PROPOSED TENTH AMENDMENT TO REGULATION NO. 20 (11 NYCRR 125)

CREDIT FOR REINSURANCE FROM UNAUTHORIZED INSURERS

I, Howard Mills, Superintendent of Insurance of the State of New York, pursuant to the authority granted by Sections 201, 301, 307(a), 308, 1301(a)(14), 1301(c), and 1308 of the Insurance Law, do hereby promulgate the following Tenth Amendment to 11 NYCRR 125 (Regulation No. 20), to take effect upon publication in the State Register, to read as follows:

(New Matter is Underlined; Matter in Brackets is Deleted)

Section 125.4(c)(2) of Part 125 is hereby amended by adding a new subparagraph (iii) to read as follows:

(iii) (a) Any security which is intended to meet the standard of marketable securities as set forth in sub-paragraphs (i) or (ii) of this paragraph and which is in any part funded, or obligated to be in any part funded, by cash flows that emanate from the alien assuming insurer seeking to establish the trust shall only be permitted if, in addition to meeting the standards of Section 1404(a)(2):

(1) the Superintendent is notified by the alien assuming insurer at least thirty days prior to funding the trust with such a security and such security is approved by the Superintendent;

(2) the issuer of such security is unaffiliated with the alien assuming insurer establishing the trust;

(3) such security is rated A or higher (or the equivalent thereto) by a securities rating agency recognized by the Superintendent; and

(4) such security has a maturity date of less than 180 days.

(b) In no event shall securities, issued by one or more issuers, meeting the conditions set forth in clause (a) of this subparagraph and held in a trust fund established pursuant to this paragraph for each alien insurer exceed the percentage approved by the Superintendent of the total of the investments in each trust provided, however, that the Superintendent shall not approve an amount that exceeds forty percent of such total investments. The factors to be considered in determining the amount shall include the creditworthiness, the liquidity and the structure of the securities.

Clause 125.4 (d)(1)(iv)(b) of Section 125 is hereby amended to read as follows:

(b) (1) At least $50 million of the trusteed surplus shall be in the types of investments set forth in paragraphs 1, 2, and 3 of Section 1402(b) of the New York Insurance Law. Any other marketable securities that make up the trust funds and the surplus shall be of the types set forth in paragraphs 1, 2, 3, 8, and 10 of Insurance Law Section 1404(a) and foreign investments complying with paragraph (3) of subdivision (c) of this section. Letters of credit complying with clause (c) of this subparagraph may be used to fund the remainder of the trust funds and the surplus;

(2) (i) Any security which is intended to meet the standard of marketable securities of the type set forth in Section 1404(a)(2) and which is in any part funded, or obligated to be in any part funded, by cash flows that emanate from any members of the group seeking to otherwise comply with the foregoing provisions shall only be permitted if, in addition to meeting the standards of Section 1404(a)(2):

(A) the Superintendent is notified by the individual member of the group at least thirty days prior to funding the trust with such a security and such security is approved by the Superintendent;

(B) the issuer of such security is unaffiliated with members of the group seeking to establish the trust;

(C) such security is rated A or higher (or the equivalent thereto) by a securities rating agency recognized by the Superintendent; and

(D) such security has a maturity date of less than 180 days.

(ii) In no event shall the securities, issued by one or more issuers, meeting the conditions set forth in clause (a) of this subparagraph and held in trust in any of the individual member’s trust funds established pursuant to this paragraph exceed the percentage approved by the Superintendent of the total of the investments in such member’s trust provided, however, that the Superintendent shall not approve an amount that exceeds forty percent of such total investments. The factors to be considered in determining the amount shall include the creditworthiness, the liquidity and the structure of the securities.