# Title 45 — Insurance, Commissioner of

## Article 45-03 — Regulation of Insurance Companies

## Chapter 45-03-07.1 — Credit for Reinsurance Model Regulation

Assuming Insurer Not Meeting the Requirements of Sections 45-03-07.1-01
Through 45-03-07.1-05
### § 45-03-07.1-01. Credit for reinsurance - Reinsurer licensed in this state.

Pursuant to subsection 2 of North Dakota Century Code section 26.1-31.2-01, the commissioner
shall allow credit for reinsurance ceded by a domestic insurer to an assuming insurer that was licensed
in this state as of any date on which statutory financial statement credit for reinsurance is claimed.
History: Effective October 1, 1995; amended effective October 1, 2002; January 1, 2016; April 1, 2022.
General Authority: NDCC 26.1-31.2-04
Law Implemented: NDCC 26.1-31.2
### § 45-03-07.1-02. Credit for reinsurance - Accredited reinsurers.

1. Pursuant to subsection 3 of North Dakota Century Code section 26.1-31.2-01, the
commissioner shall allow credit for reinsurance ceded by a domestic insurer to an assuming
insurer that is accredited as a reinsurer in this state as of the date on which statutory financial
statement credit for reinsurance is claimed. An accredited reinsurer must:
a. File a properly executed form AR-1 as evidence of its submission to this state's
jurisdiction and to this state's authority to examine its books and records;
b. File with the commissioner a certified copy of a certificate of authority or other acceptable
evidence that it 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;
c. File annually with the commissioner a copy of its annual statement filed with the
insurance department of its state of domicile or, in the case of an alien assuming insurer,
with the state through which it is entered and in which it is licensed to transact insurance
or reinsurance, and a copy of its most recent audited financial statement; and
d. Maintain a surplus as regards policyholders in an amount not less than twenty million
dollars, or obtain the affirmative approval of the commissioner upon a finding that it has
adequate financial capacity to meet its reinsurance obligations and is otherwise qualified
to assume reinsurance from domestic insurers.

2. If the commissioner determines that the assuming insurer has failed to meet or maintain any
of these qualifications, the commissioner may upon written notice and opportunity for hearing,
suspend or revoke the accreditation. Credit may not be allowed a domestic ceding insurer
under this section if the assuming insurer's accreditation has been revoked by the
commissioner, or if the reinsurance was ceded while the assuming insurer's accreditation was
under suspension by the commissioner.
History: Effective October 1, 1995; amended effective October 1, 2002; January 1, 2016; April 1, 2022.
General Authority: NDCC 26.1-31.2-04
Law Implemented: NDCC 26.1-31.2
### § 45-03-07.1-03. Credit for reinsurance - Reinsurer domiciled in another state.

1. Pursuant to subsection 4 of North Dakota Century Code section 26.1-31.2-01, the
commissioner shall allow credit for reinsurance ceded by a domestic insurer to an assuming
insurer that as of any date on which statutory financial statement credit for reinsurance is
claimed:
a. 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 North Dakota Century Code chapter
26.1-31.2 and this chapter;
b. Maintains a surplus as regards policyholders in an amount not less than twenty million
dollars; and
c. Files a properly executed form AR-1 with the commissioner as evidence of its submission
to this state's authority to examine its books and records.
2. The provisions of this section relating to surplus as regards policyholders do not apply to
reinsurance ceded and assumed pursuant to pooling arrangements among insurers in the
same holding company system. As used in this section, "substantially similar" standards
means credit for reinsurance standards which the commissioner determines equal or exceed
the standards of North Dakota Century Code chapter 26.1-31.2 and this chapter.
History: Effective October 1, 1995; amended effective October 1, 2002; January 1, 2016; April 1, 2022.
General Authority: NDCC 26.1-31.2-04
Law Implemented: NDCC 26.1-31.2
### § 45-03-07.1-04. Credit for reinsurance - Reinsurers maintaining trust funds.

1. Pursuant to subsection 5 of North Dakota Century Code section 26.1-31.2-01, the
commissioner shall allow credit for reinsurance ceded by a domestic insurer to an assuming
insurer that, as of any date on which statutory financial statement credit for reinsurance is
claimed, and thereafter for so long as credit for reinsurance is claimed, maintains a trust fund
in an amount prescribed in this section in a qualified United States financial institution as
defined in subsection 2 of North Dakota Century Code section 26.1-31.2-03, for the payment
of the valid claims of its United States domiciled ceding insurers, their assigns and successors
in interest. The assuming insurer shall report annually to the commissioner substantially the
same information as that required to be reported on the national association of insurance
commissioners annual statement form by licensed insurers, to enable the commissioner to
determine the sufficiency of the trust fund.
2. The following requirements apply to the following categories of assuming insurer:
a. The trust fund for a single assuming insurer must consist of funds in trust in an amount
not less than the assuming insurer's liabilities attributable to reinsurance ceded by United

States domiciled insurers, and in addition, the assuming insurer shall maintain a trusteed
surplus of not less than twenty million dollars, except as provided in subdivision b.
b. At any time after the assuming insurer has permanently discontinued underwriting new
business secured by the trust for at least three 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 may not be
reduced to an amount less than thirty percent of the assuming insurer's liabilities
attributable to reinsurance ceded by United States ceding insurers covered by the trust.
c. (1) The trust fund for a group, including incorporated and individual unincorporated
underwriters, must consist of:
(a) For reinsurance ceded under reinsurance agreements with an inception,
amendment, or renewal date on or after January 1, 1993, funds in trust in an
amount not less than the respective underwriters' several liabilities attributable
to business ceded by the 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 this chapter, funds in trust 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 a trusteed surplus of which
one hundred million dollars must 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 may not be engaged in any business other
than underwriting as a member of the group and must be subject to the same level
of regulation solvency control by the group's domiciliary regulator as are the
unincorporated members. The group shall, within ninety days after its financial
statements are due to be filed with the group's domiciliary regulator, provide to the
commissioner:
(a) An annual certification by the group's domiciliary regulator of the solvency of
each underwriter member of the group; or
(b) If a certification is unavailable, a financial statement prepared by independent
public accountants, of each underwriter member of the group.
d. (1) The trust fund for a group of incorporated insurers under common administration,
whose members possess aggregate policyholders surplus of ten billion dollars,
calculated and reported in substantially the same manner as prescribed by the
annual statement instructions and accounting practices and procedures manual of
the national association of insurance commissioners, and which has continuously

transacted an insurance business outside the United States for at least three years
immediately prior to making application for accreditation, must:
(a) Consist of funds in trust in an amount not less than the assuming insurers'
several liabilities attributable to business ceded by United States domiciled
ceding insurers to any members of the group pursuant to reinsurance contracts
issued in the name of the group;
(b) Maintain a joint trusteed surplus of which one hundred million dollars shall be
held jointly for the benefit of United States domiciled ceding insurers of any
member of the group; and
(c) File a properly executed form AR-1 as evidence of the submission to this
state's authority to examine the books and records of any of its members and
shall certify that any member examined will bear the expense of any
examination.
(2) Within ninety days after the statements are due to be filed with the group's
domiciliary regulator, the group shall file with the commissioner an annual
certification of each underwriter member's solvency by the members' domiciliary
regulators and financial statements, prepared by independent public accountants, of
each underwriter member of the group.
3. a. Credit for reinsurance shall not be granted unless the form of the trust and any
amendments to the trust have been approved by either the commissioner of the state
where the trust is domiciled or the commissioner of another state who, pursuant to the
terms of the trust instrument, has accepted responsibility for regulatory oversight of the
trust. The form of the trust and any trust amendments also shall be filed with the
commissioner of every state in which the ceding insurer beneficiaries of the trust are
domiciled. The trust instrument must provide that:
(1) Contested claims shall be valid and enforceable out of funds in trust to the extent
remaining unsatisfied thirty days after entry of the final order of any court of
competent jurisdiction in the United States;
(2) Legal title to the assets of the trust shall be vested in the trustee for the benefit of
the grantor's United States ceding insurers, their assigns and successors in interest;
(3) The trust shall be subject to examination as determined by the commissioner;
(4) The trust shall remain in effect for as long as the assuming insurer, or any member
or former member of a group of insurers, shall have outstanding obligations under
reinsurance agreements subject to the trust; and
(5) No later than February twenty-eighth of each year, the trustees of the trust shall
report to the commissioner in writing setting forth the balance in the trust and listing
the trust's investments at the preceding yearend, 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 thirty-first.
b. (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 this
subsection 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
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 over the trust or other designated receiver 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 over the trust in accordance with the laws of
the state in which the trust is domiciled applicable to the liquidation of domestic
insurance companies.
(3) If the commissioner with regulatory oversight over the trust determines that the
assets of the trust fund or any part thereof are not necessary to satisfy the claims of
the United States beneficiaries of the trust, the commissioner with regulatory
oversight over the trust shall return the assets, or any part thereof, to the trustee for
distribution in accordance with the trust agreement.
(4) The grantor shall waive any right otherwise available to it under United States law
that is inconsistent with this provision.
4. For purposes of this section, the term "liabilities" means the assuming insurer's gross liabilities
attributable to reinsurance ceded by United States domiciled insurers excluding liabilities that
are otherwise secured by acceptable means, and includes:
a. For business ceded by domestic insurers authorized to write accident and health and
property and casualty insurance:
(1) Losses and allocated loss expenses paid by the ceding insurer, recoverable from
the assuming insurer;
(2) Reserves for losses reported and outstanding;
(3) Reserves for losses incurred but not reported;
(4) Reserves for allocated loss expenses; and
(5) Unearned premiums.
b. For business ceded by domestic insurers authorized to write life, health, and annuity
insurance:
(1) Aggregate reserves for life policies and contracts net of policy loans and net due
and deferred premiums;
(2) Aggregate reserves for accident and health policies;
(3) Deposit funds and other liabilities without life or disability contingencies; and
(4) Liabilities for policy and contract claims.
5. Assets deposited in trusts established pursuant to North Dakota Century Code section
shall consist only of cash in United States dollars, certificates of deposit issued by a United
States financial institution as defined in subsection 1 of North Dakota Century Code section
26.1-31.2-03, clean, irrevocable, unconditional, and "evergreen" letters of credit issued or
confirmed by a qualified United States financial institution, as defined in subsection 1 of North
Dakota Century Code section 26.1-31.2-03, and investments of the type specified in this
subsection, but investments in or issued by an entity controlling, controlled by, or under
common control with either the grantor or beneficiary of the trust shall not exceed five percent
of total investments. No more than twenty percent of the total of the investments in the trust
may be foreign investments authorized under paragraph 5 of subdivision a, subdivision c,

