CurrentLouisiana Department of InsurancePolicy N/A
Annual Certifications (Illustration Actuaries and Insurer Officers)
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Sets annual certification requirements for illustration actuaries and responsible insurer officers regarding illustration scales, disclosures (including expense allocation and changes to non-guaranteed elements), filing duties, and notifications to the Louisiana Department of Insurance and insurer boards.
Policy Summary
PayerLouisiana Department of Insurance
PolicyAnnual Certifications (Illustration Actuaries and Insurer Officers)
Policy CodePolicy N/A
Change TypeNo material change
Effective DateJul 1, 1997
Next Review DateN/A
Key ActionIllustration actuary must file an annual certification with the insurer's board and the department and promptly notify both if unable to certify or if an error is discovered.
SourceLink
POLICY UPDATE CHANGES
No material clinical or coverage changes in this revision.
annualfrequency of certification filing
$250Mminimum capital for certified reinsurer
5single mortgage-related security cap (%)
25aggregate mortgage-related cap (%)
15%overdue/disputed threshold
300%RBC ratio requirement
Coverage, Credit & Reinsurance Criteria
Illustration actuary and insurer certification and disclosure requirements
Requirements and disclosures the illustration actuary and insurer must make annually and upon certain events:
Board of directors shall appoint one or more illustration actuaries.
Illustration actuary must certify that the disciplined current scale used in illustrations conforms with the Actuarial Standard of Practice for Compliance with the NAIC Model Regulation on Life Insurance Illustrations and that illustrated scales used in insurer-authorized illustrations meet regulation requirements.
Illustration actuary qualifications: must be a member in good standing of the American Academy of Actuaries; familiar with life insurance illustration standards; and must not have been found by the department to have violated insurance law, engaged in fraudulent or dishonest practices, demonstrated incompetence/untrustworthiness, or resigned/been removed within the past five years for causes noted.
Actuary must disclose in the annual certification whether a currently payable scale applicable within the previous five years has been reduced for reasons other than changes in experience; must disclose inconsistencies between non-guaranteed elements for new policies and similar in-force policies, and whether illustrated non-guaranteed elements are consistent with elements actually being paid, charged, or credited.
Actuary must disclose the method used to allocate overhead expenses for all illustrations: (a) fully allocated expenses; (b) marginal expenses; or (c) a generally recognized expense table based on fully allocated expenses approved by the department.
Filing: illustration actuary shall file a certification with the board and the department annually for all policy forms for which illustrations are used and before a new policy form is illustrated.
If an error in a previous certification is discovered, the illustration actuary shall promptly notify the insurer's board of directors and the department.
If the illustration actuary is unable to certify a scale for a policy form the insurer intends to use, the actuary shall promptly notify the insurer's board of directors and the department.
A responsible officer (other than the illustration actuary) shall certify annually that illustration formats meet regulation requirements, that scales used are those certified by the illustration actuary, and that agents have been provided information about the company's expense allocation method and required disclosures.
Annual certifications shall be provided to the department each year by a date determined by the insurer; if the insurer changes the illustration actuary, the insurer shall promptly notify the department and disclose the reason for the change.
Certified Reinsurer Certification and Security Criteria
Certification eligibility and requirements for assuming insurers seeking recognition as certified reinsurers:
Applicant must be domiciled and licensed to transact insurance or reinsurance in a qualified jurisdiction as determined by the commissioner.
Maintain capital and surplus (or equivalent) of no less than $250,000,000 (may be satisfied by certain associations or central fund arrangements).
Maintain financial strength ratings from two or more rating agencies acceptable to the commissioner; ratings must be based on interactive communication with the agency and not solely on public information.
Each certified reinsurer will be rated on a legal-entity basis; the commissioner may consider ratings, business practices, NAIC filings, audited statements, liquidation priority, and reputation for prompt payment in assigning ratings.
