Underwriting and Reinsurance Pools Working · PDF fileRegulation of Voluntary Underwriting and Reinsurance Pools White Paper National Association of Insurance Commissioners

Regulation of VoluntaryUnderwriting and

Reinsurance PoolsWhite Paper

NationalAssociation ofInsuranceCommissioners

© Copyright 2003 by National Association of Insurance Commissioners All rights reserved.

ISBN 0-89382-958-7

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© 2002 National Association of Insurance Commissioners

Draft: 11/27/02 Adopted by Financial Condition (E) Committee

REGULATION OF VOLUNTARY UNDERWRITING AND REINSURANCE

POOLS WHITE PAPER

INTRODUCTION ...................................................................................................................................................... 1 HISTORY OF VOLUNTARY UNDERWRITING AND REINSURANCE POOLS........................................... 2

Life Pools.................................................................................................................................................................. 2 Accident and Health Pools........................................................................................................................................ 2 Property and Casualty Pools ..................................................................................................................................... 4

MANAGEMENT OF VOLUNTARY UNDERWRITING AND REINSURANCE POOLS ............................... 6 Underwriting Agreements......................................................................................................................................... 6 Pool Membership...................................................................................................................................................... 7 Fronting Company .................................................................................................................................................... 7 Reporting and Inspection .......................................................................................................................................... 8 Fee Structures ........................................................................................................................................................... 8 Retrocessions ............................................................................................................................................................ 9 Underwriting Expertise and Guidelines.................................................................................................................... 9 Claims Adjudication ................................................................................................................................................. 9 Actuarial Support.................................................................................................................................................... 10

STATE LAWS GOVERNING UNDERWRITING AND REINSURANCE POOLS......................................... 11 NAIC LISTING OF ALL POOLS AND ASSOCIATIONS.................................................................................. 13 STATUTORY ACCOUNTING AND REPORTING REQUIREMENTS........................................................... 14 RECOMMENDATIONS.......................................................................................................................................... 15 EXHIBIT A – State Chart Regarding Status of NAIC Property and Casualty Model Rating Law ................. 19 EXHIBIT B – NAIC Listing of Pools as of December 13, 2001 ............................................................................ 24 EXHIBIT C – NAIC Request for Alien Insurer Identification Number.............................................................. 33 EXHIBIT D – SSAP No. 63 – Underwriting Pools and Associations Including Intercompany Pools ............... 34



INTRODUCTION The Underwriting and Reinsurance Pools Working Group (Working Group) was formed in September, 1999, as a result of a number of issues arising from the operation of the Unicover Occupational Accident Pool (Unicover), including: underwriting losses sustained questions about licensing authority adequacy of current model laws and regulations with respect to the operation of pools reporting and disclosure of workers’ compensation carve-out business reinsured by a life insurer risk-based capital implications

The 2000 charge assigned to the Working Group was as follows:

The Underwriting and Reinsurance Pools Working Group will perform a comprehensive analysis and evaluation of workers’ compensation carve-out business and the operations of underwriting pools and associations, their impact on the insurance and reinsurance marketplace and the extent that current statutory authority may have to be revised to ensure adequate and effective oversight.

This Report specifically addresses and provides recommendations as to the Working Group’s position on the following subissues identified in the 2000 charge: 1. Evaluate how pools’ financial condition is monitored and consider whether changes are needed.

Questions to be considered include:

a. How is the adequacy of reserves determined? b. Are actuarial opinions required for pools? c. Are pools examined by states? d. Are pools required to have a CPA audit? e. Do pools file financial statements (statement blank) with anyone?

2. Is the accounting guidance for pools within the Accounting Practices and Procedures Manual,

effective January 1, 2001, adequate? The Interested Parties of the Underwriting and Reinsurance Pools Working Group provided the information presented in the History and Management sections of this report, in part.

1© 2003 National Association of Insurance Commissioners


HISTORY OF VOLUNTARY UNDERWRITING AND REINSURANCE POOLS Underwriting and reinsurance pools and associations can be categorized as follows: (a) involuntary, (b) voluntary and (c) intercompany.

a. Involuntary pools and associations represent a mechanism employed by states to provide insurance coverage to those with expected higher than average probability of loss who otherwise would be excluded from obtaining coverage. Reporting entities are generally required to participate in the underwriting results, including premiums, losses, expenses, and other operations of involuntary pools, based on their proportionate share of similar business written in the state. Involuntary plans are also referred to as residual market plans, involuntary risk pools and mandatory pools.

b. Voluntary pools and associations are similar to involuntary pools except they are not state

mandated and a reporting entity participates in the pool voluntarily. In addition, voluntary pools are not limited to the provision of insurance coverage to those with higher than average probability of loss, but often are used to provide greater capacity for risks with exceptionally high levels of insurable values (e.g., aircraft, nuclear power plants, refineries and offshore drilling platforms).

c. Intercompany pooling relates to business, which is pooled among affiliated entities that

are party to an intercompany reinsurance and pooling arrangement. Although life companies utilize voluntary pools for catastrophe claims today, participation by accident and health and the property and casualty insurance companies is more prevalent, and therefore the primary focus of this report.

Life Pools Voluntary life pools existed in the 1970s and 1980s to reinsure jumbo or large face amount life policies. The arrangement was usually coinsurance among a group of unaffiliated companies taking a predetermined percentage of the remaining risk above the ceding company’s retention. One type of life pool that is currently being utilized is the catastrophic assessment pool. In these pools, a group of life companies join together to spread the disproportional effects of a catastrophe equitably among the member companies. In these pools there are no premiums, reserves, underwriters, actuarial opinions, etc. Catastrophic claims in excess of a deductible are assessed to the various members. Assessments are payable directly to the claiming company. The administrator of the pools determines the equitable sharing mechanism and handles the assessment process. Given their assessment nature, these types of pools are not the focus of this report or its recommendations. At this time, reinsurance pools are used infrequently, if at all, in the life insurance industry.

Accident and Health Pools Although several states have established statutory high-risk health insurance pools and/or small employer health pools, most accident and health pools can be classified as voluntary. With the advent of jumbo jets in the mid-1960s, it became evident that the existing capacity routinely provided through



reinsurance from Lloyd’s syndicates, would be insufficient to respond to the additional demands of the marketplace. Two experienced reinsurance underwriters, one with a background in aviation and the other in accident and health, saw an opportunity resulting from this market development and collaborated to develop the first accident and health reinsurance pool in the United States. Instead of soliciting support from individuals willing to commit their own personal wealth, domestic life and health insurance companies were approached to provide reinsurance capacity because of the combined strength of the member companies’ capital and surplus. In addition, reinsurance premium that historically had gone overseas was recaptured for the domestic marketplace. Initially, the types of business reinsured were generally accident-related, such as business travel accident programs, life catastrophe covers, seat accident on corporate owned aircraft, payroll deducted voluntary accident programs, war risk hazards, hazardous occupations and/or avocations, etc. The underlying products provided a fixed and/or a specific scheduled benefit amount in the event of an accidental death, dismemberment or other permanent disability that resulted from a covered event/loss. Reinsurance was provided on both a treaty and facultative basis, either as excess of loss or quota share. In addition to accessing new markets without the customary start-up costs, a member company could limit its liabilities by selecting a level of participation commensurate with its appetite for risk. Later, the reinsurance on medical business was added to the portfolio of products offered by these pools. The opportunity was created by the dramatic increase in inflation trends, cost shifting, the introduction of HMO options, utilization and medical technology advances that caused many employers to seek alternative funding arrangements with which many insurers were unfamiliar and needed assistance in responding to the market. Accident and health pools provided reinsurance on medical plans that were self-funded by the employer on a specific per person/per year basis and on an aggregate maximum policy year loss excess basis. Reinsurance of other medical coverages, some on a first dollar basis, was later introduced by accident and health pools. Accident and health reinsurance pools participated in the reinsurance of concentration exposures under certain workers’ compensation contracts as early as the 1970s (i.e., helicopter and crew boat exposures to offshore oilrigs and platforms in the Gulf of Mexico and elsewhere). In the mid-1980s, the workers’ compensation carve-out1 product was more formally introduced. This product was developed in response to the “global” unbundling of property and casualty treaties because of a hardening market, higher prices, reduced capacity and a general concern over accumulation of exposures. The original purpose of this product was to supply additional capacity needed for catastrophic workers’ compensation exposures since life and health reinsurers were not susceptible to catastrophic property loss resulting from natural disasters as were their property and casualty counterparts. Attachment points were lowered over time as the experience of life and health reinsurers grew. It was not until the late 1970s that several accident and health reinsurance pools were established. Growth in this area was generated by market demand as well as the substantial profit margins in these lucrative arrangements. Pool managers formed new facilities covering the same classes of business. In some instances, companies already participating in a pool wanted to increase their participation; in others, new pools were created to make provision for new members and/or to accommodate classes of business that would be best managed separately. 1 Workers’ compensation carve-out business is defined as reinsurance (including retrocessional reinsurance) assumed by life and health insurers of medical, wage loss and death benefits of the occupational illness and accident exposures, but not the employers liability exposures, of business originally written as workers’ compensation insurance. [NAIC Workers’ Compensation Carve-Out Business White Paper dated June 12, 2001]



Pool managers controlled the process. At meetings held by pool managers, only very general information about the business written by the pool was routinely provided to pool members. In some instances, these meetings may have included information on market conditions, retro covers purchased on behalf of the pool membership, new products, reserving methodology, significant industry events, etc. In the very early days of accident and health pools, managers generally did not solicit input from members, and audits were strongly discouraged or never encouraged. Often pool members did not exhibit any real interest in having more involvement in the management of the pools in which they participated, other than attending annual meetings. Generally, a potential pool member chose to participate based on its comfort level with the pool’s “management style.” Some of the participating companies recognized the profit potential of this business and chose to enter the marketplace as independent reinsurers by setting up separate departments or divisions while often retaining their existing pool participations. Companies were able to take a more significant share of placements but, in many instances, were competing against themselves on a given account. As more companies and pools entered the accident and health reinsurance arena, competition became fierce. The excess capacity created a buyers’ market and drove pricing downward while at the same time broadening contract terms and conditions. As profit margins began to decline and pool members became more knowledgeable about the business being written, there was a gradual increase in their involvement in pool management. Over time, member companies turned their attention to underwriting, claims adjudication and adequacy of reserves. More recently, there has been a move toward reinsurance underwriting managers writing on behalf of a single company. In some instances, a company required partial ownership of the reinsurance underwriting manager. Most of the pool managers who remain in business today have been involved in this marketplace for a long time and view the increased involvement and due diligence conducted by member companies as a way to protect the integrity of the business environment. In the history of accident and health reinsurance, there may have been as many as several dozen pools managed by a dozen or so pool managers representing several hundred million of per occurrence capacity. These numbers have diminished in recent years with a series of adverse market situations, not the least of which was the Unicover debacle. The recent events have heightened regulatory concern and industry criticism of the pool managers. Much of the insurance industry was affected by this situation in one way or another. Although Unicover was not managed as a traditional accident and health reinsurance pool, but rather a workers’ compensation pool, the events surrounding this situation have had a significant impact on accident and health reinsurance pools. Member companies began to withdraw from pool participation therefore greatly diminishing the capacity of these pools. Many pools are currently in runoff and many pool managers no longer exist.

Property and Casualty Pools There are several types of voluntary industry pools, many of which are created because one insurer is unable to assume the significant exposures inherent to the industry or contract. Two examples of such exposures are the aviation and nuclear industries. There are several large aviation pools. One was formed in 1929 and has been an affiliate of a London-based aviation insurance pool since 2000. It offers aviation insurance as well as support for various



aviation activities and industries. It employs approximately 240 people, specializing in airline, products liability and general aviation classes of business. It provides expertise in underwriting, claims servicing and support functions such as data processing, accounting, reinsurance, legal counsel, and safety and engineering. This pool underwrites aviation business on behalf of eight insurers that are severally liable for their participation share in the pool. These insurers have combined premiums of over $140 billion and combined assets of over $900 billion. Generally, coverage is issued on a syndicate basis: the policies are issued on a subscription basis by the U.S. admitted insurers, and then non-admitted members of the pool receive their respective participation shares through a reinsurance allocation. There are also nuclear pools. One was formed in 1957, when Congress enacted the Price-Anderson Act to encourage the commercial development of nuclear energy. This pool offers protection against nuclear incidents to commercial nuclear power plants and other nuclear facilities. There are currently 44 member companies, all domiciled within the U.S. and each with a specific share of the pool. The pool operates under a constitution, which is signed by all members, as well as general rules. Each member must have at least an A- rating from A.M. Best and at least $50 million in policyholder surplus and is limited to no more than 15 percent of the pool. In addition to the Board, there are committees that address underwriting, finance, claims, audit, engineering and security issues. Twenty-five of the members subscribe on the policies and internal reinsurance reallocates the premiums and obligations to the 44 members.