paragraph 2 of subdivision f, and subdivision g, and no more than ten percent of the total of
the investments in the trust may be securities denominated in foreign currencies. For
purposes of applying the preceding sentence, a depository receipt denominated in United
States dollars and representing rights conferred by a foreign security shall be classified as a
foreign investment denominated in a foreign currency. The assets of a trust established to
satisfy the requirements of North Dakota Century Code section 26.1-31.2-01 shall be invested
only as follows:
a. Government obligations that are not in default as to principal or interest, that are valid
and legally authorized, and that are issued, assumed, or guaranteed by:
(1) The United States or by any agency or instrumentality of the United States;
(2) A state of the United States;
(3) A territory, possession, or other governmental unit of the United States;
(4) An agency or instrumentality of a governmental unit referred to in paragraphs 2 and
3 if the obligations shall be by law, statutory or otherwise, payable, as to both
principal and interest, from taxes levied or by law required to be levied or from
adequate special revenues pledged or otherwise appropriated or by law required to
be provided for making these payments, but shall not be obligations eligible for
investment under this paragraph if payable solely out of special assessments on
properties benefited by local improvements; or
(5) The government of any other country that is a member of the organization for
economic cooperation and development and whose government obligations are
rated A or higher, or the equivalent, by a rating agency recognized by the securities
valuation office of the national association of insurance commissioners.
b. Obligations that are issued in the United States, or that are dollar-denominated and
issued in a non-United States market, by a solvent United States institution other than an
insurance company or that are assumed or guaranteed by a solvent United States
institution other than an insurance company and that are not in default as to principal or
interest if the obligations:
(1) Are rated A or higher or the equivalent by a securities rating agency recognized by
the securities valuation office of the national association of insurance
commissioners, or if not so rated, are similar in structure and other material respects
to other obligations of the same institution that are so rated;
(2) Are insured by at least one authorized insurer, other than the investing insurer or a
parent, subsidiary, or affiliate of the investing insurer, licensed to insure obligations
in this state and, after considering the insurance, are rated AAA or the equivalent by
a securities rating agency recognized by the securities valuation office of the
national association of insurance commissioners; or
(3) Have been designated as class one or class two by the securities valuation office of
the national association of insurance commissioners.
c. Obligations issued, assumed, or guaranteed by a solvent non-United States institution
chartered in a country that is a member of the organization for economic cooperation and
development or obligations of United States corporations issued in a non-United States
currency, provided that in either case the obligations are rated A or higher, or the
equivalent, by a rating agency recognized by the securities valuation office of the national
association of insurance commissioners.

d. An investment made pursuant to the provisions of subdivisions a, b, or c shall be subject
to the following additional limitations:
(1) An investment in or loan upon the obligations of an institution other than an
institution that issues mortgage-related securities shall not exceed five percent of
the assets of the trust;
(2) An investment in any one mortgage-related security shall not exceed five percent of
the assets of the trust;
(3) The aggregate total investment in mortgage-related securities shall not exceed
twenty-five percent of the assets of the trust; and
(4) Preferred or guaranteed shares issued or guaranteed by a solvent United States
institution are permissible investments if all of the institution's obligations are eligible
as investments under paragraphs 1 and 3 of subdivision b, but shall not exceed two
percent of the assets of the trust.
e. As used in this section:
(1) "Mortgage-related security" means an obligation that is rated AA or higher or the
equivalent by a securities rating agency recognized by the securities valuation office
of the national association of insurance commissioners and that either:
(a) Represents ownership of one or more promissory notes or certificates of
interest or participation in the notes, including any rights designed to assure
servicing of, or the receipt or timeliness of receipt by the holders of the notes,
certificates, or participation of amounts payable under, the notes, certificates,
or participation, that:
[1] Are directly secured by a first lien on a single parcel of real estate,
including stock allocated to a dwelling unit in a residential cooperative
housing corporation, upon which is located a dwelling or mixed residential
and commercial structure, or on a residential manufactured home as
defined in 42 U.S.C. section 5402(6), whether the manufactured home is
considered real or personal property under the laws of the state in which it
is located; and
[2] Were originated by a savings and loan association, savings bank,
commercial bank, credit union, insurance company, or similar institution
that is supervised and examined by a federal or state housing authority, or
by a mortgagee approved by the secretary of housing and urban
development pursuant to 12 U.S.C. sections 1709 and 1715-b, or, when
the notes involve a lien on the manufactured home, by an institution or by
a financial institution approved for insurance by the secretary of housing
and urban development pursuant to 12 U.S.C. section 1703; or
(b) Is secured by one or more promissory notes or certificates of deposit or
participations in the notes, with or without recourse to the insurer of the notes,
and, by its terms, provides for payments of principal in relation to payments, or
reasonable projections of payments, or notes meeting the requirements of
subparagraph a.
(2) "Promissory note", when used in connection with a manufactured home, shall also
include a loan, advance, or credit sale as evidenced by a retail installment sales
contract or other instrument.

f. Equity interests.
(1) Investments in common shares or partnership interests of a solvent United States
institution are permissible if:
(a) Its obligations and preferred shares, if any, are eligible as investments under
this subsection; and
(b) The equity interests of the institution, except an insurance company, are
registered on a national securities exchange as provided in the Securities
Exchange Act of 1934, 15 U.S.C. § 78a to 78kk or otherwise registered
pursuant to that Act, and if otherwise registered, price quotations for them are
furnished through a nationwide automated quotations system approved by the
financial industry regulatory authority, or successor organization. A trust shall
not invest in equity interests under this paragraph an amount exceeding one
percent of the assets of the trust even though the equity interests are not so
registered and are not issued by an insurance company.
(2) Investments in common shares of a solvent institution organized under the laws of a
country that is a member of the organization for economic cooperation and
development, if:
(a) All its obligations are rated A or higher, or the equivalent, by a rating agency
recognized by the securities valuation office of the national association of
insurance commissioners; and
(b) The equity interests of the institution are registered on a securities exchange
regulated by the government of a country that is a member of the organization
for economic cooperation and development.
(3) An investment in or loan upon any one institution's outstanding equity interests shall
not exceed one percent of the assets of the trust. The cost of an investment in
equity interests made pursuant to this paragraph, when added to the aggregate cost
of other investments in equity interests then held pursuant to this paragraph, shall
not exceed ten percent of the assets in the trust.
g. Obligations issued, assumed, or guaranteed by a multinational development bank,
provided the obligations are rated A or higher, or the equivalent, by a rating agency
recognized by the securities valuation office of the national association of insurance
commissioners.
h. Investment companies.
(1) Securities of an investment company registered pursuant to the Investment
Company Act of 1940, 15 U.S.C. section 80a, are permissible investments if the
investment company:
(a) Invests at least ninety percent of its assets in the types of securities that qualify
as an investment under subdivision a, b, or c or invests in securities that are
determined by the commissioner to be substantively similar to the types of
securities set forth in subdivision a, b, or c; or
(b) Invests at least ninety percent of its assets in the types of equity interests that
qualify as an investment under paragraph 1 of subdivision f.
(2) Investments made by a trust in investment companies under this paragraph shall
not exceed the following limitations:

(a) An investment in an investment company qualifying under subparagraph a of
paragraph 1 shall not exceed ten percent of the assets in the trust and the
aggregate amount of investment in qualifying investment companies shall not
exceed twenty-five percent of the assets in the trust; and
(b) Investments in an investment company qualifying under subparagraph b of
paragraph 1 shall not exceed five percent of the assets in the trust and the
aggregate amount of investment in qualifying investment companies shall be
included when calculating the permissible aggregate value of equity interests
pursuant to paragraph 1 of subdivision f.
i. Letters of credit.
(1) In order for a letter of credit to qualify as an asset of the trust, the trustee must have
the right and the obligation pursuant to the deed of trust or some other binding
agreement, as duly approved by the commissioner, to immediately draw down the
full amount of the letter of credit and hold the proceeds in trust for the beneficiaries
of the trust if the letter of credit will otherwise expire without being renewed or
replaced.
(2) The trust agreement shall provide that the trustee shall be liable for its negligence,
willful misconduct, or lack of good faith. The failure of the trustee to draw against the
letter of credit in circumstances in which a draw would be required shall be deemed
to be negligence or willful misconduct.
6. A specific security provided to a ceding insurer by an assuming insurer pursuant to section
insurer to the ceding insurer holding the specific security prior to, and as a condition precedent
for, presentation of a claim by the ceding insurer for payment by a trustee of a trust
established by the assuming insurer pursuant to this section.
History: Effective October 1, 1995; amended effective December 1, 2001; October 1, 2002; January 1,
2016; April 1, 2022.
General Authority: NDCC 26.1-31.2-04
Law Implemented: NDCC 26.1-31.2
### § 45-03-07.1-04.1. Credit for reinsurance - Certified reinsurers.