Certified reinsurer must agree to initial and ongoing information filings including timely notice of regulatory actions and rating changes, annual Form CR-F or CR-S, independent auditor's report, audited financial statements (translated into English if applicable), an annual list of disputed and overdue claims, and a domiciliary regulator certification of good standing.
Commissioner may suspend, revoke, or modify certification; upon revocation the assuming insurer must post security per §3515, and domestic cedent protections apply (e.g., limited denial of credit for three months unless high uncollectibility risk is found).
Security and contract rules
- Credit allowed is based on security held consistent with assigned rating and forms specified in regulation (§3517, §3519, §3521).
- Credit applies only to reinsurance contracts entered into or renewed on or after the effective date of the reinsurer's certification; amended or new contracts apply from amendment/new effective date.
- Reinsurance contracts must include a mandatory funding clause requiring the certified reinsurer to maintain security sufficient to avoid a financial statement penalty on the ceding insurer.
Commissioner shall increase required security by one rating level if more than 15% of cedents have overdue non-disputed recoverables >90 days and >$100,000 each, or aggregate overdue non-disputed recoverables exceed $50,000,000.
Full security (100%) is required upon entry of rehabilitation, liquidation or conservation against the ceding insurer for the benefit of the ceding insurer or its estate.
Certified reinsurer may be exempt from immediate security for catastrophe recoverables for one year from first liability reserve entry for a catastrophic occurrence if the reinsurer continues to pay claims timely; applies to specified NAIC lines.
Letter of credit qualifies as trust asset only if trustee has the right and obligation to draw the full amount if it would otherwise expire; trustee must be liable for negligence or willful misconduct for failure to draw.
Commissioner evaluates and may designate qualified jurisdictions, and may withdraw recognition; factors include regulatory framework, supervisor authority, reporting, cooperation with U.S. regulators, enforcement of U.S. judgments, and IAIS standards.
Conditions for credit and qualified trust security
Requirements and conditions under which credit for reinsurance is allowed and trust agreements qualify as security.
Assuming insurer must be licensed to write reinsurance and have its head office or be domiciled in a reciprocal jurisdiction listed by the commissioner and meet other regulation requirements.
Assuming insurer must maintain minimum capital/surplus (no less than $250,000,000) or equivalent; associations may meet via central fund equivalents.
Assuming insurer must maintain minimum solvency/capital ratios: those specified in a covered agreement for covered jurisdictions; 300% RBC for NAIC-accredited U.S. jurisdictions; or a commissioner-determined ratio for other qualified jurisdictions after consultation.
Assuming insurer must execute Form RJ-1 and consent to jurisdiction and appointment of the commissioner as agent for service of process; must provide prompt written notice if falling below minimum requirements or if regulatory actions occur.
Assuming insurer must provide specified documentation upon request, including audited financials, solvency reports, lists of disputed/overdue claims, and reinsurance schedules; supervisory authority must confirm compliance annually.
Assuming insurer must maintain prompt payment practices; lack of prompt payment is evidenced if more than 15% of recoverables are overdue and in dispute, or if >15% of cedents have overdue non-disputed paid-loss recoverables >90 days and >$100,000 each, or aggregate overdue non-disputed paid-loss recoverables exceed $50,000,000.
Commissioner shall publish lists of reciprocal jurisdictions and eligible assuming insurers and may defer to NAIC-accredited determinations; commissioner may remove jurisdictions or revoke/suspend eligibility.
Before denying credit or imposing security, the commissioner must notify parties, allow 30 days to submit a remedy plan and 90 days to remedy (shorter in exceptional circumstances), and provide written explanation.
Reduction from liability for reinsurance ceded to an unauthorized assuming insurer is allowed only to the extent of funds held as security in the U.S. in acceptable forms (cash, NAIC-listed securities, qualified letters of credit, or other forms acceptable to the commissioner).
