R590-114-2. Purpose and Scope

A. The purpose of this rule is to determine, in accordance with the guidelines of Section 31A-17-404(3), the form of letter of credit security which will be acceptable to protect a ceding insurer in a transaction of reinsurance in which the alternative security factors of Section 31A-17-404(3) or 31A-17-404(6) are not present and funds of the reinsurer are retained by the ceding insurer in the form of a letter of credit. Security is maintained in order that credit for the reinsurance may be allowed the ceding insurer as either an asset or a deduction from liabilities. The allowance or disallowance of credit in reinsurance transactions may be used to determine compliance with other financial requirements of the Insurance Code.

B. This rule shall apply to all persons transacting insurance under the Utah Insurance Code.