1. Pursuant to subsection 6 of North Dakota Century Code Section 26.1-31.2-01, the
commissioner shall allow credit for reinsurance ceded by a domestic insurer to an assuming
insurer that has been certified as a reinsurer in this state at all times for which statutory
financial statement credit for reinsurance is claimed under this section. The credit allowed
shall be based upon the security held by or on behalf of the ceding insurer in accordance with
a rating assigned to the certified reinsurer by the commissioner. The security shall be in a form
consistent with the provisions of subsection 6 of North Dakota Century Code section
45-03-07.1-07, 45-03-07.1-08, or 45-03-07.1-09. The amount of security required in order for
full credit to be allowed shall correspond with the following requirements:
a. Ratings Security Required
Secure - 1 0%
Secure - 2 10%
Secure - 3 20%

Secure - 4 50%
Secure - 5 75%
Vulnerable - 6 100%
b. Affiliated reinsurance transactions shall receive the same opportunity for reduced security
requirements as all other reinsurance transactions.
c. The commissioner shall require the certified reinsurer to post one hundred percent, for
the benefit of the ceding insurer or its estate, security upon the entry of an order of
rehabilitation, liquidation, or conservation against the ceding insurer.
d. In order to facilitate the prompt payment of claims, a certified reinsurer shall not be
required to post security for catastrophe recoverables for a period of one year from the
date of the first instance of a liability reserve entry by the ceding company as a result of a
loss from a catastrophic occurrence as recognized by the commissioner. The one year
deferral period is contingent upon the certified reinsurer continuing to pay claims in a
timely manner. Reinsurance recoverables for only the following lines of business as
reported on the national association of insurance commissioners annual financial
statement related specifically to the catastrophic occurrence will be included in the
deferral:
(1) Line 1: Fire.
(2) Line 2: Allied lines.
(3) Line 3: Farmowners multiple peril.
(4) Line 4: Homeowners multiple peril.
(5) Line 5: Commercial multiple peril.
(6) Line 9: Inland marine.
(7) Line 12: Earthquake.
(8) Line 21: Auto physical damage.
e. Credit for reinsurance under this section shall apply only to reinsurance contracts entered
into or renewed on or after the effective date of the certification of the assuming insurer.
Any reinsurance contract entered into prior to the effective date of the certification of the
assuming insurer that is subsequently amended after the effective date of the certification
of the assuming insurer, or a new reinsurance contract, covering any risk for which
collateral was provided previously, shall only be subject to this section with respect to
losses incurred and reserves reported from and after the effective date of the
amendment or new contract.
f. Nothing in this section shall prohibit the parties to a reinsurance agreement from
agreeing to provisions establishing security requirements that exceed the minimum
security requirements established for certified reinsurers under this section.
2. Certification procedure.
a. The commissioner shall post notice on the insurance department's website promptly
upon receipt of any application for certification, including instructions on how members of
the public may respond to the application. The commissioner may not take final action on

the application until at least thirty days after posting the notice required by this
subdivision.
b. The commissioner shall issue written notice to an assuming insurer that has made
application and been approved as a certified reinsurer. Included in the notice shall be the
rating assigned the certified reinsurer in accordance with subsection 1. The
commissioner shall publish a list of all certified reinsurers and their ratings.
c. In order to be eligible for certification, the assuming insurer shall meet the following
requirements:
(1) The assuming insurer must be domiciled and licensed to transact insurance or
reinsurance in a qualified jurisdiction, as determined by the commissioner pursuant
to subsection 3.
(2) The assuming insurer must maintain capital and surplus, or its equivalent, of no less
than two hundred fifty million dollars calculated in accordance with paragraph 8 of
subdivision d. This requirement may also be satisfied by an association including
incorporated and individual unincorporated underwriters having minimum capital
and surplus equivalents, net of liabilities, of at least two hundred fifty million dollars
and a central fund containing a balance of at least two hundred fifty million dollars.
(3) The assuming insurer must maintain financial strength ratings from two or more
rating agencies deemed acceptable by the commissioner. These ratings shall be
based on interactive communication between the rating agency and the assuming
insurer and shall not be based solely on publicly available information. These
financial strength ratings will be one factor used by the commissioner in determining
the rating that is assigned to the assuming insurer. Acceptable rating agencies
include the following:
(a) Standard & Poor's;
(b) Moody's Investors Service;
(c) Fitch Ratings;
(d) A.M. Best Company; or
(e) Any other nationally recognized statistical rating organization.
(4) The certified reinsurer must comply with any other requirements reasonably
imposed by the commissioner.
d. Each certified reinsurer shall be rated on a legal entity basis, with due consideration
being given to the group rating where appropriate, except that an association including
incorporated and individual unincorporated underwriters that has been approved to do
business as a single certified reinsurer may be evaluated on the basis of its group rating.
Factors that may be considered as part of the evaluation process include the following:
(1) The certified reinsurer's financial strength rating from an acceptable rating agency.
The maximum rating that a certified reinsurer may be assigned will correspond to its
financial strength rating as outlined in the table below. The commissioner shall use
the lowest financial strength rating received from an approved rating agency in
establishing the maximum rating of a certified reinsurer. A failure to obtain or
maintain at least two financial strength ratings from acceptable rating agencies will
result in loss of eligibility for certification.

Ratings Best S&P Moody's Fitch
Secure - 1 A++ AAA Aaa AAA
Secure - 2 A+ AA+, AA, AA- Aa1, Aa2, Aa3 AA+, AA, AA-
Secure - 3 A A+, A A1, A2 A+, A
Secure - 4 A- A- A3 A-
Secure - 5 B++, B+ BBB+, BBB, Baa1, Baa2, BBB+, BBB,
BBB- Baa3 BBB-
Vulnerable - 6 B, B-, C++, C+, BB+, BB, BB-, Ba1, Ba2, Ba3, BB+, BB, BB-,
CCC, CC, C, Caa, Ca, C CCC+, CC,
(2) The business practices of the certified reinsurer in dealing with its ceding insurers,
including its record of compliance with reinsurance contractual terms and
obligations;
(3) For certified reinsurers domiciled in the United States, a review of the most recent
applicable national association of insurance commissioners annual statement blank,
either schedule F for property and casualty reinsurers, or schedule S for life and
health reinsurers;
(4) For certified reinsurers not domiciled in the United States, a review annually of form
CR-F for property and casualty reinsurers, or form CR-S for life and health
reinsurers, attached as exhibits to this chapter;
(5) The reputation of the certified reinsurer for prompt payment of claims under
reinsurance agreements, based on an analysis of ceding insurers' schedule F
reporting of overdue reinsurance recoverables, including the proportion of
obligations that are more than ninety days past due or are in dispute. with specific
attention given to obligations payable to companies that are in administrative
supervision or receivership;
(6) Regulatory actions against the certified reinsurer;
(7) The report of the independent auditor on the financial statements of the insurance
enterprise, on the basis described in paragraph 8;
(8) For certified reinsurers not domiciled in the United States, audited financial
statements, regulatory filings, and actuarial opinion as filed with the non-United
States jurisdiction supervisor, with a translation into English.
Upon the initial application for certification, the commissioner will consider audited
financial statements for the last two years filed with its non-United States jurisdiction
supervisor;
(9) The liquidation priority of obligations to a ceding insurer in the certified reinsurer's
domiciliary jurisdiction in the context of an insolvency proceeding;
(10) A certified reinsurer's participation in any solvent scheme of arrangement, or similar
procedure, which involves United States ceding insurers. The commissioner shall
receive prior notice from a certified reinsurer that proposes participation by the
certified reinsurer in a solvent scheme of arrangement; and

(11) Any other information deemed relevant by the commissioner.
e. Based on the analysis conducted under paragraph 5 of subdivision d of a certified
reinsurer's reputation for prompt payment of claims, the commissioner may make
appropriate adjustments in the security the certified reinsurer is required to post to
protect its liabilities to United States ceding insurers, provided that the commissioner
shall, at a minimum, increase the security the certified reinsurer is required to post by
one rating level under paragraph 1 of subdivision d if the commissioner finds that:
(1) More than fifteen percent of the certified reinsurer's ceding insurance clients have
overdue reinsurance recoverables on paid losses of ninety days or more which are
not in dispute and which exceed one hundred thousand dollars for each cedent; or
(2) The aggregate amount of reinsurance recoverables on paid losses which are not in
dispute that are overdue by ninety days or more exceeds fifty million dollars.
f. The assuming insurer must submit a properly executed form CR-1, attached as an
exhibit to this chapter, as evidence of its submission to the jurisdiction of this state,
appointment of the commissioner as an agent for service of process in this state, and
agreement to provide security for one hundred percent 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. The commissioner shall not certify any
assuming insurer that is domiciled in a jurisdiction that the commissioner has determined
does not adequately and promptly enforce final United States judgments or arbitration
awards.
g. The certified reinsurer must 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. All information submitted by certified reinsurers which are not
otherwise public information subject to disclosure shall be exempted from disclosure
under North Dakota Century Code section 44-04-18 and shall be withheld from public
disclosure. The applicable information filing requirements are, as follows:
(1) Notification within ten days of any regulatory actions taken against the certified
reinsurer, any change in the provisions of its domiciliary license or any change in
rating by an approved rating agency, including a statement describing the changes
and the reasons therefor;
(2) Annually, form CR-F or CR-S, as applicable;
(3) Annually, the report of the independent auditor on the financial statements of the
insurance enterprise, on the basis described in paragraph 4;
(4) Annually, the most recent audited financial statements, regulatory filings, and
actuarial opinion as filed with the certified reinsurer's supervisor,with a translation
into English.
Upon the initial certification, audited financial statements for the last two years filed
with the certified reinsurer's supervisor;
(5) At least annually, an updated list of all disputed and overdue reinsurance claims
regarding reinsurance assumed from United States domestic ceding insurers;
(6) A certification from the certified reinsurer's domestic regulator that the certified
reinsurer is in good standing and maintains capital in excess of the jurisdiction's
highest regulatory action level; and

(7) Any other information that the commissioner may reasonably require.
h. Change in rating or revocation of certification.
(1) In the case of a downgrade by a rating agency or other disqualifying circumstance,
the commissioner shall upon written notice assign a new rating to the certified
reinsurer in accordance with the requirements of paragraph 1 of subdivision d.
(2) The commissioner shall have the authority to suspend, revoke, or otherwise modify
a certified reinsurer's certification at any time if the certified reinsurer fails to meet its
obligations or security requirements under this section, or if other financial or
operating results of the certified reinsurer, or documented significant delays in
payment by the certified reinsurer, lead the commissioner to reconsider the certified
reinsurer's ability or willingness to meet its contractual obligations.
(3) If the rating of a certified reinsurer is upgraded by the commissioner, the certified
reinsurer may meet the security requirements applicable to its new rating on a
prospective basis, but the commissioner shall require the certified reinsurer to post
security under the previously applicable security requirements as to all contracts in
force on or before the effective date of the upgraded rating. If the rating of a certified
reinsurer is downgraded by the commissioner, the commissioner shall require the
certified reinsurer to meet the security requirements applicable to its new rating for
all business it has assumed as a certified reinsurer.
(4) Upon revocation of the certification of a certified reinsurer by the commissioner, the
assuming insurer shall be required to post security in accordance with section
reinsurance ceded to the assuming insurer. If funds continue to be held in trust in
accordance with section 45-03-07.1-04, the commissioner may allow additional
credit equal to the ceding insurer's pro rata share of the funds, discounted to reflect
the risk of uncollectibility and anticipated expenses of trust administration.
Notwithstanding the change of a certified reinsurer's rating or revocation of its
certification, a domestic insurer that has ceded reinsurance to that certified reinsurer
may not be denied credit for reinsurance for a period of three months for all
reinsurance ceded to that certified reinsurer, unless the reinsurance is found by the
commissioner to be at high risk of uncollectibility.
3. Qualified jurisdictions.
a. If, upon conducting an evaluation under this section with respect to the reinsurance
supervisory system of any non-United States assuming insurer, the commissioner
determines that the jurisdiction qualifies to be recognized as a qualified jurisdiction, the
commissioner shall publish notice and evidence of the recognition in an appropriate
manner. The commissioner may establish a procedure to withdraw recognition of those
jurisdictions that are no longer qualified.
b. 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 reinsurance supervisory system of the non-United States 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. The commissioner shall determine the appropriate
approach for evaluating the qualifications of jurisdictions, and create and publish a list of
jurisdictions whose reinsurers may be approved by the commissioner as eligible for
certification. A qualified jurisdiction must agree to share information and cooperate with
the commissioner with respect to all certified reinsurers domiciled within that jurisdiction.