Trust agreements must be entered between beneficiary, grantor and a qualified U.S. financial institution trustee; assets held in trustee's U.S. office; beneficiary has unconditional withdrawal rights; trustee must provide quarterly statements and 10-day notice of deposits/withdrawals and permit immediate transfer upon beneficiary demand.
Trust agreements must prohibit invasion of corpus for trustee commissions; letters of credit in trust must be immediately drawable by trustee; trustee liable for negligence, willful misconduct or lack of good faith; failure to draw when required is negligence or willful misconduct.
Permitted trust uses
- For non-life reinsurance where customary, trust may be used to reimburse ceding insurer for assuming insurer's share of losses and allocated loss expenses or for unearned premiums.
- Trust may permit payment of amounts in excess of 102% of required funding to the assuming insurer.
- If termination is imminent and obligations remain unliquidated 10 days prior, ceding insurer may withdraw amounts equal to obligations and deposit them in a separate account in a qualified U.S. financial institution.
If assuming insurer's eligibility is suspended or revoked, reinsurance agreements issued or amended after suspension do not qualify for credit unless obligations are secured per §3515; after revocation, no credit unless obligations secured in acceptable form.
Acceptability and procedural criteria for trust/LC/reinsurance
Conditions that must be met or may be included for trust agreements, letters of credit, and reinsurance agreements to be acceptable for credit:
Trust agreement must provide written notification to the beneficiary at least 30 but not more than 45 days prior to termination of the trust account.
Trust agreement shall be governed by the laws of the state where the trust is domiciled.
Trust agreement shall prohibit invasion of corpus to pay trustee commissions or reimburse trustee expenses; letters of credit qualify only if the trustee has the right and obligation to immediately draw the full amount if it would otherwise expire without renewal or replacement.
Trustee shall be liable for negligence, willful misconduct or lack of good faith; failure to draw against a letter of credit when required is negligence/willful misconduct.
Permitted trust provisions for use of funds
- For non-life risks where customary, trust may permit ceding insurer to use amounts to pay or reimburse the ceding insurer for the assuming insurer's share of losses and allocated loss expenses or unearned premiums.
- For life, annuity, and accident & health reinsurance, trust may specify uses including payment of surrenders, benefits, premiums returned, and similar obligations; may permit payment of amounts in excess of required funding or segregation when termination imminent.
- When termination is imminent and obligations remain unliquidated 10 days prior, amounts equal to obligations may be withdrawn and deposited in a separate account in the name of the ceding insurer in a qualified U.S. financial institution.
Assets in trust must be valued at current fair market value and consist only of U.S. dollar cash, U.S. bank certificates of deposit, and investments permitted by the Louisiana Insurance Code; related-entity investments may not exceed 5% of total investments.
Trustee resignation/removal
- Trustee may resign or be removed effective not less than 90 days after notice to beneficiary and grantor, provided a successor trustee is appointed and assets transferred.
Letters of credit must be clean, irrevocable, unconditional, issued or confirmed by a qualified U.S. financial institution, contain issue and expiration dates, require only a sight draft to obtain funds, and not reference other agreements except as permitted; term must be at least one year and include an evergreen clause providing at least 30 days' notice before expiration/nonrenewal.
Reinsurance agreements must include an insolvency clause payable to a liquidator without diminution, submission to U.S. jurisdiction or acceptable ADR with an agent for service, and a reinsurance intermediary clause when applicable in order for credit to be granted.
All new and renewal reinsurance transactions entered into after December 31, 2013 must conform to the Act and this regulation to receive credit.
Forms AR-1 and CR-1 set forth certification language for assuming insurers including submission to Louisiana jurisdiction, designation of the Commissioner as agent for service, consent to examination, and quarterly reporting of Louisiana ceded insurers.
Assuming insurer certification commitments
Key certification commitments an assuming insurer must make on the provided forms:
Submit to the jurisdiction of Louisiana courts for adjudication of issues arising out of the reinsurance agreement, agree to comply with requirements necessary to give the court jurisdiction, and abide by final court decisions (without waiving rights to commence or remove actions in U.S. courts or to arbitrate as provided in agreements).
