§ 90j.1. Definitions.
Actuarial method—The methodology used to determine the required level of primary security, as described in § 90j.6 (relating to actuarial method).
Covered policies—(1) Subject to the exemptions described in § 90j.5 (relating to exemptions), policies of either of the following types:(i) Life insurance policies with guaranteed nonlevel gross premiums or guaranteed nonlevel benefits, or both, except for flexible premium universal life insurance policies;
(ii) Flexible premium universal life insurance policies with provisions resulting in the ability of a policyholder to keep a policy in force over a secondary guarantee period.
(2) The term does not include policies issued prior to January 1, 2015, and ceded as of December 31, 2014, as part of a reinsurance treaty that would not have met one of the exemptions set forth in § 90j.5 had that section then been in effect.
Non-covered policies—A policy that does not meet the definition of covered policies.
Other security—A security acceptable to the Commissioner other than security meeting the definition of primary security.
Primary security—The following forms of security:(i) Cash meeting the requirements of section 319.1(b)(1) of The Insurance Company Law of 1921 (40 P.S. § 442.1(b)(1)) regarding reinsurance credits;
(ii) Securities listed by the Securities Valuation Office meeting the requirements of section 319.1(b)(2) of The Insurance Company Law of 1921 regarding reinsurance credits, but excluding any synthetic letter of credit, contingent note, credit-linked note or other similar security that operates in a manner similar to a letter of credit, and excluding any securities issued by the ceding insurer or any of its affiliates;
(iii) For security held in connection with funds-withheld and modified coinsurance reinsurance treaties, including all of the following:
(A) Commercial loans in good standing of CM3 quality and higher.
(B) Policy loans.
(C) Derivatives acquired in the normal course and used to support and hedge liabilities pertaining to the actual risks in the policies ceded under the reinsurance treaty.
RBC—Risk-based capital—The minimum level of capital required for an insurer to support its operations and write coverage as set forth in Article V-A of The Insurance Department Act of 1921 (40 P.S. § § 221.1-A—221.15-A).
Required level of primary security—The dollar amount determined by applying the actuarial method to the risks ceded with respect to covered policies, but not more than the total reserve ceded.
VM-20—Requirements for principle-based reserves for life products, including all relevant definitions, from the Valuation Manual.
Valuation Manual—The Valuation Manual adopted by the NAIC as described in section 11B(1) of the standard valuation law, with all amendments adopted by the NAIC that are effective for the financial statement date on which credit for reinsurance is claimed, and which had an operative date of January 1, 2017, under 40 Pa.C.S. § 7104 (relating to notice regarding operative date of valuation manual) with public notice published at 46 Pa.B. 5867 (September 10, 2016).
Cross References This section cited in 31 Pa. Code § 90j.3 (relating to purpose); 31 Pa. Code § 90j.4 (relating to applicability); and 31 Pa. Code § 90j.6 (relating to actuarial method).
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