available to it

under United States law that is inconsistent with this provision.

K. If an accredited or certified reinsurer ceases to meet the

requirements for accreditation or certification, the Commissioner

may suspend or revoke the reinsurer's accreditation or

certification.

1. The Commissioner shall give the reinsurer notice and

opportunity for hearing. The suspension or revocation shall not

take effect until after the Commissioner's order on hearing, unless:

a. the reinsurer waives its right to hearing,

b. the Commissioner's order is based on regulatory action

by the reinsurer's domiciliary jurisdiction or the

voluntary surrender or termination of the reinsurer's

eligibility to transact insurance or reinsurance

business in its domiciliary jurisdiction or in the

primary certifying state of the reinsurer under

paragraph 6 of subsection F of this section, or

c. the Commissioner finds that an emergency requires

immediate action and a court of competent jurisdiction

has not stayed the Commissioner's action.

2. While a reinsurer's accreditation or certification is

suspended, no reinsurance contract issued or renewed after the

effective date of the suspension qualifies for credit except to the

extent that the reinsurer's obligations under the contract are

secured in accordance with Section 5123 of this title. If a

reinsurer's accreditation or certification is revoked, no credit for

reinsurance shall 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 paragraph 5 of

subsection F of this section or Section 5123 of this title.

L. Concentration Risk.

Oklahoma Statutes - Title 36. Insurance Page 1050

1. 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 thirty (30) days

after reinsurance recoverables from any single assuming insurer, or

group of affiliated assuming insurers, exceeds fifty percent (50%)

of the domestic ceding insurer's last reported surplus to

policyholders, or after it is determined that reinsurance

recoverables from any single assuming insurer, or group of

affiliated assuming insurers, is likely to exceed this limit. The

notification shall demonstrate that the exposure is safely managed

by the domestic ceding insurer.

2. A ceding insurer shall take steps to diversify its

reinsurance program. A domestic ceding insurer shall notify the

Commissioner within thirty (30) days after ceding to any single

assuming insurer, or group of affiliated assuming insurers, more

than twenty percent (20%) of the ceding insurer's gross written

premium in the prior calendar year, or after it has determined that

the reinsurance ceded to any single assuming insurer, or group of

affiliated assuming insurers, is likely to exceed this limit. The

notification shall demonstrate that the exposure is safely managed

by the domestic ceding insurer.