Designate the Commissioner of Insurance of Louisiana as lawful attorney for service of process for actions arising out of the reinsurance agreement.
Submit to the authority of the Commissioner to examine books and records and agree to bear examination expenses.
Agree to provide security equal to 100% of liabilities attributable to U.S. ceding insurers (or related liabilities) if the assuming insurer resists enforcement of a final U.S. judgment or properly enforceable arbitration award (appears in CR-1 and RJ-1 variants).
Provide notification within 10 days of regulatory actions, domiciliary license changes, or rating changes, with explanations (CR-1 requirement).
Annually file information comparable to NAIC financial statement provisions, independent auditor's report, audited financial statements, regulatory filings, actuarial opinion, and updated lists of disputed/overdue reinsurance claims as specified (CR-1, CR-F, CR-S references).
For reinsurers domiciled in reciprocal jurisdictions (RJ-1), additional commitments include paying final judgments obtained by a ceding insurer wherever enforcement is sought and providing prompt notice if falling below minimum capital/surplus or facing regulatory action, and providing documentation when requested under §3511.C.5.
Submit a current list of Louisiana-domiciled insurers reinsured and update additions/deletions at least once per calendar quarter.
Certify that the assuming insurer is in good standing with its domiciliary supervisor.
Annually file an updated list of all disputed and overdue reinsurance claims regarding reinsurance assumed from U.S. domestic ceding insurers.
Reinsurance / Ceded life reporting sections
Form CR-S Part 2 identifies sections for listing reinsurance recoverables and ceded life/annuity items as of year-end.
Form CR-S Part 2: Reinsurance Recoverable on Paid and Unpaid Losses listed by reinsuring company as of December 31, current year; includes sections for life insurance, annuities, deposit funds and other liabilities (template headings present in form extract).
Accounting-based coverage criteria for reinsurance ceded
Accounting requirements prohibit reducing liabilities or establishing assets for reinsurance ceded when the substance/effect of the agreement meets any of the listed problematic conditions.
Do not reduce liabilities or establish assets for ceded reinsurance if renewal expense allowances provided or to be provided are insufficient to cover anticipated allocable renewal expenses unless a liability is established for the present value of the shortfall (using statutory reserve basis assumptions).
Do not recognize assets if the ceding insurer can be deprived of surplus or assets at the reinsurer's option or automatically upon an event (except termination for nonpayment of premiums and certain adjustments as specified).
Do not recognize assets if the ceding insurer is required to reimburse the reinsurer for negative experience under the agreement, except for permitted offsets or voluntary termination not caused by unreasonable reinsurer provisions.
Do not recognize assets if the ceding insurer must, at scheduled points, terminate or automatically recapture all or part of the reinsurance ceded.
Do not recognize assets if the treaty contemplates possible payments by the ceding insurer to the reinsurer from sources other than income from the reinsured policies (e.g., premiums greater than direct premiums collected).
Do not recognize assets if the treaty does not transfer all significant risk inherent in the business being reinsured (significant risks include morbidity, mortality, and lapse among others per representative table).
Codes, Tables & Thresholds
Reinsurer Rating Mappingsmixed
| Secure-1..Secure-6 | Rating categories mapped to major rating agencies (S&P, Moody's, Fitch, A.M. Best) as used to determine required security level. |
Reinsurance contract required provisionsmixed
| Reinsurance agreement must include a proper insolvency clause payable to the liquidator or successor; submission to U.S. jurisdiction or alternative dispute resolution with designated agent for service of process and agreement to abide by final decision; and a proper reinsurance intermediary clause, if applicable. |
Forms / templatesmixed
| Form CR-S parts and CR-F/CR-S templates for listing reinsurance ceded (Part 3 Section 2 present; fields illegible in extract). |
inv-11: Overdue recoverables triggers
Trigger — per-cedent overdue recoverablesMore than 15% of the certified reinsurer's ceding insurance clients have overdue reinsurance recoverables on paid losses of 90 days or more which are not in dispute and which exceed $100,000 for each cedent.