MANAGEMENT OF VOLUNTARY UNDERWRITING AND REINSURANCE POOLS The concepts underlying this section are applicable to both accident and health and property and casualty voluntary pools, although the nomenclature is specific to accident and health business.

Underwriting Agreements All aspects of pool management are generally outlined in a contract known as a participation agreement or underwriting management agreement. Agreements were initially written in the fashion of a treaty contract and could range from two or three pages to more than 30 pages. The purpose of the agreement is to outline the responsibilities of the pool manager as well as the pool participants or pool members. Every facet of reinsurance management is addressed in this agreement (e.g., types or lines of business permitted to be written; classes of business specifically excluded; dollar limits both on a per person basis and a per occurrence or aggregate basis; premium and loss payments; allowances; profit commission formulas; reports and remittances; termination provisions; arbitration provisions). However, with the exception of classes of business that could and or could not be written and limits of authority, the agreement generally provides the pool managers with a very broad authority. According to many of these agreements, the pool manager can exercise broad discretion as to production and solicitation of business, underwriting (including the development of rating guidelines and manuals), contract issuance, administration and accounting, claims adjudication (including establishing case reserves, conducting audits, negotiating settlements and commutations, participating in arbitrations and managing disputes), ceded retrocessions, establishing IBNR, etc. The agreements are specific with regard to the fiduciary responsibility of the underwriting manager to pool members. Generally these agreements are written on a continuous basis, subject to the termination provision of the agreement. Each year the configuration of the pool may change, but the underlying management agreement generally does not. Most agreements include a provision for a “working” fund or “loss” fund for each agreement year. This provision allows for a cash balance to be maintained by the pool manager to have sufficient funds in order to settle claims between reporting periods. If funds are utilized in full or in part during one reporting period, they are immediately replenished in the next. In the event there are insufficient funds to cover losses in any given reporting period, the management agreements generally allow for a 'cash call' which member companies are required to respond to in a specified period of time (usually 10 working days or less). From time to time, it may be necessary to adjust these loss funds (up or down) depending on loss activity to avoid cash calls. Interest earned on these funds is generally credited to the member companies. Agreements will often address how funds may be invested. Generally, these participation/management agreements provided for the establishment of an “advisory” committee that would consist of a subset of the general pool membership. Usually, those members that participated in advisory committees were companies that had the largest shares or percentages of the pool’s capacity, or those that had personnel who were knowledgeable of the business being written by pool management. Advisory committee members, by and large, are nominated by the pool manager and approved by the general membership. These committee members are called upon to provide input to pool managers on such subjects as review of underwriting practices or rating guidelines, to assist in the development or at least endorse reserving methodology, to participate in the selection criteria of new



member companies or other significant items related to the operation of the pool. Participation/management agreements may or may not have a specific provision for audits of the pool manager by members; however, if audits were conducted they were in large part conducted by the advisory committee or by a member company appointed by the advisory committee. Some pools did not have an advisory committee per se, but rather several subcommittees that were responsible for specific functions, such as claims, underwriting, reserve methodology or auditing to name a few. Today, some pools have boards of directors and active committees whose members constitute a significant portion of the pools’ membership. In such instances, the boards and committees may be more than advisory in nature and may have significant decision-making authority for the pools. General pool membership had very few rights or responsibilities under the agreement, other than the obligation to accept liability for risks attaching to this agreement and the resulting profit or loss. Pool members could increase or decrease their share or percentage of participation in the pool capacity from year to year, or choose to depart from the pool entirely, but the advisory committee decided any significant issues. Today, general membership has a voice in the overall management of pools; however their suggestions are usually funneled through the appointed advisory committee or subcommittee.

Pool Membership The structure of the pool was developed in one of two ways. First, a pool manager may have determined what capacity (either on a per person basis and/or per occurrence/aggregate basis) he or she would require to effectively market and solicit business. Companies would then be solicited for participation as a percent of this dollar amount. The second way would be for a pool manager to solicit company participation based on the maximum dollar amount that the companies would feel appropriate to commit. The total of all these dollar lines would be equal to the total capacity of the pool. Percentages would then be assigned by the particular dollar amount that a company had committed to as a function of the total capacity. In most instances reinsurance pools’ member obligations were several not joint, meaning that pool members were not responsible for the share of another company should that company become insolvent and unable to pay claims.

Fronting Company In the past, “pool paper” was an acceptable form of security (i.e., signing contracts on behalf of the named pool). However, some ceding companies were concerned with the idea of a “several not joint” arrangement and therefore specifically requested that there be an issuing company in front of the pool to eliminate issues related to an insolvency of a member company. As time went on, this request was more routinely made. In response to this demand in the market place most, if not all pools, established a separate agreement with one of the member companies or a group of member companies to become the issuing carrier for the total pool membership. The criteria for selection of the issuing company varied from pool to pool, however the size of an issuing company’s capital and surplus and its industry rating were critical factors.



In some arrangements, reinsurance contracts were signed on behalf of the issuing carrier and then retroceded in their entirety to the pool membership of which they were a participant. In other arrangements, the issuing carrier would retain a portion of the assumed risk and retrocede the balance to the pool membership as retrocessionaires. The amount of involvement by the issuing carrier in placing the retrocessional capacity behind them varied from one situation to another. The underwriting manager did not always orchestrate these arrangements: in some situations the issuing carrier made the arrangements and in other situations a broker was appointed to do so. In fact, there are arrangements in which the reinsurance underwriting manager acts only in the capacity of production and underwriting for the issuing carrier. In these cases, the issuing carrier provides all operational support. The issuing carrier, acting only in the capacity of a front company, would receive a fronting fee for the utilization of its paper and for the risk attached to covering the potential insolvencies of the member companies behind them. Further, there are certain arrangements in which the issuing carrier has ownership of the underwriting manager, in full or in part.

Reporting and Inspection In general, the reporting by pool managers to pool members is generated quarterly on a cash basis and on an underwriting basis, although some produce reports on a monthly basis. Information provided in these reports can range from very basic data such as gross written premium, expenses, paid losses, incurred losses and IBNR to a detailed bordereau of specific account information both bound and quoted. Carriers report that in contrast to the earlier years of reinsurance underwriting management, participating companies are now active at every level of pool management, and the frequency and depth of audits and inspections have increased dramatically. Arrangements with reinsurance underwriting managers in general have more defined structures, and more stringent terms and conditions in the management agreements. The premium, losses, expenses, etc., are reflected in the accounts and annual statements of the pools’ members. (See, for example, SSAP No. 63, Summary Conclusion 8.) It has generally been deemed unnecessary to have the pool complete a statutory annual statement, actuarial certification or audited financial statements because these occur at the insurance company pool member level. Reporting at the pool level was considered duplicative because: 1) the member companies assume the risk simultaneously with the execution of the insurance policy; 2) the pool is not the risk-taker; and 3) each member records its share of the pool experience.

Fee Structures In some cases, pool managers are compensated in two ways. The fee level, which is set to cover the pool manager’s basic operating expenses, is agreed to by the pool manager and pool members. Some management fees are variable up to a certain maximum (applied by the underwriting manager on a case- by- case- basis), while others are on a sliding scale. The second facet of their compensation takes the form of a profit commission. The formula is calculated as a percent of profit and generally includes a provision for a deficit carry-forward. In other words, if any given year produces a negative result, this deficit is carried forward into the calculation of profit in subsequent agreement years. Most deficit carry-forward provisions are limited to three years, but some are unlimited.



The purpose of this two-pronged approach to pool managers’ compensation is to provide sufficient capital to cover basic operating expenses, with the real opportunity for income and growth that exists in producing profitable results, thereby maintaining appropriate incentives. Although not normally a substantial source of revenue, some management agreements also allow for pool managers to earn interest income on the balance of premiums held during the period of time when premiums are paid by clients to the underwriting manager and the date payments are remitted to member companies in the next reporting period.

Retrocessions Decisions regarding retrocessional markets are usually made jointly by the pool members and the pool manager). The decisions are largely based on the size (i.e., premium volume) of the pool, the types of business written, the mix of business, etc. To the extent possible, pool managers attempted to address the collective comfort level of member companies and their appetite for risk retention. Some pool managers were very conservative and purchased reinsurance on an account basis, either facultatively or by a cession treaty in addition to cat covers, while others purchased only catastrophe covers. Furthermore, as with many insurance companies, market conditions were often a key factor in the selection of attachment points and occurrence limits of catastrophe covers. Decisions related to the selection, including criteria for selection, of retrocessional markets and acceptable security are, in large part, left to the member companies or issuing carrier. This evaluation would include ratio tests, industry ratings, amount of capital and surplus, or other factors deemed essential by member companies or issuing carriers.

Underwriting Expertise and Guidelines Although the expertise of the underwriting staff can vary, most reinsurance underwriting managers establish specific authority levels for their individual underwriters commensurate with that person’s level of experience. These thresholds can be triggered by premium volume, attachment level, per person limit, per occurrence limit, type of risk, class of business, or any specified combination of these or similar factors. Most reinsurance underwriting managers now also require multiple sign-off or underwriting committee approval for risks exceeding a given threshold. Underwriting guidelines and manuals may be created internally or by information purchased from outside actuarial firms. In some situations, the member companies will participate in developing underwriting manuals. Depending on the specific product line, sophisticated computer pricing models are available. These manuals and pricing models are updated on a regular basis or more often as the need arises.

Claims Adjudication As previously indicated, management agreements ordinarily give broad authority with regard to claims adjudication. This would include, but not be limited to, establishing case reserves, negotiating settlements and commutations, participating in arbitrations and managing disputes. Member company input is minimal, except at the invitation of the underwriting manager, in extraordinary circumstances or perhaps in developing an overall claims philosophy. This, of course is not the case in every situation. In fact, one source advised that in its agreement, it was the issuing carrier’s responsibility to handle all issues relating to litigation and arbitration.



Most reinsurance underwriting managers have experienced claims personnel on staff. The size of their claim department is dependent on the volume and type of business they write. However, managers will from time to time utilize outside claim services when necessary. As with underwriting, claim managers establish specific authority levels commensurate with a particular claim adjuster’s level of experience. The type of claim, the amount of the claim, the specifics of the claim or any particular combination of these factors can trigger these thresholds. Some claims may require multiple sign-off and underwriter approval. A regular schedule of claim audits is generally maintained. Depending on the specific account, underwriting staff may accompany claims personnel to conduct these audits. Most underwriting managers have automated systems in place to make proper recoveries under retrocessional agreements.

Actuarial Support Initially, pool managers used the services of outside actuaries almost exclusively. As the management of pools became more sophisticated, the need for dedicated actuarial services became apparent. Larger reinsurance underwriting managers have actuaries on staff, while smaller operations utilize the actuarial services of the member companies. The scope of the services provided by these actuaries to reinsurance underwriting managers has expanded over the years and now includes: working with the underwriting department to establish manuals and rating guidelines; assisting in determining the adequacy of case reserves; developing IBNR claim reserving methodologies and formulae, performing statistical studies and developing mathematical processes for pricing; and performing claim lag studies, to name a few of their functions. Some agreements, however, do require a final sign-off on IBNR reserves by the issuing carrier or a committee chosen by pool membership. The role of actuaries on staff at reinsurance underwriting managers has more recently expanded into marketing, as well. It is generally believed to be very beneficial to have actuaries interact with underwriters at every level. In reality, actuaries have by and large become involved in every aspect of reinsurance underwriting management. Reinsurance underwriting managers continue to use outside actuarial services for the purchase of industry data to assist in the development of rate manuals. Contracts with outside services would include regular periodic updates of statistical data, notification of material changes in data, and other information necessary in maintaining sound underwriting and pricing guidelines. Many reinsurance underwriting managers solicit input from member companies’ actuaries when the need arises.