Additional factors to be considered in determining whether to recognize a qualified
jurisdiction, in the discretion of the commissioner, include the following:
(1) The framework under which the assuming insurer is regulated.
(2) The structure and authority of the domiciliary regulator with regard to solvency
regulation requirements and financial surveillance.
(3) The substance of financial and operating standards for assuming insurers in the
domiciliary jurisdiction.
(4) The form and substance of financial reports required to be filed or made publicly
available by reinsurers in the domiciliary jurisdiction and the accounting principles
used.
(5) The domiciliary regulator's willingness to cooperate with United States regulators in
general and the commissioner in particular.
(6) The history of performance by assuming insurers in the domiciliary jurisdiction.
(7) Any documented evidence of substantial problems with the enforcement of final
United States judgments in the domiciliary jurisdiction. A jurisdiction will not be
considered to be a qualified jurisdiction if the commissioner has determined that it
does not adequately and promptly enforce final United States judgments or
arbitration awards.
(8) Any relevant international standards or guidance with respect to mutual recognition
of reinsurance supervision adopted by the international association of insurance
supervisors or successor organization.
(9) Any other matters deemed relevant by the commissioner.
c. A list of qualified jurisdictions shall be published through the national association of
insurance commissioners 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 with respect to the criteria provided under
paragraphs 1 through 9 of subdivision b.
d. United States jurisdictions that meet the requirements for accreditation under the national
association of insurance commissioners financial standards and accreditation program
shall be recognized as qualified jurisdictions.
4. Recognition of certification issued by a national association of insurance commissioners
accredited jurisdiction.
a. If an applicant for certification has been certified as a reinsurer in a national association
of insurance commissioners accredited jurisdiction, the commissioner has the discretion
to defer to that jurisdiction's certification, and to defer to the rating assigned by that
jurisdiction, if the assuming insurer submits a properly executed form CR-1 and the
additional information as the commissioner requires. The assuming insurer shall be
considered to be a certified reinsurer in this state.
b. Any change in the certified reinsurer's status or rating in the other jurisdiction shall apply
automatically in this state as of the date it takes effect in the other jurisdiction. The
certified reinsurer shall notify the commissioner of any change in its status or rating within
ten days after receiving notice of the change.

c. The commissioner may withdraw recognition of the other jurisdiction's rating at any time
and assign a new rating in accordance with paragraph 1 of subdivision g of subsection 2.
d. The commissioner may withdraw recognition of the other jurisdiction's certification at any
time, with written notice to the certified reinsurer. Unless the commissioner suspends or
revokes the certified reinsurer's certification in accordance with paragraph 2 of
subdivision g of subsection 2, the certified reinsurer's certification shall remain in good
standing in this state for a period of three months, which shall be extended if additional
time is necessary to consider the assuming insurer's application for certification in this
state.
5. Mandatory funding clause. In addition to the clauses required under section 45-03-07.1-10,
reinsurance contracts entered into or renewed under this section shall include a proper
funding clause, which requires the certified reinsurer to provide and maintain security in an
amount sufficient to avoid the imposition of any financial statement penalty on the ceding
insurer under this section for reinsurance ceded to the certified reinsurer.
6. The commissioner shall comply with all reporting and notification requirements that may be
established by the national association of insurance commissioners with respect to certified
reinsurers and qualified jurisdictions.
History: Effective January 1, 2016; amended effective April 1, 2017; April 1, 2022.
General Authority: NDCC 26.1-31.2-04
Law Implemented: NDCC 26.1-31.2
### § 45-03-07.1-04.2. Credit for reinsurance - Reciprocal jurisdictions.

1. Pursuant to subsection 7 of North Dakota Century Code section 26.1-31.2-01, the
commissioner shall allow credit for reinsurance ceded by a domestic insurer to an assuming
insurer that is licensed to write reinsurance by, and has its head office or is domiciled in, a
reciprocal jurisdiction, and which meets the other requirements of this rule.
2. A "reciprocal jurisdiction" is a jurisdiction, as designated by the commissioner pursuant to
subdivision d, that meets one of the following:
a 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.
b. For purposes of this subsection, a "covered agreement" is an agreement entered into
pursuant to the 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 state or for allowing the ceding insurer to recognize credit for reinsurance;
c. A United States jurisdiction that meets the requirements for accreditation under the
national association of insurance commissioners financial standards and accreditation
program; or
d. A qualified jurisdiction, as determined by the commissioner pursuant to subdivision c of
subsection 6 of North Dakota Century Code section 26.1-31.2-01 and subsection 3 of
section 45-03-07.1-04.1, which is not otherwise described in subdivision a or b and which
the commissioner determines meets all of the following additional requirements:

(1) Provides that an insurer which has its head office or is domiciled in such qualified
jurisdiction shall receive credit for reinsurance ceded to a United States-domiciled
assuming insurer in the same manner as credit for reinsurance is received for
reinsurance assumed by insurers domiciled in such qualified jurisdiction;
(2) Does not require a United States-domiciled assuming insurer to establish or
maintain a local presence as a condition for entering into a reinsurance agreement
with any ceding insurer subject to regulation by the non-United States jurisdiction or
as a condition to allow the ceding insurer to recognize credit for such reinsurance;
(3) Recognizes the United States state regulatory approach to group supervision and
group capital, by providing written confirmation by a competent regulatory authority,
in such qualified jurisdiction, that insurers and insurance groups that are domiciled
or maintain their headquarters in this state or another jurisdiction accredited by the
national association of insurance commissioners shall be subject only to worldwide
prudential insurance group supervision, including worldwide group governance,
solvency and capital, and reporting, as applicable, by the commissioner or the
commissioner of the domiciliary state and will not be subject to group supervision at
the level of the worldwide parent undertaking of the insurance or reinsurance group
by the qualified jurisdiction; and
(4) Provides written confirmation by a competent regulatory authority in such qualified
jurisdiction that information regarding insurers and their parent, subsidiary, or
affiliated entities, if applicable, shall be provided to the commissioner in accordance
with a memorandum of understanding or similar document between the
commissioner and such qualified jurisdiction, including the International Association
of Insurance Supervisors Multilateral Memorandum of Understanding or other
multilateral memoranda of understanding coordinated by the national association of
insurance commissioners.
3. Credit must be allowed when the reinsurance is ceded from an insurer domiciled in this state
to an assuming insurer meeting each of the conditions set forth below.
a. The assuming insurer must be licensed to transact reinsurance by, and have its head
office or be domiciled in, a reciprocal jurisdiction.
b. The assuming insurer must have and maintain on an ongoing basis minimum capital and
surplus, or its equivalent, calculated on at least an annual basis as of the preceding
December thirty-first or at the annual date otherwise statutorily reported to the reciprocal
jurisdiction, and confirmed as set forth in subdivision g according to the methodology of
its domiciliary jurisdiction, in the following amounts:
(1) No less than two hundred fifty million dollars; or
(2) If the assuming insurer is an association, including incorporated and individual
unincorporated underwriters:
(a) Minimum capital and surplus equivalents (net of liabilities) or own funds of the
equivalent of at least two hundred fifty million dollars; and
(b) A central fund containing a balance of the equivalent of at least two hundred
and fifty million dollars.
c. The assuming insurer must have and maintain on an ongoing basis a minimum solvency
or capital ratio, as applicable, as follows:

(1) If the assuming insurer has its head office or is domiciled in a reciprocal jurisdiction
as defined in subdivision a of subsection 2, the ratio specified in the applicable
covered agreement;
(2) If the assuming insurer is domiciled in a reciprocal jurisdiction as defined in
subdivision b of subsection 2, a risk-based capital ratio of three hundred percent of
the authorized control level, calculated in accordance with the formula developed by
the national association of insurance commissioners; or
(3) If the assuming insurer is domiciled in a reciprocal jurisdiction as defined in
subdivision c of subsection 2, after consultation with the reciprocal jurisdiction and
considering any recommendations published through the national association of
insurance commissioners committee process, such solvency or capital ratio as the
commissioner determines to be an effective measure of solvency.
d. The assuming insurer must agree to and provide adequate assurance, in the form of a
properly executed Form RJ-1, attached as an exhibit to this chapter, of its agreement to
the following:
(1) The assuming insurer must agree to provide prompt written notice and explanation
to the commissioner if it falls below the minimum requirements set forth in
subdivision b or c, or if any regulatory action is taken against it for serious
noncompliance with applicable law.
(2) The assuming insurer must 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.
(a) The commissioner may also require that such consent be provided and
included in each reinsurance agreement under the commissioner's jurisdiction.
(b) Nothing in this provision shall 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 must consent in writing to pay all final judgments, wherever
enforcement is sought, obtained by a ceding insurer, that have been declared
enforceable in the territory where the judgment was obtained.
(4) Each reinsurance agreement must include a provision requiring the assuming
insurer to provide security in an amount equal to one hundred percent of the
assuming insurer's liabilities 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 estate, if applicable.
(5) The assuming insurer must confirm that it is not presently participating in any
solvent scheme of arrangement, which involves this state's ceding insurers, and
agrees to notify the ceding insurer and the commissioner and to provide one
hundred percent security to the ceding insurer consistent with the terms of the
scheme, should the assuming insurer enter into such a solvent scheme of
arrangement. Such security must be in a form consistent with the provisions of
subsection 6 of North Dakota Century Code section 26.1-31.2-01 and North Dakota
Century Code section 26.1-31.2-02 and sections 45-03-07.1-07, 45-03-07.1-08 and
### § 45-03-07.1-09. For purposes of this regulation, the term "solvent scheme of