Trigger — aggregate overdue recoverablesThe aggregate amount of reinsurance recoverables on paid losses which are not in dispute and are overdue by 90 days or more exceeds $50,000,000.
Effect—rating adjustmentCommissioner shall increase required security by one rating level if either overdue threshold is met.
inv-12: financial and payment thresholds
Minimum capital/surplus requirementNo less than $250,000,000 (or equivalent for associations).
RBC requirement for NAIC-accredited US jurisdictionsRisk-based capital (RBC) ratio of 300% of the authorized control level (NAIC formula).
Per-cedent overdue thresholdOverdue non-disputed recoverables > $100,000 each and >90 days triggers concern for prompt payment.
Aggregate overdue thresholdAggregate overdue non-disputed recoverables > $50,000,000 triggers concern for prompt payment.
inv-13: Trust account excess threshold
Excess funding ceiling in trust operationsTrust account may maintain up to 102% of the required funding; amounts in excess may be paid to the assuming insurer as permitted.
Permitted withdrawal conditionAfter withdrawal, current fair market value of the trust account must be no less than 102% of the required amount if assets are replaced by the assuming insurer.
Use on terminationIf trust is terminating and obligations remain unliquidated 10 days prior to termination, amounts equal to obligations may be withdrawn and deposited in a separate account for specified uses.
Filing, Notices, & Provider Obligations
Documentation Required
Filing and notification duties
Illustration actuary must file an annual certification with the insurer's board and with the Department of Insurance for all policy forms for which illustrations are used, and before a new policy form is illustrated; notify the board and the department promptly if an error in a prior certification is discovered or if unable to certify a scale. A responsible officer (other than the illustration actuary) must annually certify that illustration formats meet the regulation and that scales used are those certified by the illustration actuary, and that agents have been provided information about the company's expense allocation method. Annual certifications must be provided to the department each year by a date determined by the insurer; if the insurer changes the illustration actuary it must promptly notify the department and disclose the reason for the change.
- File certification annually for all policy forms and before illustrating new forms (CR §3319.D.1.a-b).
- Promptly notify board and department of discovered errors or inability to certify (CR §3319.D.2, §3319.E).
- Responsible officer must certify formats, use of certified scales, and agent disclosure of expense allocation method (CR §3319.F.1-2).
- Provide annual certifications to the department each year by insurer-determined date; notify department promptly when changing the illustration actuary (CR §3319.G-H).
Documentation Required
Letters of Credit — trustee drawing obligations and liability
For a letter of credit to qualify as a trust asset, the trustee must have the right and obligation under the deed of trust or other binding agreement to immediately draw the full amount of the letter of credit and hold the proceeds in trust if the letter of credit will otherwise expire; the trust agreement must make the trustee liable for negligence, willful misconduct or lack of good faith, and failure to draw when required is deemed negligence or willful misconduct.
- Trustee must be authorized to draw full LC amount if LC would otherwise expire (Letters of Credit §9.a).
- Trust agreement must make trustee liable for negligence, willful misconduct or lack of good faith; failure to draw when required is negligence/willful misconduct (§9.b).
Prior Authorization
Security posting and credit eligibility for certified reinsurers
A certified reinsurer must post security in an amount corresponding to the rating assigned by the commissioner; credit under the certified reinsurer rules applies only to reinsurance contracts entered into or renewed on or after the effective date of the reinsurer's certification (or amendment/new contract effective date), and parties may agree to provide greater security than required.
- Security amount for full credit is tied to commissioner-assigned rating and must be in forms consistent with statute and §§3517, 3519, or 3521 (§3510.A).