STATE LAWS GOVERNING UNDERWRITING and REINSURANCE POOLS The NAIC has developed a model law specific to property and casualty insurers that establishes some statutory requirements for joint underwriting pools and associations. However, there is no NAIC model law applicable to life or accident and health pools. The Property and Casualty Model Rating Law (Model Law) provides authority for the establishment of both voluntary and involuntary property and casualty underwriting and reinsurance pools and requires information supporting the formation or modification of a pool to be filed with the regulator. This Model Law also provides for examination authority, but does not establish any specific reporting requirements. No solvency standards apply directly to pools, as they are business ventures of the participating insurers. The pool itself may or may not be profitable, and adverse experience only raises solvency concerns from a regulatory perspective to the extent that it has an impact on the financial condition of one or more participating insurers. The relevant provisions of the Model Law are as follows2: Section 2. Definitions I. “Joint underwriting,” means a voluntary arrangement established to provide insurance coverage for a risk pursuant to which two (2) or more insurers jointly contract with the insured at a price and under policy terms agreed upon between the insurers. Section 17. Joint Underwriting, Joint Reinsurance Pool and Residual Market Activities A. Notwithstanding Section 12B(1), insurers participating in joint underwriting, joint reinsurance pools or residual market mechanisms may in connection with such activity act in cooperation with each other in the making of rates, rating systems, policy forms, underwriting rules, surveys, inspections and investigations, the furnishing of loss and expense statistics or other information, or carrying on research. Joint underwriting, joint reinsurance pools and residual market mechanisms shall not be deemed advisory organizations. B. Except to the extent modified by this section, insurers, joint underwriting, joint reinsurance pool and residual market mechanism activities are subject to the other provisions of this Act. C. If, after hearing, the commissioner finds that any activity or practice of an insurer participating in joint underwriting or a pool is unfair, is unreasonable, will tend to lessen competition in any market or is otherwise inconsistent with the provisions or purposes of this Act, the commissioner may issue a written order and require the discontinuance of such activity or practice. D. Every pool shall file with the commissioner a copy of its constitution; its articles of incorporation, agreement or association; its bylaws, rules and regulations governing its activities; its members; the name and address of a resident of this State upon whom notices or orders of the commissioner or process may be served; and any changes in amendments or changes in the foregoing. E. Any residual market mechanism, plan or agreement to implement such a mechanism, and any changes or amendments thereto, shall be submitted in writing to the commissioner for consideration and approval, together

2 The NAIC has adopted two versions of the Property and Casualty Model Rating Law. The language reproduced here is from the File and Use Version. The corresponding provisions of the Prior Approval Version,§§ 2(F), 14, and 15, are substantially similar, except that the definition of joint underwriting is expressly limited to commercial risks.



with such information as may be reasonably required. The commissioner shall approve only such agreements as are found to contemplate: (i) the use of rates that meet the standards prescribed by this Act, and (ii) activities and practices that are not unfair, unreasonable or otherwise inconsistent with the provisions of this Act. At any time after such agreements are in effect, the commissioner may review the practices and activities of the adherents to such agreements and if, after a hearing, the commissioner finds that any such practice or activity is unfair or unreasonable, or is otherwise inconsistent with the provisions of this Act, the commissioner may issue a written order to the parties and either require the discontinuance of such acts or revoke approval of any such agreement. Section 18. Examinations The commissioner may, as often as he or she may deem it expedient, make or cause to be made an examination of each advisory organization or statistical agent referred to in Section 11 and of each group, association or other organization referred to in Section 17, provided that each statistical agent and advisory organization licensed in this state shall be examined at least once every five (5) years. The reasonable costs of any such examination shall be paid by the advisory organization, statistical agent or group, association or other organization examined. The officers, manager, agents and employees of such advisory organization, statistical agent, or group, association or other organization may be examined at any time under oath and shall exhibit all books, records, accounts, documents or agreements governing its method of operation. In lieu of any such examination, the commissioner may accept the report of an examination made by the insurance supervisory official of another state, pursuant to the laws of that state. Exhibit A provides a detailed listing of the status of this Model Law in each state.



NAIC LISTING OF ALL POOLS AND ASSOCIATIONS The NAIC maintains a numerical listing of all pools and associations in the Listing of Companies (see Exhibit B) for purposes of Annual Statement reporting. In order to report transactions involving pools or associations consisting of non-affiliated companies correctly, an insurer must include in Schedule F (Property and Casualty companies) or Schedule S (Life & Health companies) the appropriate Pool/Association Identification Number. The report is categorized by “type” as follows based upon the information provided to the NAIC on the application: INVOLUNTARY:

State Auto Pools State FAIR Plans State Coastal Plans State WC Plans State Mine Subsidence Plans Other Public Entity Pools High Risk WC Reinsurance Pools

VOLUNTARY:

National Insurance Programs Illinois Insurance Exchange New York Insurance Exchange Insurance Exchange of the Americas Alien Pools Industry Pools/Associations

In order to be included in the Listing of Companies, the pool must complete an application (see Exhibit C for example of application) and file a copy of the Certificate of Authority. Although the form is titled “Request for Alien Identification Number,” insurers use it for pools. No other compliance or due diligence functions are performed by the NAIC for voluntary pools.



STATUTORY ACCOUNTING AND REPORTING REQUIREMENTS SSAP No. 63–Underwriting Pools and Associations Including Intercompany Pools (see Exhibit D for a copy of SSAP No. 63) establishes the statutory accounting principles for underwriting pools and associations. SSAP No. 63 is a “common area” pronouncement; therefore all reporting entities including property/casualty, life/accident and health insurers must follow the accounting and reporting guidance provided therein. The scope of SSAP No. 63 includes underwriting pools and associations categorized as involuntary, voluntary or intercompany. SSAP No. 63 requires the following accounting treatment:

8. Underwriting results shall be accounted for on a gross basis whereby the participant’s portion of premiums, losses, expenses, and other operations of the pools are recorded separately in the financial statements rather than netted against each other. Premiums and losses shall be recorded as direct, assumed, and/or ceded as applicable. If the reporting entity is a direct writer of the business, premiums shall be recorded as directly written and accounted for in the same manner as other business, which is directly written by the entity. To the extent that premium is ceded to a pool, premiums and losses shall be recorded in the same manner as any other reinsurance arrangement. A reporting entity that is a member of a pool shall record its participation in the pool as assumed business as in any other reinsurance arrangement.

SSAP No. 63 requires the following disclosures. These are included as part of Annual Statement Note #25 to the Notes to Financial Statements:

10. If a reporting entity is part of a group of affiliated entities which utilizes a pooling arrangement under which the pool participants cede substantially all of their direct and assumed business to the pool, the financial statements shall include:

a. A description of the basic terms of the arrangement and the related accounting; b. Identification of the lead entity and of all affiliated entities participating in the

intercompany pool (include NAIC Company Codes) and indication of their respective percentage shares of the pooled business;

c. Description of the lines and types of business subject to the pooling agreement; d. Description of cessions to non-affiliated reinsurers of business subject to the pooling

agreement, and indication of whether such cessions were prior to or subsequent to the cession of pooled business from the affiliated pool members to the lead entity;

e. Identification of all pool members which are parties to reinsurance agreements with non-affiliated reinsurers covering business subject to the pooling agreement and which have a contractual right of direct recovery from the non-affiliated reinsurer per the terms of such reinsurance agreements;

f. Explanation of any discrepancies between entries regarding pooled business on the assumed and ceded reinsurance schedules of the lead entity and corresponding entries on the assumed and ceded reinsurance schedules of other pool participants;

g. Description of intercompany sharing, if other than in accordance with the pool participation percentage, of the Provision for Reinsurance (Schedule F, Part 7) and the write-off of uncollectible reinsurance.



RECOMMENDATIONS 1. Currently there are several regulatory tools in place to oversee the financial condition operations

of pools and associations. These include state laws governing property and casualty pools, statutory examination authority over the joint underwriting and joint reinsurance associations and pools, annual statement disclosure and statutory accounting guidelines. Although several states have laws establishing high-risk health insurance pools and/or small employer health pools, most accident and health pools can be classified as voluntary.

The only model law in existence that provides for the oversight of voluntary pools and associations is the Property and Casualty Model Rating Law. Not all states have adopted the Model. Several states have statutes that do not include examination authority. Some states may have examination authority over pools but not exercise it, and if the domiciliary state does not have the Model Rating Law or the pool is outside its scope, the extent of the examination authority may be unclear. In addition, this Model Law is not required under the NAIC Financial Regulation Standards and Accreditation Program, and does not apply to life or accident and health pools. The Working Group recommends that each state review its legal framework to determine if it has the requisite statutory authority to oversee the financial condition of voluntary life, accident and health, and property and casualty pools and associations. This would include but not be limited to the filing of periodic financial statements and other documents with respect to corporate governance, management and pool membership, as well as the authority to perform a financial condition examination as often as the commissioner deems expedient.

2. Currently, there is no specific producer licensing requirement for reinsurance underwriting

managers. In some cases, licensure as a reinsurance intermediary may be required, since recent amendments to the Reinsurance Intermediary Model Act clarify that a pool manager is exempt “only if the group association, pool or organization of insurers (as distinguished from its members) is subject to examination by the [Insurance Commissioner] of the state in which the manager's principal business office is located.”

Although the states must be capable of monitoring pool activity and its impact on the financial condition of companies that participate in such pools or associations, the Working Group believes that the major responsibility for oversight and due diligence of initial and continued participation in a pool lies with the insurance and reinsurance companies involved. The Working Group recommends that companies that are pool members evaluate their initial and continued participation based on the criteria listed below on at least an annual basis. Pool members, however, may consider the due diligence functions performed by other pool members or by standing committees of pool members established by the governing board for a specific purpose, e.g., underwriting, claims, reinsurance and audit where appropriate. Similarly, a ceding company should have an internal process with respect to its reinsurance program to evaluate cessions into a prospective facility to ensure that the pool is well managed and consists of financially strong insurers, not only so that the reinsurance will mitigate its loss exposure but also so that the credit for risks ceded to the pool will be fully allowed.



It is also recommended that the states consider these guidelines as “best practices” for monitoring and examining companies’ participation in pools. Incorporation of these practices into an insurer’s internal audit process and a state’s regulatory procedures will provide an enhanced understanding of the risk in the business being assumed, and establish guidance on appropriate controls with respect to a company’s prospective participation.



A. Due Diligence Initial - Review of overall business plans of the underwriting manager - Review of business plan for the specific pool (e.g., target markets, premium projections,

underwriting manual, claim manual) - Review of past performance (where applicable) - Substantiate acceptable level of expertise (resumes of key management personnel) - Personal interviews with key management, underwriting, claims, actuarial, accounting and

administration personnel - Review of financials - Audit of underwriting, claims, finance, accounting and operations. The pool manager may allow

examination of a prior audit, but would probably not allow an audit by a non-member company. - Review reserving methodology - Ensure that proper licensing has been obtained - Ascertain that underwriting manager has purchased appropriate insurance (e.g., E&O; officers

and directors coverage) - Pool manager should meet financial standards acceptable to the pool members or issuing carrier

Ongoing - Audit of underwriting, claims, finance, accounting and operations on a regular basis - Review reserving methodology and adequacy of reserves - Review schedule for client underwriting and claims audits - On site visits to maintain open communication and obtain an ongoing knowledge of business

being transacted, change in personnel, systems, etc. - Formal meetings with all pool members to address significant issues, including projections and

initiatives - Determine if any change in the manager’s overall business plan since inception, changes in

underwriting philosophy, marketing strategy or product mix. Reasons why? - Ensure that proper licensing has been maintained - Ensure that appropriate insurance is maintained (e.g., E&O; officers and directors coverage)

B. Control Measures

- Purposefully written management agreement - Premium restrictions on an account basis - Premium restrictions on an aggregate basis per agreement year - Management fees on a sliding scale basis or committing a portion of the management fee to risk. - Specific guidelines (e.g., retention’s; limits; lines of business permitted and prohibited, pricing) - Defined authorities and thresholds according to level of experience of underwriting and claims

personnel - Encourage more formal training or education, including industry designations for decision-making

personnel - Require regular review of underwriting and claim manuals and updates when necessary - Provide oversight, or require prior approval, of ceded reinsurance - Provide comprehensive guidelines for security approval on both member companies and

retrocessionaires of the pool - Periodic outside actuarial review of reserving methodology and adequacy of reserves

Establish comprehensive reporting format - Maintain timely reporting

3. The Working Group strongly suggests that the Life and Health Actuarial Task Force and the Casualty Actuarial Task Force consider the feasibility of requiring an actuarial opinion with respect to the pool’s business and access to the actuary’s workpapers as well as the member companies’ audits and actuarial reviews. It is also recommended that the Life and Health Actuarial Task Force consider which jurisdiction’s minimum reserving standard should apply if it recommends that life or accident and health pools and associations be required to file an actuarial opinion.



