<html> <head> <title>Rule 20:06:31:09.01 Trust agreements established under SDCL 58-14-16.</title> <META NAME="Keywords" Content="Administrative Rules 20:06:31:09.01"> <META NAME="Description" Content="Administrative Rules 20:06:31:09.01 Trust agreements established under SDCL 58-14-16."> <meta http-equiv=Content-Type content="text/html; charset=windows-1252"> <meta name=Generator content="Microsoft Word 15 (filtered)"> <style> <!-- /* Font Definitions */ @font-face {font-family:"Cambria Math"; panose-1:2 4 5 3 5 4 6 3 2 4;} @font-face {font-family:Calibri; panose-1:2 15 5 2 2 2 4 3 2 4;} /* Style Definitions */ p.MsoNormal, li.MsoNormal, div.MsoNormal {margin-top:0in; margin-right:0in; margin-bottom:10.0pt; margin-left:0in; line-height:115%; font-size:11.0pt; font-family:"Calibri",sans-serif; color:black;} a:link, span.MsoHyperlink {color:blue; text-decoration:underline;} a:visited, span.MsoHyperlinkFollowed {color:#954F72; text-decoration:underline;} .MsoChpDefault {font-family:"Calibri",sans-serif; color:black;} .MsoPapDefault {margin-bottom:10.0pt; line-height:115%;} @page WordSection1 {size:8.5in 11.0in; margin:49.7pt 1.0in 49.7pt 63.35pt;} div.WordSection1 {page:WordSection1;} --> </style> </head> <body lang=EN-US link=blue vlink="#954F72"> <div class=WordSection1> <p class=MsoNormal style='margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;line-height:normal'><span style='font-size:12.0pt;font-family:"Times New Roman",serif'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </span><b><span style='font-size:12.0pt;font-family:"Times New Roman",serif'>20</span></b><b><span style='font-size:12.0pt;font-family:"Times New Roman",serif'>:</span></b><b><span style='font-size:12.0pt;font-family:"Times New Roman",serif'>06</span></b><b><span style='font-size:12.0pt;font-family:"Times New Roman",serif'>:</span></b><b><span style='font-size:12.0pt;font-family:"Times New Roman",serif'>31</span></b><b><span style='font-size:12.0pt;font-family:"Times New Roman",serif'>:</span></b><b><span style='font-size:12.0pt;font-family:"Times New Roman",serif'>09.01</span></b><b><span style='font-size:12.0pt;font-family:"Times New Roman",serif'>.&nbsp;&nbsp;Trust agreements established under SDCL <A HREF="/statutes/DisplayStatute.aspx?Type=Statute&Statute=58-14-16">58-14-16.</A></span></b><span style='font-size: 12.0pt;font-family:"Times New Roman",serif'> Notwithstanding</span><span style='font-size:12.0pt;font-family:"Times New Roman",serif'> </span><span style='font-size:12.0pt;font-family:"Times New Roman",serif'>other provisions of this chapter, when a trust agreement is established to meet the requirements</span><span style='font-size:12.0pt;font-family:"Times New Roman",serif'> </span><span style='font-size:12.0pt;font-family:"Times New Roman",serif'>of SDCL <A HREF="/statutes/DisplayStatute.aspx?Type=Statute&Statute=58-14-16">58-14-16</A> in conjunction with a reinsurance agreement covering life, annuities, or</span><span style='font-size:12.0pt;font-family:"Times New Roman",serif'> </span><span style='font-size:12.0pt;font-family:"Times New Roman",serif'>accident and health risks, where it is customary to provide a trust agreement for a specific</span><span style='font-size:12.0pt;font-family:"Times New Roman",serif'> </span><span style='font-size:12.0pt;font-family:"Times New Roman",serif'>purpose, the trust agreement may provide that the ceding insurer shall undertake to use and apply</span><span style='font-size:12.0pt;font-family:"Times New Roman",serif'> </span><span style='font-size:12.0pt;font-family:"Times New Roman",serif'>amounts drawn upon the trust account, without diminution because of the insolvency of the</span><span style='font-size:12.0pt;font-family:"Times New Roman",serif'> </span><span style='font-size:12.0pt;font-family:"Times New Roman",serif'>ceding insurer or the assuming insurer, only for the following purposes:</span></p> <p class=MsoNormal style='margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;line-height:normal'><span