- Certified reinsurer required to post 100% security upon entry of rehabilitation, liquidation or conservation against the ceding insurer (§3510.1.3).
- Credit applies only to contracts entered into or renewed on or after the certification effective date; amendments/new contracts apply from their effective date (certified reinsurer contract applicability).
Documentation Required
Assuming insurer assurances, jurisdiction and notice
An assuming insurer must execute Form RJ-1 and provide written consent to the jurisdiction of Louisiana courts and to appointment of the Commissioner as agent for service of process, and must provide prompt written notice to the commissioner if it falls below minimum capital/surplus or is subject to regulatory action.
- Consent in writing to Louisiana jurisdiction and appointment of the Commissioner as agent for service of process (Form RJ-1/CR-1 requirements, §3511/Forms).
- Agree to provide prompt notice and explanation to the commissioner if falling below minimum requirements or subject to regulatory action (§3511.C.4.a).
- Submit RJ-1/CR-1 as required to provide adequate assurances for credit eligibility (Form CR-1/Certificate language).
Billing Rule
Acceptable security forms and conditions for admitted asset recognition
Security held for reinsurance obligations may be cash, securities listed by the NAIC Securities Valuation Office (admitted assets), clean irrevocable unconditional evergreen letters of credit issued/confirmed by a qualified U.S. financial institution, or any other form acceptable to the commissioner; an admitted asset or liability reduction for reinsurance to an unauthorized assuming insurer is allowed only when the requirements of §3523 and the applicable portions of §§3517, 3519 or 3521 are satisfied.
- Permitted forms of security include: cash; NAIC SVO-listed securities qualifying as admitted assets; clean, irrevocable, unconditional, evergreen LCs issued/confirmed by qualified U.S. financial institutions; or other forms acceptable to the commissioner (§3515.A.1-4).
- Admitted asset or liability reduction for reinsurance ceded to an unauthorized assuming insurer is allowed only when §§3523 and applicable portions of §§3517, 3519 or 3521 requirements are satisfied (§3515.B).
Documentation Required
Certification forms: AR-1 / CR-1 execution and required commitments
Assuming insurers must submit the required certification forms (e.g., Form AR-1 and CR-1) that include submission to Louisiana jurisdiction, designation of the Commissioner as agent for service of process, consent to examination, and quarterly lists of ceded Louisiana insurers; these forms must be properly executed and accompany required filings.
- Form CR-1/Certificate and related AR-1 require submission to Louisiana jurisdiction, designation of the Commissioner as agent for service, and submission of a current list of Louisiana domiciled insurers reinsured with quarterly updates (Form CR-1/CR variants).
- Forms must also include consent to examination by the Commissioner and related commitments as specified on the certificates (Form language §72-73).
Documentation Required
Service of process designation (Form CR-1)
By executing Form CR-1, the assuming insurer designates the Commissioner of Insurance of Louisiana 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, and submits to the Commissioner's authority to examine books and records.
- Designation of Commissioner as lawful attorney for service of process is explicit on Form CR-1 (Form CR-1 §2).
- Form CR-1 also includes submission to the authority of the Commissioner to examine books and records and an agreement to bear examination expenses (Form CR-1 §3).
Documentation Required
Service of process designation (Form RJ-1)
By executing the RJ-1 certificate, the assuming insurer domiciled in a reciprocal jurisdiction designates the Insurance Commissioner of Louisiana as its lawful attorney upon whom may be served any lawful process in this state arising out of the reinsurance agreement and agrees to include such consent in each reinsurance agreement if requested by the commissioner.
- Designation of the Insurance Commissioner as lawful attorney for service of process appears in the RJ-1 certificate language (§1-2 of the certificate).
- The insurer agrees to include the consent to jurisdiction in each reinsurance agreement if requested by the commissioner (RJ-1 certificate text).
