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Rule Title: GUIDELINES AND INTERNAL CONTROL PROCEDURES
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Department: STATE AUDITOR
Chapter: INSURANCE DEPARTMENT
Subchapter: Insurer Investments
 
Latest version of the adopted rule presented in Administrative Rules of Montana (ARM):

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6.6.4022    GUIDELINES AND INTERNAL CONTROL PROCEDURES

(1) Before engaging in a derivative transaction, an insurer shall establish written guidelines, approved by the commissioner, that shall be used for effecting and maintaining derivative transactions. The guidelines shall:

(a) specify the insurer's objectives for engaging in derivative transactions, derivative strategies, and all applicable risk constraints, including credit risk limits;

(b) establish counterparty exposure limits and credit equity standards;

(c) identify permissible derivative transactions and the relationship of those transactions to insurer operations; for example, a precise identification of the risks being hedged by a derivative transaction; and

(d) require compliance with internal control procedures.

(2) An insurer shall have a written methodology for determining whether a derivative instrument used for hedging has been effective.

(3) An insurer shall have written policies and procedures describing the credit risk management process and a credit risk management system for over-the-counter derivative transactions that measures credit risk exposure using the counterparty exposure amount.

(4) An insurer's board of directors shall, in accordance with 33-12-104, MCA:

(a) approve the written guidelines, methodology, polices and procedures, and systems required by this rule;

(b) determine whether the insurer has adequate professional personnel, technical expertise, and systems to implement investment practices involving derivatives;

(c) review whether derivatives transactions have been made in accordance with the approved guidelines, and consistent with the stated objectives; and

(d) take action to correct any deficiencies in internal controls relative to derivative transactions.

History: 33-1-313, 33-12-111, MCA; IMP, 33-12-210, 33-12-310, MCA; NEW, 2011 MAR p.1303, Eff. 7/15/11.


 

 
MAR Notices Effective From Effective To History Notes
6-193 7/15/2011 Current History: 33-1-313, 33-12-111, MCA; IMP, 33-12-210, 33-12-310, MCA; NEW, 2011 MAR p.1303, Eff. 7/15/11.
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