4. The Working Group also recommends that NAIC/AICPA (E) Working Group consider whether

pools and associations should be required to file an independent statutory audit opinion and be subject to requirements similar to those in the Model Audit Rule, giving appropriate consideration to the pass-through nature of pools and technical issues such as reconciliation between fiscal year and calendar year accounting for pools that do not operate on a calendar year basis.

5. The Working Group is aware that Risk-Based Capital charges are calculated on a net basis,

flowing through premiums and losses in both the life and property and casualty formulae. However, it is recommended that both Task Forces review the calculation to determine if an additional charge is needed when business that arises in a property and casualty company, such as the workers’ compensation carve-out, is reinsured with a life company or vice versa.

6. The Working Group recommends that the Statutory Accounting Principles (E) Working Group

review SSAP No. 63, paragraph 10.g., to determine whether Schedule S should be included in the parenthetical description. Inclusion would eliminate confusion that the disclosure is only applicable to property and casualty insurers.

7. The Working Group recommends modernizing the NAIC application process to list pools and

associations and assign identification numbers for Annual Statement reporting of pool transactions in Schedule F or Schedule S to provide some level of due diligence. Currently an applicant must complete a form titled “Request for Alien Identification Number” and file a copy of the Certificate of Authority. Since the states do not have uniform filing requirements for pools incorporated in their jurisdictions and many do not issue certificates of authority, minimal information is available for regulatory purposes.

The Working Group does not mean to suggest that the recommendations in this report will prevent another opportunistic incident that circumvents regulatory oversight. However, the recommended enhancements to the existing regulatory monitoring process will provide the states with the additional tools to detect many potential problems. In addition, the heightened awareness of both regulators and the insurance industry, because of the fallout from the recent Unicover event, should make both experienced and potential start-up underwriting managers more cautious about entering the arena and should diminish the incentive to seek a quick financial return without a long term commitment to the industry and its partners.



EXHIBIT A – State Chart Regarding Status of NAIC Property and Casualty Model Rating Law

NAIC MEMBER MODEL/SIMILAR LEGIS. RELATED LEGIS./REGS Alabama ALA. CODE §§ 27-13-1 to 27-13-

105 (1971): Bulletin dated March 15, 1990 [4]

Alaska ALASKA STAT. §§ 21.39.010 to 21.39.070 (1966/1984) [2]

ALASKA ADMIN. CODE tit. 3 §§ 29.200 to 29.300 (1992/1993) [4]

Arizona ARIZ. REV. STAT. ANN. §§ 20-341 to 20-359 (1954/1990) [2, 3]

Arkansas ARK. STAT. ANN. §§ 23-67-101 to 23-67-122 (1987/1999) [1, 3]

ARK. STAT. ANN. §§ 23-67-206 (1987/1999) [5]; 23-79-109 (1959/1999); ARK. INS. RULE & REG. 23 (1981/1991). [4]

California CAL. INS. CODE §§ 1850 to 1858.35 (1947-1988) (Some parts from 1963 model); See also CAL. ADMIN. CODE tit. 10 §§ 2641.1 to 2647.1 (1991/1992).

Colorado COLO. REV. STAT. §§ 10-4-401 to 10-4-418 (1979/2000) [2, 4]

COLO. REV. STAT. §§ 10-4-1401 to 10-4-1404 (1999); COLO. ADMIN. INS. REG. 5-1-13 (2000) [5]; COLO. ADMIN. INS. REG. 5-1-10 (1991) [4]

Connecticut CONN. GEN. STAT. §§ 38a-663 to 38a-680 (1969/1989) (Commercial lines) [2, 4]

CONN. GEN. STAT. §§ 38a-684 to 38a-694 (1982) (Personal risk insurance) [3]; Bulletin PC-8 (1990) [4]

Delaware DEL. CODE ANN. Tit. 18 §§ 2501 to 2531 (1953/1963) [2]

DEL. CODE ANN. tit. 19 §§ 2601 to 2623 (1993) (Worker’s Comp.) [3, 4]; FORM AND RATES BULLETIN 5 (1990/1992) [4]

District of Columbia D.C. CODE ANN. §§ 35-1601 to 35-1609; 35-1701 to 35-1710; (1973).

Florida FLA. STAT. §§ 627.011 to 627.381 (1982/1990) [4]; FLA. ADMIN. CODE § 4-170.007 (1990) [4]



Georgia GA. CODE ANN. §§ 33-9-1 to 33-

9-38 (1967/1987) [2, 3] DIRECTIVE NO. 90-PC-6 (1990) [4]; GA. ADMIN. COMP. Ch. 120-2-77 (1999) [5]

GUAM GUAM GOVT CODE §§ 43385 to 43387 (1978).

Hawaii HAWAII REV. STAT. §§ 431:14-101 to 431:14-120 (1988/1997) [2, 4]

Idaho IDAHO CODE §§ 41-1401 to 41-1441 (1969).

Illinois Rating law expired 1971; but see ILL. ADMIN. REG. Tit. 50 § 754 for some filing requirements.

Indiana IND. CODE §§ 27-1-22-1 to 27-1-22-24 (1967/1985) [2]

Bulletin 67 (1991) [4]; IND. CODE §§ 27-1-22-2.5 to 27-1-22-4 (1999) [5]

Iowa IOWA CODE §§ 515F.1 to 515F.19 (1990) [2, 3, 4]

See also Directive dated April 6, 1990 [4]

Kansas KAN. STAT. ANN. §§ 40-951 to 40-967 (1997/1999) [1, 3, 5]

KAN. ADMIN. REGS. 40-3-46 to 40-3-47 (1991) [4]

Kentucky KY. REV. STAT. §§ 304.13-011 to 304.13-390 (1982/2000) [1, 3, 4]

KY. REV. STAT. § 304.11-020 (1970/2000) [5]

Louisiana LA. REV. STAT. ANN. §§ 22:1401 to 22:1422 (1979/1984); 22:620 (1999); LA. INS. REG. 72 (2000) [5]

Maine ME. REV. STAT. ANN. tit. 24-A §§ 2301 to 2330 (1970/1991) [2, 4]

ME. REV. STAT. ANN. tit. 24-A § 2412-A (1999) [5]; BULLETIN 241 (1995) [4]

Maryland MD. ANN. CODE Ins. §§ 11-01 to 11-232 (1945/1997) [2]; 11-301 to 11-344 (1984/1997) [1.3]

MD. ADMIN. CODE §§ 31.07.01.01 to 31.07.01.08 (1990) [4]

Massachusetts MASS. GEN. LAWS ch. 174A §§ 1 to 19; ch. 175A (1947/1985); §§ 1 to 20 (1947/1983) [2]

BULLETIN SRB-90-5 (1990) [4]; HB 998, SB 4022 pending (1999) to add [5]



Michigan MICH. COMP. LAWS §§ 500.2600

to 500.2674 (1957) (Fire) [2] MICH. COMP. LAWS §§ 500.2101 to 500.2114 (1979) (Auto and homeowners); §§ 500.2408 to 500.2484 (1956) (Casualty).

Minnesota MINN. STAT. §§ 70A.01 to 70A.23 (1969/1987) [3]

Mississippi MISS. CODE ANN. §§ 83-2-1 to 83-2-31 (1988) [1]

Missouri MO. REV. STAT. §§ 379.316 to 379.361 (1972/1999) [2, 5]

MO. ADMIN. CODE tit. 20 § 500-4.200 (1990) [4]

Montana MONT. CODE ANN. §§ 33-16-101 to 33-16-405 (1969/1999) [2]

MONT. ADMIN. R. 6.6.3001 to 6.6.3007 (1990) [4]

Nebraska NEB. REV. STAT. §§ 44-7501 to 44-7535 (2001) [3, 4]; NEB. ADMIN. R. tit. 210 ch. 73 pending (2000) [4]

Nevada NEV. REV. STAT. §§ 686B.010 to 686B.175 (1971/1990) [2]

NEV. ADMIN. CODE §§ 686B.400 to 686B.460 (1990) [4]

New Hampshire N.H. REV. STAT. §§ 413:1 to 413:10 (1947) (Rating Organizations); §§ 414:1 414:9 (1947) (Fire and Casualty) [2]

N.H. Admin. CODE INS. 2801.01 to 2801.07 (1990/1992) [4]

New Jersey N. J. REV. STAT. §§ 17:29AA-1 17:29AA-32 (1982) Commercial lines [1]

See also. N.J. REV. STAT. §§ 17:29A-1 to 17:29A-32 (1944/1950); P.L. 1990 c.8(Fair Automobile Insurance Reform Act of 1990) [4 for auto]; N.J. ADMIN. CODE §§ 11:3-16.1 to 11:13-16.10 (1990) [4 for auto]; §§ 11:13-8.1 to 11:13-8.5 (1993); 11:4-9.1 to 11:4-9.5 (1995) [4]

New Mexico N.M. STAT. ANN. §§ 59a-17-1 to 59A-17-35 (1985/1987) [1, 3, 4]

N.M. INS. REGS. Art. 17 Rule 1 (1987) [SCC-87-3-IN] [4]

New York N.Y. INS. LAWS §§ 2301 to 2344 (1984/1990) [3] See also N.Y. ADMIN. CODE tit. 11§§ 161.0 to 161.9 (Regulation 129) (1986) on flex rating.

North Carolina N.C. STAT. LAWS §§ 58-40-1 to 58-40-140 (1977/1989) [Parts of 1,2]

N.C. ADMIN. CODE tit. 11 ch. 10 §§ .1601 to .1604 (1991/1992) [4]



North Dakota N.D. CENT. CODE §§ 26.1-25-01

to 26.1-25-18 (1983/1991) [2, 4]

Bulletin 90-1 (1990) [4]

Ohio OHIO REV. CODE ANN. §§ 3935.01 to 3935.99; 3937.01 to 3997.99 (1947-1948) [2]

Bulletin 91-1 (1991) [4]

Oklahoma OKLA. STAT. Tit. 36 §§ 901 to 938 (1957/1997) [2]

OKLA. STAT. Tit. 36 §§ 981 to 998 (1999) [3, 5]; OKLA. INS> REGS. § 570:10-1-3 (1992/1994).

Oregon OR. REV. STAT. §§ 737.007 to 737.560 (1967-1987); Bulletin INS-90-4 (1990) [4]

Pennsylvania PA. CONS. STAT. §§ 40-65-101 to 40-65-119 (1947/1994); §§ 40-67-101 to 40-67-119 (1961/1994) [2]

Directive dated July 16, 1990 [4] Statement of Policy § 120.1 to 120.5 (1993) (Worker’s Comp.) [4]; PA. CONS. STAT. §§ 40-66-101 to 40-66-119 (1998) [5]

Puerto Rico P.R. LAWS ANN. tit. 26 §§ 1201 to 1240 (1979) [2]

Rhode Island R.I. GEN. LAWS §§ 27-44-1 to 27-44-22 (1988) [1, 3] (use for competitive market); §§ 27-6-1 to 27-6-52; 27-9-1 to 27-9-52 (1948/1993) [2] (Use for non-competitive market)

R.I. GEN. LAWS §§ 27-7.1-1 to 27-7.1-25 (1985/1998) (Workers’ compensation); §§ 27-64-1 to 27-64-2 (1999) [5]; Bulletin dated April 27, 1990 [4]

South Carolina S.C. CODE ANN. §§ 38-73-10 to 38-73-1540 (1988/2000) [2, 5]

South Dakota S.D. CODIFIED LAWS ANN. §§ 58-24-1 to 58-24-65 (1966/1990) [2]

Bulletin 94-3 (1994) [4]

Tennessee TENN.CODE ANN. §§ 56-5-301 to 56-5-318 (1983).

Texas TEX. INS. CODE ANN. art. 5.01 to 5.54 (1951/1993).