arrangement" means a foreign or alien statutory or regulatory compromise
procedure subject to requisite majority creditor approval and judicial sanction in the
assuming insurer's home jurisdiction either to finally commute liabilities of duly
noticed classed members or creditors of a solvent debtor, or to reorganize or
restructure the debts and obligations of a solvent debtor on a final basis, and which
may be subject to judicial recognition and enforcement of the arrangement by a
governing authority outside the ceding insurer's home jurisdiction.
(6) The assuming insurer must agree in writing to meet the applicable information filing
requirements as set forth in subdivision e.
e. The assuming insurer or its legal successor must provide, if requested by the
commissioner, on behalf of itself and any legal predecessors, the following
documentation to the commissioner:
(1) For the two years preceding entry into the reinsurance agreement and on an annual
basis thereafter, the assuming insurer's annual audited financial statements, in
accordance with the applicable law of the jurisdiction of its head office or domiciliary
jurisdiction, as applicable, including the external audit report;
(2) For the two years preceding entry into the reinsurance agreement, the solvency and
financial condition report or actuarial opinion, if filed with the assuming insurer's
supervisor;
(3) Before entry into the reinsurance agreement and not more than semiannually
thereafter, an updated list of all disputed and overdue reinsurance claims
outstanding for ninety days or more, regarding reinsurance assumed from ceding
insurers domiciled in the United States; and
(4) Before entry into the reinsurance agreement and not more than semiannually
thereafter, information regarding the assuming insurer's assumed reinsurance by
ceding insurer, ceded reinsurance by the assuming insurer, and reinsurance
recoverable on paid and unpaid losses by the assuming insurer to allow for the
evaluation of the criteria set forth in subdivision f.
f. The assuming insurer must maintain a practice of prompt payment of claims under
reinsurance agreements. The lack of prompt payment will be evidenced if any of the
following criteria is met:
(1) More than fifteen percent of the reinsurance recoverables from the assuming insurer
are overdue and in dispute as reported to the commissioner;
(2) More than fifteen percent of the assuming insurer's ceding insurers or reinsurers
have overdue reinsurance recoverable on paid losses of ninety days or more which
are not in dispute and which exceed for each ceding insurer one hundred thousand
dollars, or as otherwise specified in a covered agreement; or
(3) The aggregate amount of reinsurance recoverable on paid losses which are not in
dispute, but are overdue by ninety days or more, exceeds fifty million dollars, or as
otherwise specified in a covered agreement.
g. The assuming insurer's supervisory authority must confirm to the commissioner on an
annual basis that the assuming insurer complies with the requirements set forth in
subdivisions a and b.
h. Nothing in this provision precludes an assuming insurer from providing the commissioner
with information on a voluntary basis.

4. 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 commissioner's list must include any reciprocal
jurisdiction as defined under subdivisions a and b of subsection 2, and must 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 national association of insurance commissioners list of reciprocal jurisdictions as
provided by applicable law, regulation, or in accordance with criteria published through
the national association of insurance commissioners committee process.
b. The commissioner may remove a jurisdiction from the list of reciprocal jurisdictions upon
a determination that the jurisdiction no longer meets one or more of the requirements of a
reciprocal jurisdiction, as provided by applicable law, regulation, or in accordance with a
process published through the national association of insurance commissioners
committee process, except that the commissioner may not remove from the list a
reciprocal jurisdiction as defined under subdivisions a and b of subsection 2. Upon
removal of a reciprocal jurisdiction from this list, credit for reinsurance ceded to an
assuming insurer domiciled in that jurisdiction must be allowed, if otherwise allowed
pursuant to North Dakota Century Code chapter 26.1-31.2 or chapter 45-03-07.1.
5. 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 must be granted credit in
accordance with this section.
a. If a national association of insurance commissioners accredited jurisdiction has
determined that the conditions set forth in subsection 3 have been met, the
commissioner has the discretion to defer to that jurisdiction's determination, and add
such assuming insurer to the list of assuming insurers to which cessions must be granted
credit in accordance with this subsection. The commissioner may accept financial
documentation filed with another national association of insurance commissioners
accredited jurisdiction or with the national association of insurance commissioners in
satisfaction of the requirements of subsection 3.
b. When requesting that the commissioner defer to another national association of
insurance commissioners accredited jurisdiction's determination, an assuming insurer
shall submit a properly executed Form RJ-1 and additional information as the
commissioner may require. A state that has received such a request will notify other
states through the national association of insurance commissioners committee process
and provide relevant information with respect to the determination of eligibility.
6. 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.
a. While an assuming insurer's eligibility 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 assuming insurer's obligations under the contract are secured in
accordance with section 45-03-07.1-06.
b. If an assuming insurer's eligibility 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
before the date of revocation, except to the extent that the assuming insurer's obligations
under the contract are secured in a form acceptable to the commissioner and consistent
with the provisions of section 45-03-07.1-06.

7. Before denying statement credit or imposing a requirement to post security under
subsection 6 or adopting any similar requirement that will have substantially the same
regulatory impact as security, the commissioner shall:
a. Communicate with the ceding insurer, the assuming insurer, and the assuming insurer's
supervisory authority that the assuming insurer no longer satisfies one of the conditions
listed in subsection 3;
b. Provide the assuming insurer with thirty days from the initial communication to submit a
plan to remedy the defect, and ninety days from the initial communication to remedy the
defect, except in exceptional circumstances in which a shorter period is necessary for
policyholder and other consumer protection;
c. After the expiration of ninety days or less, as set out in subdivision b if the commissioner
determines that no or insufficient action was taken by the assuming insurer, the
commissioner may impose any of the requirements as set out in this subsection; and
d Provide a written explanation to the assuming insurer of any of the requirements set out
in this subsection.
8. 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 liabilities.
History: Effective April 1, 2022.
General Authority: NDCC 26.1-31.2-04
Law Implemented: NDCC 26.1-31.2
### § 45-03-07.1-05. Credit for reinsurance required by law.

Pursuant to subsection 7 of North Dakota Century Code section 26.1-31.2-01, the commissioner
shall allow credit for reinsurance ceded by a domestic insurer to an assuming insurer not meeting the
requirements of subsections 2, 3, 4, 5, and 6 of North Dakota Century Code section 26.1-31.2-01, 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. As used in this section, "jurisdiction" means state,
district, or territory of the United States and any lawful national government.
History: Effective October 1, 1995; amended effective October 1, 2002; January 1, 2016; April 1, 2022.
General Authority: NDCC 26.1-31.2-04
Law Implemented: NDCC 26.1-31.2
### § 45-03-07.1-06. Asset or reduction from liability for reinsurance ceded to an unauthorized

assuming insurer not meeting the requirements of sections 45-03-07.1-01 through 45-03-07.1-05.
1. Pursuant to North Dakota Century Code section 26.1-31.2-02, the commissioner shall allow a
reduction from liability for reinsurance ceded by a domestic insurer to an assuming insurer not
meeting the requirements of North Dakota Century Code section 26.1-31.2-01 in an amount
not exceeding the liabilities carried by the ceding insurer. The reduction must be in the amount
of funds held by or on behalf of the ceding insurer, including funds held in trust for the
exclusive benefit of the ceding insurer, under a reinsurance contract with the assuming insurer
as security for the payment of obligations under the reinsurance contract. The security must
be 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
as defined in subsection 2 of North Dakota Century Code section 26.1-31.2-03. This security
may be in the form of any of the following:

a. Cash;
b. 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;
c. Clean, irrevocable, unconditional, and "evergreen" letters of credit issued or confirmed by
a qualified United States institution, as defined in subsection 1 of North Dakota Century
Code section 26.1-31.2-03, effective no later than December thirty-first of the year for
which filing is being made, and in the possession of, or in trust for, the ceding insurer on
or before the filing date of its annual statement. Letters of credit meeting applicable
standards of issuer acceptability as of the dates of their issuance or confirmation, shall,
notwithstanding the issuing or confirming institution's subsequent failure to meet
applicable standards of issuer acceptability, continue to be acceptable as security until
their expiration, extension, renewal, modification, or amendment, whichever occurs first;
or
d. Any other form of security acceptable to the commissioner.
2. An admitted asset or a reduction from liability for reinsurance ceded to an unauthorized
assuming insurer pursuant to this section shall be allowed only when the requirements of
section 45-03-07.1-10 and the applicable portions of sections 45-03-07.1-07, 45-03-07.1-08,
or 45-03-07.1-09 have been satisfied.
History: Effective October 1, 1995; amended effective December 1, 2001; October 1, 2002; January 1,
2016.
General Authority: NDCC 26.1-31.2-04
Law Implemented: NDCC 26.1-31.2
### § 45-03-07.1-07. Trust agreements qualified under section 45-03-07.