style='font-size:12.0pt;font-family:"Times New Roman",serif'>&nbsp;</span></p> <p class=MsoNormal style='margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;line-height:normal'><span style='font-size:12.0pt;font-family:"Times New Roman",serif'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </span><span style='font-size:12.0pt;font-family:"Times New Roman",serif'>(1)&nbsp;&nbsp;</span><span style='font-size:12.0pt;font-family:"Times New Roman",serif'>To pay or reimburse the ceding insurer for:</span></p> <p class=MsoNormal style='margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;line-height:normal'><span style='font-size:12.0pt;font-family:"Times New Roman",serif'>&nbsp;</span></p> <p class=MsoNormal style='margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;line-height:normal'><span style='font-size:12.0pt;font-family:"Times New Roman",serif'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (a)</span><span style='font-size:12.0pt;font-family:"Times New Roman",serif'>&nbsp;&nbsp;</span><span style='font-size:12.0pt;font-family:"Times New Roman",serif'>The assuming insurer's share under the specific reinsurance agreement of</span><span style='font-size:12.0pt;font-family:"Times New Roman",serif'> </span><span style='font-size:12.0pt;font-family:"Times New Roman",serif'>premiums returned, but not yet recovered from the assuming insurer, to the</span><span style='font-size:12.0pt;font-family:"Times New Roman",serif'> </span><span style='font-size:12.0pt;font-family:"Times New Roman",serif'>owners of policies reinsured under the reinsurance agreement on account of</span><span style='font-size:12.0pt;font-family:"Times New Roman",serif'> </span><span style='font-size:12.0pt;font-family:"Times New Roman",serif'>cancellations of the policies; and</span></p> <p class=MsoNormal style='margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;line-height:normal'><span style='font-size:12.0pt;font-family:"Times New Roman",serif'>&nbsp;</span></p> <p class=MsoNormal style='margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;line-height:normal'><span style='font-size:12.0pt;font-family:"Times New Roman",serif'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (b)</span><span style='font-size:12.0pt;font-family:"Times New Roman",serif'>&nbsp;&nbsp;</span><span style='font-size:12.0pt;font-family:"Times New Roman",serif'>The assuming insurer's share under the specific reinsurance agreement of</span><span style='font-size:12.0pt;font-family:"Times New Roman",serif'> </span><span style='font-size:12.0pt;font-family:"Times New Roman",serif'>surrenders and benefits or losses paid by the ceding insurer, but not yet recovered</span><span style='font-size:12.0pt;font-family:"Times New Roman",serif'> </span><span style='font-size:12.0pt;font-family:"Times New Roman",serif'>from the assuming insurer, under the terms and provisions of the policies</span><span style='font-size:12.0pt;font-family:"Times New Roman",serif'> </span><span style='font-size:12.0pt;font-family:"Times New Roman",serif'>reinsured under the reinsurance agreement;</span></p> <p class=MsoNormal style='margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;line-height:normal'><span style='font-size:12.0pt;font-family:"Times New Roman",serif'>&nbsp;</span></p> <p class=MsoNormal style='margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;line-height:normal'><span style='font-size:12.0pt;font-family:"Times New Roman",serif'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (2)</span><span style='font-size:12.0pt;font-family:"Times New Roman",serif'>&nbsp;&nbsp;</span><span style='font-size:12.0pt;font-family:"Times New Roman",serif'>To pay to the assuming insurer amounts held in the trust account in excess of the</span><span style='font-size:12.0pt;font-family:"Times New Roman",serif'> </span><span style='font-size:12.0pt;font-family:"Times New Roman",serif'>amount necessary to secure the credit or reduction from liability for reinsurance taken by</span><span style='font-size:12.0pt;font-family:"Times