Utah UTAH CODE ANN. §§ 31A-19a-101to 31A-19a-210 (1986/1999) [3]; UTAH INS. REG. R590-140 (1990/2000) and Bulletin 90-6 (1990) [4]

Vermont VT. STAT. ANN. tit. 8 §§ 4681 to 4708 (1984/1990) [1, 3]

Bulletin 99 (1990) [4]



Virgin Islands NO ACTION TO DATE

Virginia VA. CODE §§ 38.2-1900 to 38.2-2027 (1986/2000) [3, 4, 5]; Admin. Letters 1990-5, 1993-10 [4]

Washington WASH. REV. CODE ANN. §§ 48.19.010 to 48.19.440 (1947/1983); WASH. ADMIN. CODE R. §§ 284-24-010 to 284-24-100 (1982/1990) [4]

West Virginia W. VA. CODE §§ 33-20-1 to 33-20-16 (1957/1986) [2]

West Virginia Informational Letter No. 68 (1990) [4]

Wisconsin WIS. STAT. §§ 625.01 to 625.35 (1969/1979) [1]

Bulletin dated June 11, 1990 [4]

Wyoming WYO. STAT. §§ 26-14-101 to 26-14-118 (1983/1988) [1, 3]

[1] Similar to competitive rating model; found at p. 775-1. [2] Similar to prior approval model; found at p. 780-1. [3] Distinguishes between competitive and non-competitive market. [4] Includes provisions regarding filing of advisory rates based on loss costs. [5] Commercial lines re-engineering.



EXHIBIT B – NAIC Listing of Pools as of December 13, 2001 NAIC Numerical List of Pools and Associations December 13, 2001

TYPE POOL/ASSOCIATION/ENTITY STATE POOL NUMBER STATE AUTOMOBILE POOLS ALABAMA COMMERCIAL AUTO INS PROCEDURE ALABAMA AA-9991100

ALASKA SERVICING CARRIER PROGRAM ALASKA AA-9991101 ARIZONA COMMERCIAL AUTO INS PROCEDURE ARIZONA AA-9991102 ARKANSAS COMMERCIAL AUTO INS PROCEDURE ARKANSAS AA-9991103 ARKANSAS SPECIAL RISK PROGRAM ARKANSAS AA-9991104 CALIFORNIA COMMERCIAL AUTO INS PROCEDURE CALIFORNIA AA-9991105 CALIFORNIA SPECIAL RISK PROGRAM CALIFORNIA AA-9991106 COLORADO COMMERCIAL AUTO INS PROCEDURE COLORADO AA-9991107 CONNECTICUT COMMERCIAL AUTO INS PROCEDURE CONNECTICUT AA-9991108 CONNECTICUT SPECIAL RISK PROGRAM CONNECTICUT AA-9991109 DELAWARE COMMERCIAL AUTO INS PROCEDURE DELAWARE AA-9991110 FLORIDA JOINT UNDERWRITING ASSN FLORIDA AA-9991111 GEORGIA COMMERCIAL AUTO INS PROCEDURE GEORGIA AA-9991112 HAWAII JOINT UNDERWRITING PROGRAM HAWAII AA-9991113 IDAHO COMMERCIAL AUTO INS PROCEDURE IDAHO AA-9991114 ILLINOIS COMMERCIAL AUTO INS PROCEDURE ILLINOIS AA-9991115 ILLINOIS SPECIAL RISK PROGRAM ILLINOIS AA-9991116 INDIANA COMMERCIAL AUTO INS PROCEDURE INDIANA AA-9991117 IOWA COMMERCIAL AUTO INS PROCEDURE IOWA AA-9991118 KANSAS COMMERCIAL AUTO INS PROCEDURE KANSAS AA-9991119 KENTUCKY COMMERCIAL AUTO INS PROCEDURE KENTUCKY AA-9991120 LOUISIANA COMMERCIAL AUTO INS PROCEDURE LOUISANA AA-9991121 MAINE COMMERCIAL AUTO INS PROCEDURE MAINE AA-9991122 MARYLAND INDUSTRY AUTO INS ASSN MARYLAND AA-9991123 MICHIGAN AUTO INS PLACEMENT FACILITY MICHIGAN AA-9991124 MINNESOTA COMMERCIAL AUTO INS PROCEDURE MINNESOTA AA-9991125 MINNESOTA SPECIAL RISK PROGRAM MINNESOTA AA-9991126 MISSISSIPPI COMMERCIAL AUTO INS PROCEDURE MISSISSIPPI AA-9991127 MISSOURI JOINT UNDERWRITING ASSN MISSOURI AA-9991128 MONTANA COMMERCIAL AUTO INS PROCEDURE MONTANA AA-9991129 NEBRASKA COMMERCIAL AUTO INS PROCEDURE NEBRASKA AA-9991130 NEVADA COMMERCIAL AUTO INS PROCEDURE NEVADA AA-9991131

NEW HAMPSHIRE AUTO REINS FACILITY (PRIV PASSENGE NEW HAMPSHIRE AA-9991132

NEW HAMPSHIRE COMMERCIAL AUTO INS PROCEDURE NEW HAMPSHIRE AA-9991133

NEW JERSEY COMMERCIAL AUTO INS PROCEDURE NEW JERSEY AA-9991134 NEW JERSEY MARKET TRANSITION FACILITY NEW JERSEY AA-9991135 NEW MEXICO COMMERCIAL AUTO INS PROCEDURE NEW MEXICO AA-9991136 NEW YORK SPECIAL RISK DISTRIBUTION PROGRAM NEW YORK AA-9991137

NEW YORK TAXI LIMO POOL(NY PUBLIC AUTO PROGRAM) NEW YORK AA-9991138

NORTH CAROLINA REINS FACILITY NORTH CAROLINA AA-9991139

NORTH DAKOTA COMMERCIAL AUTO INS PROCEDURE NORTH DAKOTA AA-9991140

OHIO COMMERCIAL AUTO INS PROCEDURE OHIO AA-9991141 OKLAHOMA COMMERCIAL AUTO INS PROCEDURE OKLAHOMA AA-9991142



NAIC Numerical List of Pools and Associations December 13, 2001

TYPE POOL/ASSOCIATION/ENTITY STATE POOL NUMBER

OREGON COMMERCIAL AUTO INS PROCEDURE OREGON AA-9991143

PENNSYLVANIA COMMERCIAL AUTO INS PROCEDURE PENNSYLVANIA AA-9991144

PENNSYLVANIA SPECIAL RISK PROGRAM PENNSYLVANIA AA-9991145 RHODE ISLAND COMMERCIAL AUTO INS PROCEDURE RHODE ISLAND AA-9991146

SOUTH CAROLINA COMMERCIAL AUTO INS PROCEDURE SOUTH CAROLINA AA-9991147

SOUTH CAROLINA REINS FACILITY SOUTH CAROLINA AA-9991148

SOUTH DAKOTA COMMERCIAL AUTO INS PROCEDURE SOUTH DAKOTA AA-9991149

TENNESSEE COMMERCIAL AUTO INS PROCEDURE TENNESSEE AA-9991150 UTAH COMMERCIAL AUTO INS PROCEDURE UTAH AA-9991151 VERMONT COMMERCIAL AUTO INS PROCEDURE VERMONT AA-9991152 VIRGINIA COMMERCIAL AUTO INS PROCEDURE VIRGINIA AA-9991153 WASHINGTON COMMERCIAL AUTO INS PROCEDURE WASHINGTON AA-9991154 WASHINGTON SPECIAL RISK PROGRAM WASHINGTON AA-9991155 WEST VIRGINIA COMMERCIAL AUTO INS PROCEDURE WEST VIRGINIA AA-9991156 WISCONSIN SPECIAL RISK PROGRAM WISCONSIN AA-9991157 WYOMING COMMERCIAL AUTO INS PROCEDURE WYOMING AA-9991158 MICHIGAN CATASTROPHIC CLAIMS ASSN MICHIGAN AA-9991159

NEW JERSEY UNSATISFIED CLAIM AND JUDGMENT FUND NEW JERSEY AA-9991160

COMMONWEALTH AUTOMOBILE REINSURERS MASSACHUSETTS AA-9991161 NEW JERSEY AUTO INS RISK EXCH(NJ AIRE) NEW JERSEY AA-9991162 MINNESOTA ASSIGNED CLAIMS BUREAU MINNESOTA AA-9991163 PA POOLED COMMERCIAL ASSIGNMENT PROCEDURE PENNSYLVANIA AA-9991164 TEXAS AUTOMOBILE INS PLAN(TX ASSIGNED RISK) TEXAS AA-9991165 NJ VOLUNTARY PRIVATE PASSENGER AUTO INS POOLNEW YORK AA-9991166 STATE FAIR PLANS ARKANSAS FAIR PLAN ARKANSAS AA-9991200 CALIFORNIA FAIR PLAN CALIFORNIA AA-9991201 CONNECTICUT FAIR PLAN CONNECTICUT AA-9991202 DELAWARE FAIR PLAN DELAWARE AA-9991203

DISTRICT OF COLUMBIA FAIR PLAN WASHINGTON, D.C. AA-9991204

GEORGIA FAIR PLAN GEORGIA AA-9991205 ILLINOIS FAIR PLAN ILLINOIS AA-9991206 INDIANA FAIR PLAN INDIANA AA-9991207 IOWA FAIR PLAN IOWA AA-9991208 KANSAS FAIR PLAN KANSAS AA-9991209 KENTUCKY FAIR PLAN KENTUCKY AA-9991210 LOUISIANA FAIR PLAN LOUISIANA AA-9991211 MARYLAND FAIR PLAN MARYLAND AA-9991212 MASSACHUSETTS FAIR PLAN MASSACHUSETTS AA-9991213 MICHIGAN FAIR PLAN MICHIGAN AA-9991214 MINNESOTA FAIR PLAN MINNESOTA AA-9991215 MISSISSIPPI FAIR PLAN MISSISSIPPI AA-9991216 MISSOURI FAIR PLAN MISSOURI AA-9991217 NEW JERSEY FAIR PLAN NEW JERSEY AA-9991218 NEW MEXICO FAIR PLAN NEW MEXICO AA-9991219 NEW YORK FAIR PLAN NEW YORK AA-9991220 NORTH CAROLINA FAIR PLAN NORTH CAROLINA AA-9991221 OHIO FAIR PLAN OHIO AA-9991222 OREGON FAIR PLAN OREGON AA-9991223





PENNSYLVANIA FAIR PLAN PENNSYLVANIA AA-9991224 RHODE ISLAND FAIR PLAN RHODE ISLAND AA-9991225 VIRGINIA FAIR PLAN VIRGINIA AA-9991226 WASHINGTON FAIR PLAN WASHINGTON AA-9991227 WEST VIRGINIA FAIR PLAN WEST VIRGINIA AA-9991228 WISCONSIN FAIR PLAN WISCONSIN AA-9991229 STATE COASTAL (BEACH AND WINDSTORM) PLANS

ALABAMA BEACH PLAN ALABAMA AA-9991300

FLORIDA WINDSTORM POOL FLORIDA AA-9991301 LOUISIANA BEACH PLAN LOUISIANA AA-9991302 MISSISSIPPI BEACH PLAN MISSISSIPPI AA-9991303 NORTH CAROLINA BEACH PLAN NORTH CAROLINA AA-9991304 SOUTH CAROLINA BEACH PLAN SOUTH CAROLINA AA-9991305 TEXAS BEACH PLAN TEXAS AA-9991306 FLORIDA HURRICANE CATASTROPHE FUND FLORIDA AA-9991310 MISSISSIPPI WINDSTORM UNDERWRITING ASSN MISSISSIPPI AA-9991315 OHIO WINDSTORM REINS POOL OHIO AA-9991320 STATE WORKERS' COMP PLANS ALABAMA WORKERS’ COMP ALABAMA AA-9991400 ALASKA WORKERS’ COMP ALASKA AA-9991401 ARIZONA WORKERS’ COMP ARIZONA AA-9991402 ARKANSAS WORKERS’ COMP ARKANSAS AA-9991403 CALIFORNIA WORKERS’ COMP CALIFORNIA AA-9991404 COLORADO WORKERS’ COMP COLORADO AA-9991405 CONNECTICUT WORKERS’ COMP CONNECTICUT AA-9991406 DELAWARE WORKERS’ COMP DELAWARE AA-9991407