Documentation Required
Form CR-S — Part 2 year‑end headings and reporting sections
Form CR-S Part 2 identifies year-end reporting headings for reinsurance recoverables on paid and unpaid losses and related life/annuity ceded items to be listed by reinsuring company as of December 31 of the current year; the form provides sections for reinsurance recoverable and ceded life insurance, annuities, deposit funds and other liabilities.
- CR-S Part 2 heading: 'Reinsurance Recoverable on Paid and Unpaid Losses Listed by Reinsuring Company as of December 31, Current Year' (Form CR-S Part 2).
- CR-S includes parts referencing ceded life insurance, annuities, deposit funds and other liabilities for year-end reporting (Form CR-S Part 2/Part 3 references).
Documentation Required
Annual certification forms (CR-S Part 2/3) and scope of applicability
Forms CR-S Part 2 and Part 3 are referenced for annual certifications and must be used to list reinsurance recoverables and ceded life/annuity items; the regulation applies to domestic life and accident & health insurers and to other insurers with a certificate of authority not subject to a substantially similar domiciliary regulation.
- CR-S Part 2 and Part 3 are the forms referenced for reporting reinsurance recoverables and ceded life/annuity items (Form CR-S Part 2/Part 3 headings).
- Scope: regulation applies to domestic life and accident & health insurers and other insurers with a certificate of authority not subject to a substantially similar domiciliary regulation (§3703).
Defined Terms
inv-24: illustration actuary
RoleAn actuary appointed by the insurer's board who certifies the disciplined current scale used in illustrations conforms with the Actuarial Standard of Practice for compliance with NAIC Model Regulation on Life Insurance Illustrations.
QualificationMust be a member in good standing of the American Academy of Actuaries and familiar with life insurance illustration standards.
Filing dutyMust file a certification annually for all policy forms using illustrations and before a new policy form is illustrated; must promptly notify board and department of errors or inability to certify.
inv-25: expense allocation method
Required disclosure optionsExpense allocation method disclosed must be one of: fully allocated expenses; marginal expenses; or a generally recognized expense table based on fully allocated expenses and approved by the department.
Agent notificationCompany must provide its agents with information about the expense allocation method used in its illustrations.
Certification inclusionThe method used to allocate overhead expenses must be disclosed in the illustration actuary's annual certification.
inv-26: Mortgage-Related Security
Definition—Mortgage-Related SecurityAn obligation representing ownership of one or more promissory notes or certificates of interest or participation in the notes, meeting specified origination and security conditions and rated AA or higher (or equivalent).
Single-security investment capMaximum investment in any one mortgage-related security limited to 5% of trust assets (as noted in inventory statistics).
Aggregate mortgage-related capAggregate mortgage-related securities held in trust limited to 25% of trust assets (as noted in inventory statistics).
inv-27: Promissory Note (manufactured home)
Definition—Promissory Note (manufactured home)When used in connection with a manufactured home, 'Promissory Note' includes a loan, advance, or credit sale evidenced by a retail installment sales contract or other instrument.
Security characteristicMay be directly secured by a first lien on a single parcel of real estate or on a residential manufactured home as specified.
Origination standardNotes should be originated by institutions supervised and examined by a federal or state housing authority, or by approved mortgagees as specified.
inv-28: reciprocal jurisdiction
DefinitionReciprocal jurisdiction: a jurisdiction designated by the commissioner that is either (1) a non‑US jurisdiction subject to an in‑force covered agreement with the US, (2) a US jurisdiction accredited under the NAIC program, or (3) a qualified jurisdiction the commissioner determines meets additional requirements for reciprocal credit.
Use in eligibilityReciprocal jurisdiction status is used to determine credit for reinsurance and applicable solvency/capital ratio rules for assuming insurers domiciled there.
PublicationThe commissioner shall timely create and publish a list of reciprocal jurisdictions, considering the NAIC list and other determinations.
inv-29: beneficiary / grantor / obligations (trust context)
Beneficiary (trust) — definitionThe entity for whose sole benefit the trust has been established and any successor by operation of law, including a court‑appointed domiciliary receiver.