1-06.
1. As used in this section:
a. "Beneficiary" means the entity for whose sole benefit the trust has been established and
any successor of the beneficiary by operation of law. If a court of law appoints a
successor in interest to the named beneficiary, then the named beneficiary includes and
is limited to the court-appointed domiciliary receiver, conservator, rehabilitator, or
liquidator.
b. "Grantor" means the entity that has established a trust for the sole benefit of the
beneficiary. When established in conjunction with a reinsurance agreement, the grantor is
the unlicensed, unaccredited assuming insurer.
c. "Obligations", as used in subdivision k of subsection 2 means:
(1) Reinsured losses and allocated loss expenses paid by the ceding company, but not
recovered from the assuming insurer;
(2) Reserves for reinsured losses reported and outstanding;
(3) Reserves for reinsured losses incurred but not reported; and
(4) Reserves for allocated reinsured loss expenses and unearned premiums.
2. Required conditions:

a. The trust agreement must be entered into between the beneficiary, the grantor, and a
trustee which shall be a qualified United States financial institution as defined in
subsection 2 of North Dakota Century Code section 26.1-31.2-03.
b. The trust agreement must create a trust account into which assets must be deposited.
c. All assets in the trust account must be held by the trustee at the trustee's office in the
United States.
d. The trust agreement must provide that:
(1) The beneficiary shall have the right to withdraw assets from the trust account at any
time, without notice to the grantor, subject only to written notice from the beneficiary
to the trustee;
(2) No other statement or document is required to be presented in order to withdraw
assets, except that the beneficiary may be required to acknowledge receipt of
withdrawn assets;
(3) It is not subject to any conditions or qualifications outside of the trust agreement;
and
(4) It shall not contain references to any other agreements or documents except as
provided for in subdivisions k and l.
e. The trust agreement must be established for the sole benefit of the beneficiary.
f. The trust agreement must require the trustee to:
(1) Receive assets and hold all assets in a safe place;
(2) Determine that all assets are in a form that the beneficiary, or the trustee upon
direction by the beneficiary, may whenever necessary negotiate any assets, without
consent or signature from the grantor or any other person or entity;
(3) Furnish to the grantor and the beneficiary a statement of all assets in the trust
account upon its inception and at intervals no less frequent than the end of each
calendar quarter;
(4) Notify the grantor and the beneficiary within ten days of any deposits to or
withdrawals from the trust account;
(5) Upon written demand of the beneficiary, immediately take any and all steps
necessary to transfer absolutely and unequivocably all right, title, and interest in the
assets held in the trust account to the beneficiary and deliver physical custody of the
assets to the beneficiary; and
(6) Allow no substitutions or withdrawals of assets from the trust account, except on
written instructions from the beneficiary, except that the trustee may, without the
consent of but with notice to the beneficiary, upon call or maturity of any trust asset,
withdraw the asset upon condition that the proceeds are paid into the trust account.
g. The trust agreement must provide that at least thirty days, but not more than forty-five
days, prior to termination of the trust account, written notification of termination must be
delivered by the trustee to the beneficiary.
h. The trust agreement must be made subject to and governed by the laws of the state in
which the trust is domiciled.

i. The trust agreement must prohibit invasion of the trust corpus for the purpose of paying
compensation to, or reimbursing the expenses of, the trustee. In order for a letter of
credit to qualify as an asset of the trust, the trustee shall have the right and the obligation
pursuant to the deed of trust or some other binding agreement, as duly approved by the
commissioner, to immediately draw down the full amount of the letter of credit and hold
the proceeds in trust for the beneficiaries of the trust if the letter of credit will otherwise
expire without being renewed or replaced.
j. The trust agreement must provide that the trustee is liable for its own negligence, willful
misconduct, or lack of good faith. The failure of the trustee to draw against the letter of
credit in circumstances in which the draw would be required shall be deemed to be
negligence or willful misconduct.
k. Notwithstanding other provisions of this chapter, when a trust agreement is established in
conjunction with a reinsurance agreement covering risks other than life, annuities, and
accident and health, when it is customary practice to provide a trust agreement for a
specific purpose, the trust agreement may provide that the ceding insurer shall undertake
to use and apply amounts drawn upon the trust account, without diminution because of
the insolvency of the ceding insurer or the assuming insurer, only for the following
purposes:
(1) To pay or reimburse the ceding insurer for the assuming insurer's share under the
specific reinsurance agreement regarding any losses and allocated loss expenses
paid by the ceding insurer, but not recovered from the assuming insurer, or for
unearned premiums due to the ceding insurer if not otherwise paid by the assuming
insurer;
(2) To make payment to the assuming insurer of any amounts held in the trust account
that exceed one hundred two percent of the actual amount required to fund the
assuming insurer's obligations under the specific reinsurance agreement; or
(3) If the ceding insurer has received notification of termination of the trust account and
if the assuming insurer's entire obligations under the specific reinsurance
agreement remain unliquidated and undischarged ten days prior to the termination
date, to withdraw amounts equal to the obligations and deposit those amounts in a
separate account, in the name of the ceding insurer in any qualified United States
financial institution as defined in subsection 2 of North Dakota Century Code section
specified in paragraphs 1 and 2 as may remain executory after the withdrawal and
for any period after the termination date.
l. Notwithstanding other provisions of this chapter, when a trust agreement is established to
meet the requirements of section 45-03-07.1-06 in conjunction with a reinsurance
agreement covering life, annuities, or accident and health risks, if it is customary practice
to provide a trust agreement for a specific purpose, the trust agreement may provide that
the ceding insurer shall undertake to use and apply amounts drawn upon the trust
account, without diminution because of the insolvency of the ceding insurer or the
assuming insurer, only for the following purposes:
(1) To pay or reimburse the ceding insurer for:
(a) The assuming insurer's share under the specific reinsurance agreement of
premiums returned, but not yet recovered from the assuming insurer, to the
owners of policies reinsured under the reinsurance agreement on account of
cancellations of the policies; and

(b) The assuming insurer's share under the specific reinsurance agreement of
surrenders and benefits or losses paid by the ceding insurer, but not yet
recovered from the assuming insurer, under the terms and provisions of the
policies reinsured under the reinsurance agreement;
(2) To pay to the assuming insurer amounts held in the trust account in excess of the
amount necessary to secure the credit or reduction from liability for reinsurance
taken by the ceding insurer; or
(3) If the ceding insurer has received notification of termination of the trust and the
assuming insurer's entire obligations under the specific reinsurance agreement
remain unliquidated and undischarged ten days prior to the termination date, to
withdraw amounts equal to the assuming insurer's share of liabilities, to the extent
that the liabilities have not yet been funded by the assuming insurer, and deposit
those amounts in a separate account, in the name of the ceding insurer in any
qualified United States financial institution apart from its general assets, in trust for
the uses and purposes specified in paragraphs 1 and 2 as may remain executory
after withdrawal and for any period after the termination date.
m. Either the reinsurance agreement or the trust agreement must stipulate that assets
deposited in the trust account shall be valued according to their current fair market value
and shall consist only of cash in United States dollars, certificates of deposit issued by a
United States bank and payable in United States dollars, and investments permitted by
the insurance code or any combination of the above, provided investments in or issued
by an entity controlling, controlled by or under common control with either the grantor or
the beneficiary of the trust shall not exceed five percent of total investments. The
agreement may further specify the types of investments to be deposited. If the
reinsurance agreement covers life, annuities, or accident and health risks, then the
provisions required by this subdivision must be included in the reinsurance agreement.
3. Permitted conditions:
a. The trust agreement may provide that the trustee may resign upon delivery of a written
notice of resignation, effective not less than ninety days after the beneficiary and grantor
receive the notice and that the trustee may be removed by the grantor by delivery to the
trustee and the beneficiary of a written notice of removal, effective not less than ninety
days after the trustee and the beneficiary receive the notice, provided that no such
resignation or removal shall be effective until a successor trustee has been duly
appointed and approved by the beneficiary and the grantor and all assets in the trust
have been duly transferred to the new trustee.
b. The grantor may have the full and unqualified right to vote any shares of stock in the trust
account and to receive from time to time payments of any dividends or interest upon any
shares of stock or obligations included in the trust account. Any interest or dividends
must be either forwarded promptly upon receipt to the grantor or deposited in a separate
account established in the grantor's name.
c. The trustee may be given authority to invest, and accept substitutions of, any funds in the
account, provided that no investment or substitution may be made without prior approval
of the beneficiary, unless the trust agreement specifies categories of investments
acceptable to the beneficiary and authorizes the trustee to invest funds and to accept
substitutions which the trustee determines are at least equal in current fair market value
to the assets withdrawn and that are consistent with the restrictions in paragraph 2 of
subdivision a of subsection 4.

d. The trust agreement may provide that the beneficiary may at any time designate a party
to which all or part of the trust assets are to be transferred. The transfer may be
conditioned upon the trustee receiving, prior to or simultaneously, other specified assets.
e. The trust agreement may provide that, upon termination of the trust account, all assets
not previously withdrawn by the beneficiary, with written approval by the beneficiary, must
be delivered over to the grantor.
4. Additional conditions applicable to reinsurance agreements:
a. A reinsurance agreement may contain provisions that:
(1) Require the assuming insurer to enter into a trust agreement and to establish a trust
account for the benefit of the ceding insurer, and specifying what the agreement is
to cover;
(2) Require the assuming insurer, prior to depositing assets with the trustee, to execute
assignments or endorsements in blank, or to transfer legal title to the trustee of all
shares, obligations or any other assets requiring assignments, in order that the
ceding insurer, or the trustee upon the direction of the ceding insurer, may whenever
necessary negotiate these assets without consent or a signature from the assuming
insurer or any other entity;
(3) Require that all settlements of account between the ceding insurer and the
assuming insurer be made in cash or its equivalent; and
(4) Stipulate that the assuming insurer and the ceding insurer agree that the assets in
the trust account, established pursuant to the provisions of the reinsurance
agreement, may be withdrawn by the ceding insurer at any time, notwithstanding
any other provisions in the reinsurance agreement, and shall be utilized and applied
by the ceding insurer or its successors in interest by operation of law, including
without limitation any liquidator, rehabilitator, receiver, or conservator of the
company, without diminution because of insolvency on the part of the ceding insurer
or the assuming insurer, only for the following purposes:
(a) To pay or reimburse the ceding insurer for:
[1] The assuming insurer's share under the specific reinsurance agreement
of premiums returned, but not yet recovered from the assuming insurer, to
the owners of policies reinsured under the reinsurance agreement
because of cancellations of the policies;
[2] The assuming insurer's share of surrenders and benefits or losses paid by
the ceding insurer pursuant to the provisions of the policies reinsured
under the reinsurance agreement; and
[3] Any other amounts necessary to secure the credit or reduction from
liability for reinsurance taken by the ceding insurer.
(b) To make payment to the assuming insurer of amounts held in the trust account
in excess of the amount necessary to secure the credit or reduction from
liability for reinsurance taken by the ceding insurer.
b. The reinsurance agreement may also contain provisions that:
(1) Give the assuming insurer the right to seek approval from the ceding insurer, which
shall not be unreasonably or arbitrarily withheld, to withdraw from the trust account

