P&CNJmedium
Under N.J.A.C. 11:2-28, a New Jersey ceding insurer may take financial-statement credit for reinsurance ceded to an unauthorized reinsurer only if which condition is met?
AThe reinsurer's CEO personally guarantees the obligation in a signed and notarized written instrument delivered to the ceding insurer
BThe reinsurance contract is filed with the NJ Attorney General
The reinsurer's obligation is secured by qualifying collateral such as a clean, irrevocable letter of credit or a U.S. trust
DThe ceding company maintains a captive in Bermuda
Why this is the answer
N.J.A.C. 11:2-28 implements the NAIC Credit for Reinsurance Model. A NJ ceding insurer can reduce its reserve liability for reinsurance ceded only if the reinsurer is authorized, accredited, certified, or its obligation is fully secured by qualifying collateral such as a clean letter of credit or a U.S. trust.
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