Grantor (trust) — definitionThe entity that established the trust; when tied to reinsurance, the grantor is the unlicensed/unaccredited assuming insurer.
Obligations includedObligations mean reinsured losses and allocated loss expenses paid by the ceding company but not recovered, reserves for reported and incurred but not reported losses, reserves for allocated loss expenses, and unearned premiums.
inv-30: Beneficiary
Beneficiary (LC) — definitionThe domestic insurer for whose benefit the letter of credit has been established and any successor by operation of law (including a court‑appointed domiciliary receiver).
Rights under LCBeneficiary may draw a sight draft to obtain funds; LC must be clean, irrevocable, unconditional, and not contingent on reimbursement conditions.
Notice and term requirementsLC term at least one year and include an evergreen clause providing no less than 30 days' notice prior to expiration or nonrenewal.
inv-31: Assuming Insurer
DefinitionAssuming Insurer: the reinsurer assuming liabilities under a reinsurance agreement with one or more insurers domiciled in Louisiana.
Certification commitmentsAssuming insurer must submit Form RJ‑1 or CR‑1 consenting to jurisdiction, appointment of the commissioner as agent for service of process, and provide lists of ceded Louisiana insurers (quarterly updates).
Minimum financial expectationsMust maintain minimum capital/surplus (e.g., $250,000,000) and required solvency/capital ratios as applicable to jurisdiction status.
inv-32: Commissioner of Insurance of Louisiana
Role/authorityCommissioner of Insurance of Louisiana: designated lawful attorney for service of process (as named by assuming insurers) and regulator with authority to examine books and records and publish lists of reciprocal jurisdictions.
Examination consentAssuming insurers certify submission to the Commissioner's authority to examine books and records and agree to bear examination expenses.
Agent for serviceAssuming insurers designate the Commissioner as their lawful attorney upon whom lawful process may be served in actions arising out of reinsurance agreements.
inv-33: Form CR-F / Form CR-S template fields
Forms referencedForm CR‑F and Form CR‑S (Part 2 and Part 3) are templates for reporting reinsurance recoverables and ceded life/annuity items as of year‑end.
Part 2 contentCR‑S Part 2 headings include 'Reinsurance Recoverable on Paid and Unpaid Losses Listed by Reinsuring Company as of December 31, Current Year'.
Template statusExtracted template fields are present but portions are OCR‑mangled in the source; forms require completion of repeated identifying fields and schedules.
inv-34: significant risk
Definition—significant risk transfer testDo not recognize reinsurance assets if the treaty does not transfer all of the significant risk inherent in the business being reinsured; significant risks include morbidity, mortality, and lapse.
Accounting prohibition exampleAn insurer shall not reduce liabilities or establish assets for ceded reinsurance if renewal expense allowances are insufficient to cover anticipated allocable renewal expenses unless a liability is established for the present value of the shortfall.
Lapse explainedLapse is the risk that a policy will voluntarily terminate prior to recoupment of a statutory surplus strain experienced at issue of the policy.
inv-35: Lapse
DefinitionLapse — the risk that a policy will voluntarily terminate prior to the recoupment of a statutory surplus strain experienced at issue of the policy.
Accounting relevanceLapse is listed as a significant risk for certain products; absence of transfer of lapse risk may preclude recognition of reinsurance assets.
ContextUsed within the accounting criteria that prohibit recognition of assets when significant risks are not transferred under a treaty.
Policy Summary
PayerLouisiana Department of Insurance
PolicyAnnual Certifications (Illustration Actuaries and Insurer Officers)
Policy CodePolicy N/A
Change TypeNo material change
Effective DateJul 1, 1997
Next Review DateN/A
Key ActionIllustration actuary must file an annual certification with the insurer's board and the department and promptly notify both if unable to certify or if an error is discovered.
SourceLink
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