all or any part of the trust assets and transfer those assets to the assuming insurer,
provided:
(a) At the time of withdrawal, the assuming insurer shall replace the withdrawn
assets with other qualified assets having a current fair market value equal to
the market value of the assets withdrawn so as to maintain at all times the
deposit in the required amount; or
(b) After withdrawal and transfer, the current fair market value of the trust account
is no less than one hundred two percent of the required amount.
(2) Provide for the return of any amount withdrawn in excess of the actual amounts
required for paragraph 5 of subdivision a and interest payments, at a rate not in
excess of the prime rate of interest, on those amounts.
(3) Permit the award by any arbitration panel or court of competent jurisdiction of:
(a) Interest at a rate different from that provided in paragraph 2;
(b) Court or arbitration costs;
(c) Attorney's fees; and
(d) Any other reasonable expenses.
c. Financial reporting. A trust agreement may be used to reduce any liability for reinsurance
ceded to an unauthorized assuming insurer in financial statements required to be filed
with the department in compliance with this chapter when established on or before the
date of filing of the financial statement of the ceding insurer. Further, the reduction for the
existence of an acceptable trust account may be up to the current fair market value of
acceptable assets available to be withdrawn from the trust account at that time, but the
reduction must be no greater than the specific obligations under the reinsurance
agreement that the trust account was established to secure.
d. Existing agreements. Any trust agreement or underlying reinsurance agreement in
existence prior to October 1, 1995, will continue to be acceptable until January 1, 1996,
at which time the agreements will have to fully comply with this chapter for the trust
agreement to be acceptable.
e. The failure of any trust agreement to specifically identify the beneficiary as defined in
subsection 1 may not be construed to affect any actions or rights which the
commissioner may take or possess pursuant to the provisions of the laws of this state.
History: Effective October 1, 1995; amended effective December 1, 2001; October 1, 2002; January 1,
2016.
General Authority: NDCC 26.1-31.2-04
Law Implemented: NDCC 26.1-31.2
### § 45-03-07.1-08. Letters of credit qualified under section 45-03-07.

1-06.
1. The letter of credit must be clean, irrevocable, unconditional, and issued or confirmed by a
qualified United States financial institution as defined in subsection 1 of North Dakota Century
Code section 26.1-31.2-03. The letter of credit must contain an issue date and expiration date
and stipulate that the beneficiary need only draw a sight draft under the letter of credit and
present it to obtain funds and that no other document need be presented. The letter of credit
must also indicate that it is not subject to any condition or qualifications outside of the letter of
credit. In addition, the letter of credit itself may not contain reference to any other agreements,

documents, or entities, except as provided in subdivision a of subsection 9. As used in this
section, "beneficiary" means the domestic insurer for whose benefit the letter of credit has
been established and any successor of the beneficiary by operation of law. If a court of law
appoints a successor in interest to the named beneficiary, then the named beneficiary includes
and is limited to the court-appointed domiciliary receiver, including conservator, rehabilitator, or
liquidator.
2. The heading of the letter of credit may include a boxed section containing the name of the
applicant and other appropriate notations to provide a reference for the letter of credit. The
boxed section must be clearly marked to indicate that the information is for internal
identification purposes only.
3. The letter of credit must contain a statement to the effect that the obligation of the qualified
United States financial institution under the letter of credit is in no way contingent upon
reimbursement with respect thereto.
4. The term of the letter of credit must be for at least one year and must contain an "evergreen
clause" that prevents the expiration of the letter of credit without due notice from the issuer.
The "evergreen clause" must provide for a period of no less than thirty days' notice prior to the
expiration date or nonrenewal.
5. The letter of credit must state whether it is subject to and governed by the laws of this state or
the uniform customs and practice for documentary credits of the international chamber of
commerce, publication 600 (UCP 600) or international standby practices of the international
chamber of commerce publication 590 (ISP98), and all drafts drawn thereunder must be
presentable at an office in the United States of a qualified United States financial institution.
6. If the letter of credit is made subject to the uniform customs and practice for documentary
credits of the international chamber of commerce, publication 600 (UCP 600) or international
standby practices of the international chamber of commerce publication 590 (ISP98), or any
successor publication, then the letter of credit shall specifically address and provide for an
extension of time to draw against the letter of credit in the event that one or more of the
occurrences specified in article 36 of publication 600 or any other successor publication occur.
7. If the letter of credit is issued by a financial institution authorized to issue letters of credit, other
than a qualified United States financial institution as described in subsection 1, then the
following additional requirements must be met:
a. The issuing financial institution shall formally designate the confirming qualified United
States financial institution as its agent for the receipt and payment of the drafts; and
b. The "evergreen clause" must provide for thirty days' notice prior to the expiration date for
nonrenewal.
8. Reinsurance agreement provisions.
a. The reinsurance agreement in conjunction with which the letter of credit is obtained may
contain provisions that:
(1) Require the assuming insurer to provide letters of credit to the ceding insurer and
specify what they are to cover.
(2) Stipulate that the assuming insurer and ceding insurer agree that the letter of credit
provided by the assuming insurer pursuant to the provisions of the reinsurance
agreement may be drawn upon at any time, notwithstanding any other provisions in
the agreement, and shall be utilized by the ceding insurer or its successors in
interest only for one or more of the following reasons:

(a) To pay or reimburse the ceding insurer for:
[1] The assuming insurer's share under the specific reinsurance agreement
of premiums returned, but not yet recovered from the assuming insurers,
to the owners of policies reinsured under the reinsurance agreement on
account of cancellations of the policies;
[2] The assuming insurer's share, under the specific reinsurance agreement,
of surrenders and benefits or losses paid by the ceding insurer, but not
yet recovered from the assuming insurers, under the terms and provisions
of the policies reinsured under the reinsurance agreement; and
[3] Any other amounts necessary to secure the credit or reduction from
liability for reinsurance taken by the ceding insurer.
(b) If the letter of credit will expire without renewal or be reduced or replaced by a
letter of credit for a reduced amount and if the assuming insurer's entire
obligations under the specific reinsurance agreement remain unliquidated and
undischarged ten days prior to the termination date, to withdraw amounts
equal to the assuming insurer's share of the liabilities, to the extent that the
liabilities have not yet been funded by the assuming insurer and exceed the
amount of any reduced or replacement letter of credit, and deposit those
amounts in a separate account in the name of the ceding insurer in a qualified
United States financial institution apart from its general assets, in trust for the
uses and purposes specified in paragraph 2 of subdivision a as may remain
after withdrawal and for any period after the termination date.
(3) All of the provisions of this subdivision must be applied without diminution because
of insolvency on the part of the ceding insurer or assuming insurer.
b. Nothing contained in subdivision a precludes the ceding insurer and assuming insurer
from providing for:
(1) An interest payment, at a rate not in excess of the prime rate of interest, on the
amounts held pursuant to paragraph 2 of subdivision a; or
(2) The return of any amounts drawn down on the letters of credit in excess of the
actual amounts required for the above or any amounts that are subsequently
determined not to be due.
History: Effective October 1, 1995; amended effective December 1, 2001; October 1, 2002; January 1,
2016; April 1, 2017.
General Authority: NDCC 26.1-31.2-04
Law Implemented: NDCC 26.1-31.2
### § 45-03-07.1-09. Other security.

A ceding insurer may take credit for unencumbered funds withheld by the ceding insurer in the
United States subject to withdrawal solely by the ceding insurer and under its exclusive control.
History: Effective October 1, 1995.
General Authority: NDCC 26.1-31.2-04
Law Implemented: NDCC 26.1-31.2

### § 45-03-07.1-10. Reinsurance contract.

Credit will not be granted, nor an asset or reduction from liability allowed, to a ceding insurer for
reinsurance effected with assuming insurers meeting the requirements of section 45-03-07.1-01,
45-03-07.1-02, 45-03-07.1-03, 45-03-07.1-04, 45-03-07.1-04.1, 45-03-07.1-05, or 45-03-07.1-06 or
otherwise in compliance with North Dakota Century Code section 26.1-31.2-01 after October 1, 1995,
unless the reinsurance agreement:
1. Includes a proper insolvency clause, which stipulates that reinsurance is payable directly to
the liquidator or successor without diminution regardless of the status of the ceding company,
pursuant to North Dakota Century Code section 26.1-06.1-31; and
2. Includes a provision pursuant to North Dakota Century Code section 26.1-31.2-01 whereby
the assuming insurer, if an unauthorized assuming insurer, has submitted to the jurisdiction of
an alternative dispute resolution panel or court of competent jurisdiction within the United
States, has agreed to comply with all requirements necessary to give the court or panel
jurisdiction, has designated an agent upon whom service of process may be effected, and has
agreed to abide by the final decision of the court or panel; and
3. Includes a proper reinsurance intermediary clause, if applicable, which stipulates that the
credit risk for the intermediary is carried by the assuming insurer.
History: Effective October 1, 1995; amended effective October 1, 2002; January 1, 2016; April 1, 2022.
General Authority: NDCC 26.1-31.2-04
Law Implemented: NDCC 26.1-31.2
### § 45-03-07.1-11. Contracts affected.