DISTRICT OF COLUMBIA WORKERS’ COMP DISTRICT OF COLUMBIA AA-9991408

FLORIDA WORKERS’ COMP FLORIDA AA-9991409 GEORGIA WORKERS’ COMP GEORGIA AA-9991410 HAWAII WORKERS’ COMP HAWAII AA-9991411 IDAHO WORKERS’ COMP IDAHO AA-9991412 ILLINOIS WORKERS’ COMP ILLINOIS AA-9991413 INDIANA WORKERS’ COMP INDIANA AA-9991414 IOWA WORKERS’ COMP IOWA AA-9991415 KANSAS WORKERS’ COMP KANSAS AA-9991416 KENTUCKY WORKERS’ COMP KENTUCKY AA-9991417 LOUISIANA WORKERS’ COMP LOUISIANA AA-9991418 MAINE WORKERS’ COMP MAINE AA-9991419 MARYLAND WORKERS’ COMP MARYLAND AA-9991420 MASSACHUSETTS WORKERS’ COMP MASSACHUSETTS AA-9991421 MICHIGAN WORKERS’ COMP MICHIGAN AA-9991422 MINNESOTA WORKERS’ COMP MINNESOTA AA-9991423 MISSISSIPPI WORKERS’ COMP MISSISSIPPI AA-9991424 MISSOURI WORKERS’ COMP MISSOURI AA-9991425 MONTANA WORKERS’ COMP MONTANA AA-9991426 NEBRASKA WORKERS’ COMP NEBRASKA AA-9991427 NEVADA WORKERS’ COMP NEVADA AA-9991428 NEW HAMPSHIRE WORKERS’ COMP NEW HAMPSHIRE AA-9991429 NEW JERSEY WORKERS’ COMP NEW JERSEY AA-9991430 NEW MEXICO WORKERS’ COMP NEW MEXICO AA-9991431 NEW YORK WORKERS’ COMP NEW YORK AA-9991432 NORTH CAROLINA WORKERS’ COMP NORTH CAROLINA AA-9991433 NORTH DAKOTA WORKERS’ COMP NORTH DAKOTA AA-9991434





OHIO WORKERS’ COMP OHIO AA-9991435 OKLAHOMA WORKERS’ COMP OKLAHOMA AA-9991436 OREGON WORKERS’ COMP OREGON AA-9991437 PENNSYLVANIA WORKERS’ COMP PENNSYLVANIA AA-9991438 PUERTO RICO WORKERS’ COMP PUERTO RICO AA-9991439 RHODE ISLAND WORKERS’ COMP RHODE ISLAND AA-9991440 SOUTH CAROLINA WORKERS’ COMP SOUTH CAROLINA AA-9991441 SOUTH DAKOTA WORKERS’ COMP SOUTH DAKOTA AA-9991442 TENNESSEE WORKERS’ COMP TENNESSEE AA-9991443 TEXAS WORKERS’ COMP TEXAS AA-9991444 UTAH WORKERS’ COMP UTAH AA-9991445 VERMONT WORKERS’ COMP VERMONT AA-9991446 VIRGINIA WORKERS’ COMP VIRGINIA AA-9991447 WASHINGTON WORKERS’ COMP WASHINGTON AA-9991448 WEST VIRGINIA WORKERS’ COMP WEST VIRGINIA AA-9991449 WISCONSIN WORKERS’ COMP WISCONSIN AA-9991450 WYOMING WORKERS’ COMP WYOMING AA-9991451 STATE MINE SUBSIDENCE FUNDS ILLINOIS MINE SUBSIDENCE FUND ILLINOIS AA-9991500 INDIANA MINE SUBSIDENCE FUND INDIANA AA-9991501 KENTUCKY MINE SUBSIDENCE FUND KENTUCKY AA-9991502 OHIO MINE SUBSIDENCE FUND OHIO AA-9991503 TENNESSEE MINE SUBSIDENCE FUND TENNESSEE AA-9991504 VIRGINIA MINE SUBSIDENCE FUND VIRGINIA AA-9991505 WEST VIRGINIA MINE SUBSIDENCE FUND WEST VIRGINIA AA-9991506 OTHER PUBLIC ENTITY POOLS ALASKA SMALL EMPLOYER HEALTH REINS PGM ALASKA AA-9992000 ARIZONA SMALL EMPLOYER HEALTH REINS PGM ARIZONA AA-9992001 CALIFORNIA SMALL EMPLOYER HEALTH REINS PGM CALIFORNIA AA-9992002 DELAWARE SMALL EMPLOYER HEALTH REINS PGM DELAWARE AA-9992003 IDAHO SMALL EMPLOYER HEALTH REINS PGM IDAHO AA-9992004 ALLIANCE FOR AFFORDABLE HEALTH CARE TEXAS AA-9992005 MARYLAND SMALL EMPLOYER HEALTH REINS PGM MARYLAND AA-9992006 MN SMALL EMPLOYER HEALTH REINS PGM MINNESOTA AA-9992007 MISSOURI SMALL EMPLOYER HEALTH REINS PGM MISSOURI AA-9992008 MONTANA SMALL EMPLOYER HEALTH REINS PGM MONTANA AA-9992009 NEBRASKA SMALL EMPLOYER HEALTH REINS PGM NEBRASKA AA-9992011 NJ SMALL EMPLOYER HEALTH REINS PGM NEW JERSEY AA-9992012 ND SMALL EMPLOYER HEALTH REINS PGM NORTH DAKOTA AA-9992013 OK SMALL EMPLOYER HEALTH REINS PGM OKLAHOMA AA-9992014 RI SMALL EMPLOYER HEALTH REINS PGM RHODE ISLAND AA-9992015 SC SMALL EMPLOYER HEALTH REINS PGM SOUTH CAROLINA AA-9992016 TEXAS SMALL EMPLOYER HEALTH REINS PGM TEXAS AA-9992017

THE COLORADO SMALL EMPLOYER HEALTH REINS PROGRAM COLORADO AA-9992019

COLORADO SCHOOL DISTRICTS SIF COLORADO AA-9992020 ALABAMA DIV OF RISK MGMT ALABAMA AA-9992021 GEORGIA DIV OF RISK MGMT SERVICES GEORGIA AA-9992022 IRFFNC INTERLOCAL RISK FINANCING FUND OF NC NORTH CAROLINA AA-9992025

ERISA EMPLOYERS RETIREMENT INCOME SECURITY ACT FLORIDA AA-9992030

FLORIDA SMALL EMPLOYER HEALTH REINS PROGRAM FLORIDA AA-9992034





FLORIDA MUNICIPAL LIAB SELF INSURERS PROGRA FLORIDA AA-9992035 IOWA SMALL EMPLOYER HEALTH REINS PROGRAM CONNECTICUT AA-9992037

KANSAS SMALL EMPLOYER HEALTH REINS PROGRAM CONNECTICUT AA-9992041

MA SMALL EMPLOYER HEALTH REINS PLAN MASSACHUSETTS AA-9992045 MASSACHUSETTS CRIME INS PROGRAM MASSACHUSETTS AA-9992046 MN HEALTH COVERAGE REINS ASSN CONNECTICUT AA-9992049

MMRMA MICHIGAN MUNICIPAL RISK MGMT AUTHORITY MICHIGAN AA-9992052

MISSISSIPPI INS UNDERWRITING ASSN MISSISSIPPI AA-9992054 MISSISSIPPI RURAL RISK UNDERWRITING ASSN MISSISSIPPI AA-9992055 NC SMALL EMPLOYER HEALTH REINS POOL NORTH CAROLINA AA-9992056 NATIONAL ASSN FOR SELF EMPLOYED TEXAS AA-9992057 OHIO SMALL EMPLOYER HEALTH REINS PROGRAM OHIO AA-9992058 NEW JERSEY CRIME IND PLAN NEW JERSEY AA-9992059

OVERSEAS PRIVATE INVESTMENT CORP(OPIC) DISTRICT OF COLUMBIA AA-9992060

OHIO INS OPEN ENROLLMENT REINS PROGRAM OHIO AA-9992061 OR SMALL EMPLOYER HEALTH REINS POOL CONNECTICUT AA-9992062 ALLIANCE OF SCHOOLS COOP INS PROGRA CALIFORNIA AA-9992063

PUERTO RICO FIRE & ALLIED LINES UNDERWRITING ASS PUERTO RICO AA-9992068

SOUTH CAROLINA INS RESERVE FUND SOUTH CAROLINA AA-9992074 STATE OF SC BUDGET & CONTROL BOARD SOUTH CAROLINA AA-9992075 TN SMALL EMPLOYER HEALTH REINS PROGRAM CONNECTICUT AA-9992080 TEXAS SMALL PREMIUM POLICY PLAN TEXAS AA-9992082 WISCONSIN SPECIAL RISK DISTRIBUTION PROGRAM RHODE ISLAND AA-9992090

WYOMING SMALL EMPLOYER HEALTH REINS PROGRAM CONNECTICUT AA-9992093

HIGH RISK WORKERS' COMPENSATION REINSURANCE POOLS ALABAMA WC POOL FOR COAL MINE RISKS ALABAMA AA-9992100 ILLINOIS WC POOL FOR COAL MINE RISKS ILLINOIS AA-9992101 IOWA WC POOL FOR COAL MINE RISKS IOWA AA-9992102 KENTUCKY WC POOL FOR COAL MINE RISKS KENTUCKY AA-9992103 TENNESSEE WC POOL FOR COAL MINE RISKS TENNESSEE AA-9992105 VIRGINIA WC POOL FOR COAL MINE RISKS VIRGINIA AA-9992106 ALASKA WORKERS’ COMP REINS POOL ALASKA AA-9992107 NEW MEXICO WORKERS’ COMP REINS POOL NEW MEXICO AA-9992108 ARKANSAS STOCK POOL FOR ASSIGNED RISKS ARKANSAS AA-9992109 ILLINOIS STOCK POOL FOR ASSIGNED RISKS ILLINOIS AA-9992110 PENNSYLVANIA WC INS PLACEMENT & REINS POOL PENNSYLVANIA AA-9992111 ARKANSAS MUT REINS POOL FOR ASSIGNED RI ARKANSAS AA-9992112 ILLINOIS MUT REINS POOL FOR ASSIGNED RI ILLINOIS AA-9992113

MICHIGAN WORKERS’ COMP INS PLACEMENT FACILITY MICHIGAN AA-9992114

MAINE WORKERS’ COMP REINS POOL FOR 1987 POLICY YR MAINE AA-9992115

MAINE WORKERS’ COMP RESIDUAL MARKET POOL MAINE AA-9992116 ASSIGNED RISK POOL FOR RISKS IN PRE1970 POOLS NEW YORK AA-9992117 NATIONAL WORKERS’ COMP REINS POOL NEW YORK AA-9992118 CT SMALL EMPLOYER HEALTH REINS POOL (CSEHRP) CONNECTICUT AA-9992119 MINNESOTA WORKERS’ COMP INSURERS ASS INC MINNESOTA AA-9992120 MISSISSIPPI WORKERS’ COMP ASSIGNED RISK POOL MISSISSIPPI AA-9992121 MA WORKERS’ COMP ASSIGNED RISK POOL MASSACHUSETTS AA-9992122 NATIONAL INSURANCE PROGRAMS FEDERAL CROP INS CORP

DISTRICT OF COLUMBIA AA-9992200

NATIONAL FLOOD INS PROGRAM DISTRICT OF COLUMBIA AA-9992201

U S SMALL BUSINESS ADMINISTRATION DISTRICT OF COLUMBIA AA-9992202

U S DEPARTMENT OF TRANSPORTATION DISTRICT OF COLUMBIA AA-9992203




TYPE POOL/ASSOCIATION/ENTITY STATE POOL NUMBER ILLINOIS INSURANCE EXCHANGE AAI SYNDICATE #1 LTD ILLINOIS AA-9993100 AGORA SYNDICATE INC (IIE) ILLINOIS AA-9993101 ALLIANCE SYNDICATE INC (IIE) ILLINOIS AA-9993102 BRITAMCO UNDERWRITERS INC (IIE) ILLINOIS AA-9993103 CLASSIC SYNDICATE (IIE) ILLINOIS AA-9993104 COMPREHENSIVE ENSURERS MKT SYND INC CEM (IIE)ILLINOIS AA-9993105 FIRST MERCURY SYNDICATE (IIE) ILLINOIS AA-9993106 FIRST OAK BROOK CORP SYNDICATE INC (IIE) ILLINOIS AA-9993107 GENEVA ASSUR SYNDICATE INC (IIE) ILLINOIS AA-9993108 GENEVA UNDERWRITERS SYNDICTE INC (IIE) ILLIONIS AA-9993109 RCA SYNDICATE #1 LTD (IIE) ILLINOIS AA-9993110 RESURE INC (IIE) ILLINOIS AA-9993111 TRANSCO SYNDICATE #1 LTD (IIE) ILLINOIS AA-9993112 AGORA LTD SYNDICATE ILLINOIS AA-9993113 PRIME SYNDICATE ILLINOIS AA-9993114 NEW YORK INSURANCE EXCHANGE ADENA SYNDICATE LTD NEW YORK AA-9993200 ALLIANZ SYNDICATE INC NEW YORK AA-9993201 BROUGHER SYNDICATE INC NEW YORK AA-9993202 BURT SYNDICATE INC THE NEW YORK AA-9993203 CANDON SYNDICATE NV NEW YORK AA-9993204 FAIRWAY SYNDICATE INC NEW YORK AA-9993205 FIRST NY SYNDICATE CORP THE NEW YORK AA-9993206 FIRST RIVERSIDE SYNDICATE INC NEW YORK AA-9993207 FREMONT SYNDICATE INC THE NEW YORK AA-9993208 GALLEON SYNDICATE CORP NEW YORK AA-9993209 GOLDSTREET SYNDICATE CORP NEW YORK AA-9993210 HEARTLAND GRP INC THE NEW YORK AA-9993211 IAT SYNDICATE INC NEW YORK AA-9993212

