NEW YORK STATE
INSURANCE DEPARTMENT

THIRD AMENDMENT TO REGULATION NO. 108
(11 NYCRR 112)

LOSS PORTFOLIO TRANSFERS

I, Gregory V. Serio, Superintendent of Insurance of the State of New York, pursuant to the authority granted by Sections 201 and 301 of the Insurance Law, do hereby promulgate the following Third Amendment to Part 112 of Title 11 of the Official Compilation of Codes, Rules and Regulations of the State of New York (Regulation No. 108), to take effect upon publication in the State Register, to read as follows:

(Matter in brackets is deleted; new matter is underlined)

Section 112.1 of Part 112 is amended to read as follows:

112.1 Applicability.

(a) This Part shall apply to all loss portfolio transfers [executed or] with an effective date of December 31, 2000 or prior, entered into by every insurer subject to article 41, 61, 62 or 66 of the Insurance Law, that is authorized or accredited to insure or reinsure any of the basic kinds of insurance specified in section 4101 of the Insurance Law.

(b) All loss portfolio transfers with an effective date on or after January 1, 2001 shall, in accordance with section 83.3(c) of Regulation 172 (Part 83 of this Title), be governed by the accounting practices and procedures set forth in Statement of Statutory Accounting Principles (SSAP) 62, and shall also be subject to the provisions of section 112.5(j) and section 112.6(k) of this Part.

Section 112.5(j) is amended to read as follows:

(j) If the transferee is not an authorized insurer or an accredited reinsurer in New York, a Letter of Credit acceptable under the terms of [Circular Letter No. 19 (1983)] Regulation 133 (Part 79 of this Title) must be furnished, or funds must be held by the transferer in a manner consistent with Regulation 114 (Part 126 of this Title) and section 1301(a)(14) of the Insurance Law, in the amount of the remaining obligations of the transferee to the transferer under the agreement.

Section 112.6(a), (h), (i), and (j) are amended to read as follows:

(a) The transferer and transferee must report on line [18] 23, page three, the total amount of all loss portfolio transfers as a write-in item identified as "loss portfolio transfer," recorded as an offset liability by the transferer and as an additional liability by the transferee.

(h) The transferer shall report the amount of the gain from the transaction as a write-in item, "loss portfolio transfer - gain," to be reflected on page four, line [12] 14, as a part of other income, in the underwriting and investment exhibit.

(i) The transferee shall report the total additional obligations from the transferer as a write-in item, "loss portfolio transfer - loss," on page four, line [12] 14, in the underwriting and investment exhibit.

(j) Any subsequent change in the initial incurred loss and loss adjustment expense reserves transferred shall be reported and identified as "loss portfolio transfer," on page four, line [12] 14, in other income, so as to recognize the "gain" or "loss" on the transfer, and shall be included in the write-in item on line [18] 23, and in the loss portfolio transfer account, on page three.

I, Gregory V. Serio, Superintendent of Insurance of the State of New York, do hereby certify that the foregoing is the Third Amendment to Part 112 of Title 11 of the Official Compilation of Codes, Rules and Regulations of the State of New York (Regulation No. 108), promulgated by me on November 24, 2003, pursuant to the authority granted by Sections 201 and 301of the Insurance Law.

Pursuant to the provisions of the State Administrative Procedure Act, prior notice of the proposed regulation was published in the State Register on September 24, 2003. No other publication or prior notice is required by statute.

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Gregory V. Serio
Superintendent of Insurance

 

November 24, 2003