All new and renewal reinsurance transactions entered into after October 1, 1995, must conform to
the requirements of the Act and this chapter if credit is to be given to the ceding insurer for such
reinsurance.
History: Effective October 1, 1995.
General Authority: NDCC 26.1-31.2-04
Law Implemented: NDCC 26.1-31.2

(name of officer) (title of officer)
of __________________________________________, the assuming insurer
(name of assuming insurer)
under a reinsurance agreement(s) with one or more insurers domiciled in
______________________________________________________, hereby
(name of state)
certify that _________________________________ ("Assuming Insurer"):
(name of assuming insurer)
1. Submits to the jurisdiction of any court of competent jurisdiction in
__________________________________________________________
(ceding insurer's state of domicile)
for the adjudication of any issues arising out of the reinsurance agreement(s), agrees to
comply with all requirements necessary to give such court jurisdiction, and will abide by the
final decision of such court or any appellate court in the event of an appeal. Nothing in this
paragraph constitutes or should be understood to constitute a waiver of Assuming Insurer's
rights to commence an action in any court of competent jurisdiction in the United States, to
remove an action to a United States District Court, or to seek a transfer of a case to another
court as permitted by the laws of the United States or of any state in the United States. This
paragraph is not intended to conflict with or override the obligation of the parties to the
reinsurance agreement(s) to arbitrate their disputes if such an obligation is created in the
agreement(s).
2. Designates the Insurance Commissioner of ________________________
(ceding insurer's state of domicile)
as its lawful attorney upon whom may be served any lawful process in any action, suit or
proceeding arising out of the reinsurance agreement(s) instituted by or on behalf of the
ceding insurer.
3. Submits to the authority of the Insurance Commissioner of
_____________________________ to examine its books and records and
(ceding insurer's state of domicile)
agrees to bear the expense of any such examination.
4. Submits with this form a current list of insurers domiciled in __________________________
reinsured by Assuming Insurer and
(ceding insurer's state of domicile)
undertakes to submit additions to or deletions from the list to the Insurance Commissioner at
least once per calendar quarter.
Dated: ___________________________ _______________________________
(name of assuming insurer)

(name of officer)
_____________________________
(title of officer)

(name of officer) (title of officer)
of __________________________________________, the assuming insurer
(name of assuming insurer)
under a reinsurance agreement with one or more insurers domiciled in
______________________________________________________, in order to be considered for
(name of state)
Approval in this state, hereby certify that _________________________________ ("Assuming
Insurer"):
(name of assuming insurer)
1. Submits to the jurisdiction of any court of competent jurisdiction in
__________________________________________________________
(ceding insurer's state of domicile)
for the adjudication of any issues arising out of the reinsurance agreement, agrees to comply
with all requirements necessary to give such court jurisdiction, and will abide by the final
decision of such court or any appellate court in the event of an appeal. Nothing in this
paragraph constitutes or should be understood to constitute a waiver of assuming insurer's
rights to commence an action in any court of competent jurisdiction in the United States, to
remove an action to a United States District Court, or to seek a transfer of a case to another
court as permitted by the laws of the United States or of any state in the United States. This
paragraph is not intended to conflict with or override the obligation of the parties to the
reinsurance agreement to arbitrate their disputes if such an obligation is created in the
agreement.
2. Designates the Insurance Commissioner of ________________________
(ceding insurer's state of domicile)
as its lawful attorney upon whom may be served any lawful process in any action, suit, or
proceeding arising out of the reinsurance agreement instituted by or on behalf of the ceding
insurer.
3. Agrees to provide security in an amount equal to 100% of liabilities attributable to U.S. ceding
insurers if it resists enforcement of a final United States judgment or properly enforceable
arbitration award.
4. Agrees to provide notification within 10 days of any regulatory actions taken against it, any
change in the provisions of its domiciliary license or any change in its rating by an approved
rating agency, including a statement describing such changes and the reasons therefor.
5. Agrees to annually file information comparable to relevant provisions of the National
Association of Insurance Commissioners financial statement for use by insurance markets in
accordance with paragraph 2 of subdivision g of subsection 2 of North Dakota Administrative
Code Section 45-03-07.1-04.1.
6. Agrees to annually file the report of the independent auditor on the financial statements of the

insurance enterprise.
7. Agrees to annually file audited financial statements, regulatory filings, and actuarial opinion in
accordance with paragraph 4 of subdivision g of subsection 2 of North Dakota Administrative
Code Section 45-03-07.1-04.1.
8. Agrees to annually file an updated list of all disputed and overdue reinsurance claims
regarding reinsurance assumed from United States domestic ceding insurers.
9. Is in good standing as an insurer or reinsurer with the supervisor of its domiciliary jurisdiction.
Dated: ___________________________ _______________________________
(name of assuming insurer)
(name of officer)
_____________________________
(title of officer)

Form CR-F-PART 1
Assumed Reinsurance as of December 31, Current Year (000 Omitted)
1 2 3 4 5 Reinsurance On 9 10 11 12 13 14 15
6 7 8 Amount of
Funds Held Assets
By or Pledged or Amount of
Paid Losses Deposited Compensating Assets
Company and Loss Known Case Contingent Assumed With Letters of Balances to Pledged or
Code or ID Name of Domiciliary Assumed Adjustment Losses and Commissions Premiums Unearned Reinsured Credit Secure Letters Collateral Held
Number Reinsured Jurisdiction Premium Expenses LAE Cols. 6 + 7 Payable Receivable Premium Companies Posted of Credit in Trust
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9999999 Totals

Form CR-F-PART 2
Ceded Reinsurance as of December 31, Current Year (000 Omitted)
1 2 3 4 5 6 Reinsurance Recoverable On Reinsurance Payable 18 19
Reinsurance 7 8 9 10 11 12 13 14 15 16 17
Contracts Net Amount
Ceding 75% Recoverable Funds Held
Company or More of Known Other From by Company
Code or Direct Reinsurance Case Known IBNR IBNR Cols. 7 Ceded Amounts Reinsurers Under
ID Name of Domiciliary Premiums Premiumds Paid Paid Loss Case LAE Loss LAE Unearned Contingent through Balances Due to Cols. 15 - [16 Reinsurance
Number Reinsured Jurisdiction Written Ceded Losses LAE Reserves Reserves Reserves Reserves Premiums Commissions 14 Totals Payable Reinsurers + 17] Treaties
............ ........... ............ ............ ............ ............ ........... ........... ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............
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9999999 Totals

Form CR-S-PART 1-SECTION 1
Reinsurance Assumed Life Insurance, Annuities, Deposit Funds, and Other Liabilities
Without Life or Disability Contingencies, and Related Benefits Listed by Reinsurance Company as of December 31, Current Year
1 2 3 4 5 6 7 8 9 10 11 12
Reinsurance
Type of Amount of In Payable on Paid Modified Funds Withheld
Company Code Name of Reinsurance Force at End of and Unpaid Coinsurance Under
or ID Number Effective Date Reinsured Location Assumed Year Reserve Premiums Losses Reserve Coinsurance
.................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... ....................
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Totals

Form CR-S-PART 1-SECTION 2
Reinsurance Assumed Accident and Health Insurance Listed By Reinsured Company as of December 31, Current Year
1 2 3 4 5 6 7 8 9 10 11 12
Reserve Liability Reinsurance
Type of Other Than For Payable on Paid Modified Funds Withheld
Company Code Name of Domiciliary Reinsurance Unearned Unearned and Unpaid Coinsurance Under
or ID Number Effective Date Reinsured Jurisdiction Assumed Premiums Premiums Premiums Losses Reserve Coinsurance
.................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... ....................
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Totals

Form CR-S-PART 2
Reinsurance Recoverable on Paid and Unpaid Losses Listed by Reinsuring Company as of December 31, Current Year
1 2 3 4 5 6 7
Company Code or ID Number Effective Date Name of Company Location Paid Losses Unpaid Losses
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Totals--Life, Annuity, and Accident and Health

Form CR-S-PART 3-SECTION 1
Reinsurance Ceded Life Insurance, Annuities, Deposit Funds and Other Liabilities
Without Life or Disability Contingencies, and Related Benefits Listed by Reinsuring Company as of December 31, Current Year
1 2 3 4 5 6 7 Reserve Credit Taken 10 Outstanding Surplus Relief 13 14
8 9 11 12 Funds
Company Type of Amount in Modified Withheld
Code or ID Name of Reinsurance Force at End Coinsurance Under
Number Effective Date Company Location Ceded of Year Current Year Prior Year Premiums Current Year Prior Year Reserve Coinsurance
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Totals

Form CR-S-PART 3-SECTION 2
Reinsurance Ceded Accident and Health Insurance by Reinsuring Company as of December 31, Current Year
1 2 3 4 5 6 7 8 9 Outstanding Surplus Relief 12 13
Reserve Credit 10 11
Taken Other
Unearned Than for Modified Funds Withheld
Company Code Name of Premiums Unearned Coinsurance Under
or ID Number Effective Date Company Location Type Premiums (Estimated) Premiums Current Year Prior Year Reserve Coinsurance
.................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. ..................
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I,________________________________________,____________________________________ of
(name of officer) (title of officer)
______________________________________________, the assuming insurer under a reinsurance
(name of assuming insurer)
agreement with one or more insurers domiciled in ___________________________, be considered for
(name of state)
approval in this state, hereby certify that ________________________________("Assuming Insurer"):
(name of assuming insurer)
1. Submits to the jurisdiction of any court of competent jurisdiction in North Dakota for the
adjudication of any issues arising out of the reinsurance agreement, agrees to comply with all
requirements necessary to give such court jurisdiction, and will abide by the final decision of
such court or any appellate court in the event of an appeal. The assuming insurer agrees that
it will include such consent in each reinsurance agreement, if requested by the commissioner.
Nothing in this paragraph constitutes or should be understood to constitute a waiver of
assuming insurer’s rights to commence an action in any court of competent jurisdiction in the
United States, to remove an action to a United States District Court, or to seek a transfer of a
case to another court as permitted by the laws of the United States or of any state in the
United States. This paragraph is not intended to conflict with or override the obligation of the
parties to the reinsurance agreement to arbitrate their disputes if such an obligation is created
in the agreement, except to the extent such agreements are unenforceable under applicable
insolvency or delinquency laws.
2. Designates the Insurance Commissioner of North Dakota as its lawful attorney in and for upon
whom may be served any lawful process in any action, suit or proceeding in this state arising
out of the reinsurance agreement instituted by or on behalf of the ceding insurer.
3. Agrees to pay all final judgments, wherever enforcement is sought, obtained by a ceding
insurer, that have been declared enforceable in the territory where the judgment was obtained.
4. Agrees to provide prompt written notice and explanation if it falls below the minimum capital
and surplus or capital or surplus ratio, or if any regulatory action is taken against it for serious
noncompliance with applicable law.
5. Confirms that it is not presently participating in any solvent scheme of arrangement, which
involves insurers domiciled in [Name of State]. If the assuming insurer enters into such an
arrangement, the assuming insurer agrees to notify the ceding insurer and the commissioner,
and to provide 100% security to the ceding insurer consistent with the terms of the scheme.
6. Agrees that in each reinsurance agreement it will provide security in an amount equal to 100%
of the assuming insurer's liabilities attributable to reinsurance ceded pursuant to that
agreement if the assuming insurer resists enforcement of a final U.S. judgment, that is
enforceable under the law of the territory in which it was obtained, or a properly enforceable
arbitration award whether obtained by the ceding insurer or by its resolution estate, if
applicable.
7. Agrees to provide the documentation in accordance with subdivision e of subsection 3 of
North Dakota Administrative Code section 45-03-07.1-04.2 if requested by the commissioner.

Dated:___________________________ ______________________________
(name of assuming insurer)
(name of officer)
_______________________________
(title of officer)