New Roman",serif'> </span><span style='font-size:12.0pt;font-family:"Times New Roman",serif'>the ceding insurer; or</span></p> <p class=MsoNormal style='margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;line-height:normal'><span style='font-size:12.0pt;font-family:"Times New Roman",serif'>&nbsp;</span></p> <p class=MsoNormal style='margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;line-height:normal'><span style='font-size:12.0pt;font-family:"Times New Roman",serif'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (3)</span><span style='font-size:12.0pt;font-family:"Times New Roman",serif'>&nbsp;&nbsp;</span><span style='font-size:12.0pt;font-family:"Times New Roman",serif'>Where the ceding insurer has received notification of termination of the trust and</span><span style='font-size:12.0pt;font-family:"Times New Roman",serif'> </span><span style='font-size:12.0pt;font-family:"Times New Roman",serif'>where the assuming insurer's entire obligations under the specific reinsurance agreement</span><span style='font-size:12.0pt;font-family:"Times New Roman",serif'> </span><span style='font-size:12.0pt;font-family:"Times New Roman",serif'>remain unliquidated and undischarged ten days prior to the termination date, to withdraw</span><span style='font-size:12.0pt;font-family:"Times New Roman",serif'> </span><span style='font-size:12.0pt;font-family:"Times New Roman",serif'>amounts equal to the assuming insurer's share of liabilities, to the extent that the</span><span style='font-size:12.0pt;font-family:"Times New Roman",serif'> </span><span style='font-size:12.0pt;font-family:"Times New Roman",serif'>liabilities have not yet been funded by the assuming insurer, and deposit those amounts in</span><span style='font-size:12.0pt;font-family:"Times New Roman",serif'> </span><span style='font-size:12.0pt;font-family:"Times New Roman",serif'>a separate account, in the name of the ceding insurer in any qualified U.S. financial</span><span style='font-size:12.0pt;font-family:"Times New Roman",serif'> </span><span style='font-size:12.0pt;font-family:"Times New Roman",serif'>institution apart from its general assets, in trust for the uses and purposes specified in</span><span style='font-size:12.0pt;font-family:"Times New Roman",serif'> </span><span style='font-size:12.0pt;font-family:"Times New Roman",serif'>subdivisions (1) and (2) of this section as may remain executory after withdrawal and for</span><span style='font-size:12.0pt;font-family:"Times New Roman",serif'> </span><span style='font-size:12.0pt;font-family:"Times New Roman",serif'>any period after the termination date.</span></p> <p class=MsoNormal style='margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;line-height:normal'><span style='font-size:12.0pt;font-family:"Times New Roman",serif'>&nbsp;</span></p> <p class=MsoNormal style='margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;line-height:normal'><span style='font-size:12.0pt;font-family:"Times New Roman",serif'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <b>Source:</b> 44 SDR 71, effective October 23, 2017.</span></p> <p class=MsoNormal style='margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;line-height:normal'><span style='font-size:12.0pt;font-family:"Times New Roman",serif'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <b>General Authority:</b> SDCL </span><span style='font-size:12.0pt;font-family:"Times New Roman",serif'>58-14-17.</span></p> <p class=MsoNormal style='margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;line-height:normal'><span style='font-size:12.0pt;font-family:"Times New Roman",serif'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <b>Law Implemented:</b> SDCL </span><span style='font-size:12.0pt;font-family:"Times New Roman",serif'>58-14-16, 58-14-17.</span></p> <p class=MsoNormal style='margin-bottom:0in;margin-bottom:.0001pt;text-align: justify;line-height:normal'><span style='font-size:12.0pt;font-family:"Times New Roman",serif'>&nbsp;</span></p> </div> </body> </html>