JOHNSON & HIGGINS WILLIS FABER SYNDICATE A INC NEW YORK AA-9993213

J & H WF SYNDICATE B INC NEW YORK AA-9993214 KANSA SYNDICATE INC NEW YORK AA-9993215 KCC NEW YORK SYNDICATE CORP NEW YORK AA-9993216 MAIDEN LANE SYNDICATE INC THE NEW YORK AA-9993217 MML SYNDICATE INC NEW YORK AA-9993218 NRG AMERICA SYNDICATE INC NEW YORK AA-9993219 PAN ATLANTIC INVESTORS LTD NEW YORK AA-9993220 PINE TOP SYNDICATE INC NEW YORK AA-9993221 REALEX GRP NV THE NEW YORK AA-9993222 REPUBLIC WESTERN SYNDICATE INC NEW YORK AA-9993223 SENTRY SYNDICATE INC NEW YORK AA-9993224 SOUTH PLACE SYNDICATE INC THE NEW YORK AA-9993225 SPEAR LEEDS & KELLOGG RE CORP NEW YORK AA-9993226 SYNDICATE OF WALL STREET INVESTORS NV NEW YORK AA-9993227 U S RISK INC NEW YORK AA-9993228 WATER STREET SYNDICATE INC NEW YORK AA-9993229 INS EXCHANGE OF THE AMERICAS ADMINISTRATIVE MGMT SERVICES SYND LTD FLORIDA AA-9993300 AIB SYNDICATE INC FLORIDA AA-9993301 AMERICAN ROYAL SYNDICATE INC FLORIDA AA-9993302 BGH SYNDICATE INC FLORIDA AA-9993303 BISCAYNE INS SYNDICATE INC FLORIDA AA-9993304 FEICO SYNDICATE INC FLORIDA AA-9993305 FIRST INTER CONTINENT INS SYND INC FLORIDA AA-9993306 FIRST INVESTORS SYNDICATE INC FLORIDA AA-9993307 HISPANO AMER INS SYNDICATE INC FLORIDA AA-9993308 LAHUS II INC FLORIDA AA-9993309 LAHUS III INC FLORIDA AA-9993310 LAHUS V INC FLORIDA AA-9993311 PACIFIC INS SYNDICATE FLORIDA AA-9993312 RAM SYNDICATE INC FLORIDA AA-9993313 SYNDICATE FOUR INC FLORIDA AA-9993314 SYNDICATE ONE INC FLORIDA AA-9993315 SYNDICATE THREE INC FLORIDA AA-9993316 SYNDICATE TWO INC FLORIDA AA-9993317 U K LIFE INS CO(IEA) FLORIDA AA-9993318 W F POE SYNDICATE FLORIDA AA-9993319 ALIEN POOLS EXKO INTER POOL 1990 GERMANY AA-9994100




TYPE POOL/ASSOCIATION/ENTITY STATE POOL NUMBER EXKO CAPACITY XL GERMANY AA-9994101

FAREX GROUPEMENT FRANCAIS DE SOCIETES D ASSUR FRANCE AA-9994102

INTERNATIONAL OIL INSURERS U K AA-9994103 EUREX GIE FRANCE EXCESS FRANCE AA-9994104 MARINE FRANCE EXCESS GIE FRANCE EXCESS FRANCE AA-9994105 AVIATION FRANCE EXCESS GIE FRANCE EXCESS FRANCE AA-9994106 CANADIAN ACCIDENT REINS FACILITY CANADA AA-9994107

PARIS POOL D ASSUR DES RISQUES INTERNAT ET SPECI FRANCE AA-9994108

EXKO XL AGREEMENT 70 GERMANY AA-9994109 ALEXANDER HOWDEN EXCESS OF LOSS POOL U.K. AA-9994110 NORSK NATURSKADEPOOL NORWAY AA-9994111 LONDON ACCIDENT REINS GRP U.K. AA-9994112 SAUDI UNITED INS CO LTD EC SAUDI ARABIA AA-9994113 ONTARIO RISK SHARING POOL CANADA AA-9994114 CARF INTL CANADA AA-9994115 CARF II CANADA AA-9994116 GROUPEMENT D ASSUR DE RISQUES EXCEPTIONNELS FRANCE AA-9994117 GROUPEMENT D ACCEPTATIONS MARITIMES INTL FRANCE AA-9994118 CANADIAN LAWYERS INS ASSN CANADA AA-9994122 FACILITY ASSN CANADA AA-9994125 INI REINS POOL GERMANY AA-9994140 ISAR REINS MGMT GMBH GERMANY AA-9994141 INTERNATIONAL GRP PROTECTION & IND ASSN U.K. AA-9994143 KENYA MOTOR INS POOL KENYA AA-9994150 MUNICIPAL INS ASSN BRITISH COLUMBIA CANADA AA-9994157

NEW ZEALAND EARTHQUAKE & WAR DAMAGE COMMISSION NEW ZEALAND AA-9994165

NEW ZEALAND LOCAL AUTHORITY PROTECTION PGM FUND NEW ZEALAND AA-9994166

KOT SAVINGS COOP MUT INS ASSN KANSAS AA-9994167 EURO AMER REINS MGMT CO SRL ITALY AA-9994175 WILLIS FABER AVIATION MARKETING AGREEMENT U.K. AA-9994280 EUROPEAN EXCESS FACILITY GERMANY AA-9994281 INDUSTRY POOLS/ASSOCIATIONS AMERICAN ACCIDENT REINS GRP I NEW YORK AA-9995000 AMERICAN ACCIDENT REINS GRP II NEW YORK AA-9995001 AMERICAN ACCIDENT REINS GRP III NEW YORK AA-9995002 AMERICAN CARGO WAR RISK REINS EXCH NEW YORK AA-9995003 AMERICAN EXCESS INS ASSN CONNECTICUT AA-9995004 AMERICAN HULL INS SYNDICATE NEW YORK AA-9995005 ASSOCIATION OF MILL & ELEVATOR MUT INS COS ILLINOIS AA-9995006

AMERICAN NUCLEAR INSURERS CANADIAN LIAB & PROP CONNECTICUT AA-9995007

AMERICAN NUCLEAR INSURERS EXCESS PROP POOL CONNECTICUT AA-9995008

AMERICAN NUCLEAR INSURERS FOREIGN LIAB & PROP CONNECTICUT AA-9995009

AMERICAN NUCLEAR INSURERS PRIMARY LIAB POOL CONNECTICUT AA-9995010

AMERICAN NUCLEAR INSURERS PRIMARY PROP POOL CONNECTICUT AA-9995011

ASSOCIATED ACCIDENT & HEALTH REINS PENNSYLVANIA AA-9995012 ASSOCIATED AVIATION UNDERWRITERS (AAU) NEW JERSEY AA-9995013 ASSOCIATED COMMERCIAL PROP INSURERS NEW YORK AA-9995014 ASSOCIATED INLAND MARINE MASSACHUSETTS AA-9995015 MUTUAL CAS UNDERWRITERS POOL MASSACHUSETTS AA-9995016 SELECTED INS RISKS PLAN (SIR) MASSACHUSETTS AA-9995017 AUTOMOBILE INS UNDERWRITING ASSN PENNSYLVANIA AA-9995018 AVIATION OFFICE OF AMERICA INC NEW YORK AA-9995019 CAR FAC PROP FACULTATIVE SYNDICATE NEW YORK AA-9995020 DEVCO MUT ASSN PENNSYLVANIA AA-9995021 EXCESS AND CAS REINS ASSN (ECRA) NEW YORK AA-9995022 EXCESS BOND REINS ASSN NEW YORK AA-9995023 GARDEN STATE REINS ASSN PENNSYLVANIA AA-9995024 GULF COAST MARINE UNDERWRITING POOL LOUISIANA AA-9995025 GUY CARPENTER MGMT CORP (TREATY) NEW YORK AA-9995026 IMPROVED RISK MUT (IRM) NORTH CAROLINA AA-9995027 INDUSTRIAL RISK INSURERS CONNECTICUT AA-9995028 INLAND WATERWAYS INS ASSN OHIO AA-9995029 MARINE OFFICE OF AMER CORP NEW JERSEY AA-9995030




TYPE POOL/ASSOCIATION/ENTITY STATE POOL NUMBER MUNICIPAL BOND INS ASSN NEW YORK AA-9995031 MUTUAL MARINE OFFICE INC NEW YORK AA-9995032 MAELU ILLINOIS AA-9995033 MAERP REINS ASSN ILLINOIS AA-9995034 MUTUAL REINS BUREAU ILLINOIS AA-9995035 NATIONAL ASSN OF MUT INS COS INDIANA AA-9995036 NEW YORK MARINE MANAGERS NEW YORK AA-9995037 PENNSYLVANIA GRANGE MUT INS EXCH PENNSYLVANIA AA-9995038 PENNSYLVANIA MUT REINS EXCH PENNSYLVANIA AA-9995039 POLLUTION LIAB INS ASSN ILLINOIS AA-9995040 REGISTERED MAIL INS ASSN NEW YORK AA-9995041 SATURN SURPLUS FACILITY NEW YORK AA-9995042 U S AIRCRAFT INS GRP NEW YORK AA-9995043 WATER QUALITY INS SYNDICATE NEW YORK AA-9995044 WOREXCO (WOR FAC FACULTATIVE SYND) NEW YORK AA-9995045 FRANKLIN INS ASSN NEW YORK AA-9995046 CARGO REINS ASSN NEW YORK AA-9995047 AMERICAN OFFSHORE INS SYNDICATE NEW YORK AA-9995048 FIRST NON PROFIT RISK POOLING TRUST ILLINOIS AA-9995049 PINEHURST ACCIDENT REINS GRP NEW JERSEY AA-9995050 WORKERS’ COMP REINS BUREAU NEW JERSEY AA-9995051 EXCISE BOND UNDERWRITERS NEW YORK AA-9995052

SPECIAL POOLED RISK ADMINISTRATORS INC (ORDINARY NEW JERSEY AA-9995053

SPECIAL POOLED RISK ADMINISTRATORS INC (GRP) NEW JERSEY AA-9995054

AMERICAN DISABILITY REINS UNDERWRITERS SYNDICATE MAINE AA-9995055

AMERICAN LONG TERM CARE REINS GRP NEW YORK AA-9995056 FESTER FOTHERGILL & HARTUNG LTD NEW YORK AA-9995057 AMERICAN MILL AND AGRI INSURERS ILLINOIS AA-9995058 ASSOCIATED MEDICAL REINS UNDERWRITERS PENNSYLVANIA AA-9995059 FLORIDA AUTOMOBILE DEALERS ASSN FLORIDA AA-9995060 FOREIGN CREDIT INS ASSN NEW YORK AA-9995061 GUARANTEED ISSUE POOL OF REINSURERS NEW JERSEY AA-9995062 IAGM CORP NEW YORK AA-9995063 IOWA AUTOMOBILE DEALERS ASSN IOWA AA-9995064 MULTIPLE EMPLOYER TRUST POOL (MET SLIP) NEW YORK AA-9995065 SECOND LIABILITY EXCESS OF LOSS POOL NEW JERSEY AA-9995066 NATIONAL ACCIDENT INS GRP ILLINOIS AA-9995067 CANADIAN AVIATION INS GRP NEW YORK AA-9995068 ALL AMERICAN MARINE SLIP NEW YORK AA-9995069 CROWN MEDICAL REINS FACILITY NEW YORK AA-9995070 EASTERN MUT GRP PENNSYLVANIA AA-9995071 REINSURANCE OFFICE OF AMERICA ILLINOIS AA-9995072 WORKERS’ COMP UNDERWRITERS ASSN PENNSYLVANIA AA-9995073 SPECIAL RISK REINS FACILITY MASSACHUSETTS AA-9995074 STARR TECHNICAL RISKS NEW YORK AA-9995075 LONG TERM CARE REINS UNDERWRITERS PENNSYLVANIA AA-9995076 TAURUS STOP LOSS POOL PENNSYLVANIA AA-9995077 SOMERSET MARINE INC SYNDICATE NEW YORK AA-9995078 AVIATORS INTL TEXAS AA-9995079 STATEWIDE REINS UNDERWRITERS ASSN NEW YORK AA-9995080 AGENCY MANAGERS LTD NEW YORK AA-9995081 RETROCESSION POOL OF MN TOWNSHIP MUT INS MINNESOTA AA-9995082 MARINER MGMT GRP AVIATION POOL NEW JERSEY AA-9995083 MARINER MGMT GRP MARINE POOL NEW JERSEY AA-9995084 FORTRESS REINS INC NORTH CAROLINA AA-9995085 AMERICAN PUBLIC ENTITY EXCESS POOL MICHIGAN AA-9995086 RAILROAD INS UNDERWRITERS NEW YORK AA-9995087 D H MILLER INC NEW YORK AA-9995088 E&O AND D&O EXCESS REINS FACILITY ILLINOIS AA-9995089 AMERICAN INTL MARINE AGENCY NEW YORK AA-9995090 NEW HAMPSHIRE MAP LIQUOR NEW HAMPSHIRE AA-9995091 ALASKA LAD RHODE ISLAND AA-9995092 EXCESS AND TREATY MGMT CORP NEW YORK AA-9995093 PROGRAMME OF REINS FOR AMER MUT NEW YORK AA-9995094 NAMICO REINS FACILITY INDIANA AA-9995095

