(a) The commissioner may adopt regulations in accordance with the procedures provided in Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code or otherwise prescribe requirements consistent with Sections 922.4, 922.41, 922.42, 922.425, 922.43, and 922.5, provided the commissioner may update subparagraph (A) of paragraph (1) of subdivision (h) and subdivision (i) of Section 922.41 to add other nationally recognized statistical rating agencies, or to modify the rating categories, the corresponding financial ratings, or the percentage of security required to conform to changes in these factors adopted by the National Association of Insurance Commissioners (NAIC).

(b) (1) The commissioner may adopt regulations applicable to reinsurance arrangements described in paragraph (2).

(2) A regulation adopted pursuant to this subdivision may apply only to reinsurance relating to the following:

(A) Life insurance policies with guaranteed nonlevel gross premiums or guaranteed nonlevel benefits.

(B) Universal life insurance policies with a provision resulting in the ability of a policyholder to keep a policy in force over a secondary guarantee period.

(C) Variable annuities with guaranteed death or living benefits.

(D) Long-term care insurance policies.

(E) Other life and health insurance and annuity products as to which the NAIC adopts model regulatory requirements with respect to credit for reinsurance.

(3) A regulation adopted pursuant to subparagraph (A) or (B) of paragraph (2) may apply to any treaty containing the following:

(A) Policies issued on or after January 1, 2015.

(B) Policies issued prior to January 1, 2015, if risk pertaining to those policies is ceded in connection with the treaty, in whole or in part, on or after January 1, 2015.

(4) A regulation adopted pursuant to this subdivision may require the ceding insurer, in calculating the amounts or forms of security required to be held under regulations promulgated under this authority, to use the Valuation Manual adopted pursuant to paragraph (1) of subdivision (b) of Section 10489.96, including all amendments in effect on the date as of which the calculation is made, to the extent applicable.

(5) A regulation adopted pursuant to this subdivision shall not apply to cessions to an assuming insurer that satisfies any of the following:

(A) The insurer meets the conditions of Section 922.425 in this state or is operating in accordance with provisions substantially equivalent to Section 922.425 in a minimum of five other states.

(B) The insurer is certified in this state, or certified in a minimum of five other states.

(C) The insurer maintains at least two hundred fifty million dollars ($250,000,000) in capital and surplus when determined in accordance with the NAIC Accounting Practices and Procedures Manual, including all amendments thereto adopted by the NAIC, excluding the impact of any permitted or prescribed practices, and satisfies either of the following:

(i) The insurer is licensed in at least 26 states.

(ii) The insurer is licensed in at least 10 states, and licensed or accredited in a total of at least 35 states.

(6) The authority to adopt regulations pursuant to this subdivision does not limit the commissioner’s general authority to adopt regulations pursuant to subdivision (a).

(Amended by Stats. 2020, Ch. 71, Sec. 5. (AB 2049) Effective January 1, 2021.)