LDG RE UNDERWRITERS OCCUPATIONAL A & H FACILITY MASSACHUSETTS AA-9995096

EXTENDED REINS GRP NEW YORK AA-9995097




TYPE POOL/ASSOCIATION/ENTITY STATE POOL NUMBER GLOBAL ACCIDENT LINE SLIP INC CALIFORNIA AA-9995098 DISABILITY ALLIANCE FOR REINS TREATIES (DART) MAINE AA-9995099 BALIS & CO INC PENNSYLVANIA AA-9995100 NAMIC CATASTROPHE POOL NEW YORK AA-9995101 MENNONITE RETROCESSION POOL PENNSYLVANIA AA-9995102 SPECIAL RISK REINS FACILITY II MASSACHUSETTS AA-9995103 GUY CARPENTER MGMT CORP (FACULTATIVE CAS) NEW YORK AA-9995104 AVIATION SPECIAL RISK REINS FACILITY MASSACHUSETTS AA-9995105 WORKERS’ COMP ALTERNATIVE FACILITY MASSACHUSETTS AA-9995106 OCCUPATIONAL ACCIDENT POOL ILLINOIS AA-9995107 HCIF EXCESS LIABILITY POOL MINNESOTA AA-9995108 HCIF ACCIDENT & HEALTH POOL MINNESOTA AA-9995109 ARIZONA JOINT UNDERWRITING PLAN ARIZONA AA-9995110 CAL RE MANAGEMENT INC CALIFORNIA AA-9995111 TMK SPORTS REINS #1 ILLINOIS AA-9995112 TMK SPORTS REINS POOL #2 ILLINOIS AA-9995113 COMP RE FACILITY PENNSYLVANIA AA-9995114 PRINCETON REINS GRP NEW JERSEY AA-9995115 GEORGIA ASSOC OF CONV STORE WKRS COMP FUND GEORGIA AA-9995116 GEORGIA MFG WORKERS’ COMP FUND GEORGIA AA-9995117

GEORGIA WHOLESALERS AND RETAILERS WKR COMP FUND GEORGIA AA-9995118

BALIS & CO INC RURAL ACCOUNTS PROGRAM PENNSYLVANIA AA-9995119 TMK SPORTS REINS POOL #3 ILLINOIS AA-9995120 BALIS & CO INC TREATY REINS PROGRAM PENNSYLVANIA AA-9995121 ASSOCIATED AEROSPACE UNDERWRITERS NEW YORK AA-9995122 BALIS & CO INC MULT LINE FAC BINDING AUTHORIT PENNSYLVANIA AA-9995123 ALTERNATIVE MEDICAL REINS GRP NEW YORK AA-9995125 OCCUPATIONAL ACCIDENT REINS GRP NEW JERSEY AA-9995126 SELF INSURED LUMBER BUSINESSES ASSN MASSACHUSETTS AA-9995127 LUMBER INDUSTRIES SELF INSURED GRP NEW HAMPSHIRE AA-9995128

TENNESSEE ASSN OF SELF INSURED LUMBER ENTITIES TENNESSEE AA-9995129

SPECIAL ACCIDENT REINS FACILITY NEW JERSEY AA-9995130 SPECIAL CAS ACCIDENT REINS FACILITY NEW JERSEY AA-9995131 HEALTH REINS MGMT FACILITY MASSACHUSETTS AA-9995132 DISABILITY REINS FACILITY MASSACHUSETTS AA-9995133 LATIN AMER REINS FACILITY MASSACHUSETTS AA-9995134 PRINCETON REINS GRP II NEW JERSEY AA-9995135 TMK SPORTS REINS POOL #4 ILLINOIS AA-9995136 GLOBAL AEROSPACE UNDERWRITERS NEW JERSEY AA-9995137



EXHIBIT C – NAIC Request for Alien Insurer Identification Number

REQUEST FOR ALIEN INSURER IDENTIFICATION NUMBER

INSTRUCTIONS

***PLEASE READ CAREFULLY*** One form should be completed for each company for which you are requesting a number. Numbers will be assigned to insurers only – NUMBERS WILL NOT BE ASSIGNED TO BROKERS OR OTHER INTERMEDIARIES. Be sure to complete the entire form. Completed forms and attachments should be forwarded to:

Jennifer Heinz, Company Demographics Analyst NAIC

2301 McGee, Ste. 800 Kansas City, MO 64106

Fax: (816) 460-7521 Email: [email protected]

NUMBERS ARE ASSIGNED FOR IDENTIFICATION PURPOSES ONLY. THE NAIC DOES NOT CERTIFY THE AUTHORITY OR INTEGRITY OF ANY ORGANIZATION ASSIGNED A NUMBER UNDER THE REGISTRATION. *********************************************************************************************************************************** FULL NAME OF ALIEN INSURER: _________________________________________________________ ADDRESS: _________________________________________________________ COUNTRY OF DOMICILE: _________________________________________________________ CONTACT/TITLE/PHONE: _________________________________________________________ ATTACH A COPY OF THE FOLLOWING, IN ENGLISH OR WITH ENGLISH TRANSLATION: ( ) REGISTRATION WITH COUNTRY OF DOMICILE OR ( ) CERTIFICATE OF AUTHORITY IF ADMITTED IN AN U.S. STATE *********************************************************************************************************************************** REQUESTOR INFORMATION: COMPANY: _________________________________________________________ ADDRESS: _________________________________________________________ CITY, STATE, ZIP: _________________________________________________________ CONTACT/TITLE/PHONE/E-MAIL: _________________________________________________________



EXHIBIT D – SSAP No. 63 – Underwriting Pools and Associations Including Intercompany Pools

Statement of Statutory Accounting Principles No. 63 Underwriting Pools and Associations Including Intercompany Pools STATUS Type of Issue: Common Area Issued: Initial Draft Effective Date: January 1, 2001 Affects: No other pronouncements Affected by: No other pronouncements Interpreted by: No other pronouncements SCOPE OF STATEMENT 1. This statement establishes statutory accounting principles for underwriting pools and associations. SUMMARY CONCLUSION 2. Underwriting pools and associations can be categorized as follows: (a) involuntary, (b) voluntary and (c) intercompany. 3. Involuntary pools represent a mechanism employed by states to provide insurance coverage to those with higher than average probability of loss who otherwise would be excluded from obtaining coverage. Reporting entities are generally required to participate in the underwriting results, including premiums, losses, expenses and other operations of involuntary pools, based on their proportionate share of similar business written in the state. Involuntary plans are also referred to as residual market plans, involuntary risk pools, and mandatory pools. 4. Voluntary pools are similar to involuntary pools except they are not state mandated and a reporting entity participates in the pool voluntarily. In addition, voluntary pools are not limited to the provision of insurance coverage to those with higher than average probability of loss, but often are used to provide greater capacity for risks with exceptionally high levels of insurable values (e.g., aircraft, nuclear power plants, refineries and offshore drilling platforms). 5. Intercompany pooling relates to business that is pooled among affiliated entities who are party to a pooling arrangement. 6. Participation in a pool may be on a joint and several basis, i.e., in addition to a proportional share of losses and expenses incurred by the pool, participants will be responsible for their share of any otherwise unrecoverable obligations of other pool participants. In certain instances, one or more entities may be designated as servicing carriers for purposes of policy issuance, claims handling and general administration of the pooled business, while in other cases a pool manager or administrator performs all of these functions and simply bills pool participants for their respective shares of all losses and expenses incurred by the pool. In either case, liabilities arising from pooled business are generally incurred on a basis similar to those associated with non-pooled business, and should therefore be treated in a manner



consistent with the guidelines set forth in SSAP No. 5—Liabilities, Contingencies and Impairments of Assets (SSAP No. 5). 7. Intercompany pooling arrangements involve establishment of a conventional quota share reinsurance agreement under which all of the pooled business is ceded to the lead entity and then retroceded back to the pool participants in accordance with their stipulated shares. In these arrangements, only the policy issuing entity has direct liability to its policyholders or claimants; other pool participants are liable as reinsurers for their share of the issuing entity’s obligations. Although participants may use different assumptions (e.g., discount rates) in recording transactions, the timing of recording transactions shall be consistently applied by all participants. 8. Underwriting results shall be accounted for on a gross basis whereby the participant’s portion of premiums, losses, expenses and other operations of the pools are recorded separately in the financial statements rather than netted against each other. Premiums and losses shall be recorded as direct, assumed and/or ceded as applicable. If the reporting entity is a direct writer of the business, premiums shall be recorded as directly written and accounted for in the same manner as other business which is directly written by the entity. To the extent that premium is ceded to a pool, premiums and losses shall be recorded in the same manner as any other reinsurance arrangement. As in any other reinsurance arrangement, a reporting entity who is a member of a pool shall record its participation in the pool as assumed business. 9. Equity interests in, or deposits receivable from, a pool represent cash advances to provide funding for operations of the pool. These are admitted assets and shall be recorded separately from receivables and payables related to a pool’s underwriting results. Receivables and payables related to underwriting results shall be accounted for in accordance with the guidance in paragraphs 6 to 8, above. If it is probable that these receivables are uncollectible, any uncollectible amounts shall be written off against operations in the period such determination is made. If it is reasonably possible a portion of the balance is uncollectible but is not written off, disclosure requirements outlined in SSAP No. 5 shall be followed. Disclosures 10. If a reporting entity is part of a group of affiliated entities which utilizes a pooling arrangement under which the pool participants cede substantially all of their direct and assumed business to the pool, the financial statements shall include:

a. A description of the basic terms of the arrangement and the related accounting; b. Identification of the lead entity and of all affiliated entities participating in the

intercompany pool (include NAIC Company Codes) and indication of their respective percentage shares of the pooled business;

c. Description of the lines and types of business subject to the pooling agreement; d. Description of cessions to non-affiliated reinsurers of business subject to the pooling

agreement, and indication of whether such cessions were prior to or subsequent to the cession of pooled business from the affiliated pool members to the lead entity;

e. Identification of all pool members which are parties to reinsurance agreements with non-affiliated reinsurers covering business subject to the pooling agreement and which have a contractual right of direct recovery from the non-affiliated reinsurer per the terms of such reinsurance agreements;



f. Explanation of any discrepancies between entries regarding pooled business on the assumed and ceded reinsurance schedules of the lead entity and corresponding entries on the assumed and ceded reinsurance schedules of other pool participants;

g. Description of intercompany sharing, if other than in accordance with the pool participation percentage, of the Provision for Reinsurance (Schedule F, Part 7) and the write–off of uncollectible reinsurance.

11. Refer to the preamble for further discussion regarding disclosure requirements. Effective Date and Transition 12. This statement is effective for years beginning January 1, 2001. A change resulting from the adoption of this statement shall be accounted for as a change in accounting principle in accordance with SSAP No. 3—Accounting Changes and Corrections of Errors.


RVU- OP 09/04/2003

Documents

Underwriting and Reinsurance Pools Working · PDF fileRegulation of Voluntary Underwriting and Reinsurance Pools White Paper National Association of Insurance Commissioners