§ 24-A §731-B — Credit for reinsurance

1.
Except to the extent that the liabilities ceded are secured in accordance with subsection 3, credit for reinsurance is allowed a domestic ceding insurer as either an asset or a deduction from liability on account of reinsurance ceded only when the reinsurance is ceded to a solvent assuming insurer that:
1-A.
The superintendent may suspend or revoke a reinsurer's accreditation or certification under subsection 1, after notice and opportunity for hearing, for failure to meet the applicable requirements of subsection 1 or on any ground that would warrant similar action against the certificate of authority of an authorized insurer.
2.
The credit permitted by subsection 1 is not to be allowed unless the assuming insurer agrees in the reinsurance agreements:
2-A.
Credit for reinsurance may not be allowed on the basis of a trust maintained pursuant to subsection 1, paragraph C unless the assuming insurer agrees in the trust agreements to the following conditions.
2-B.
Through rules adopted under subsection 7, the superintendent may establish additional requirements that reinsurance agreements that are subject to this subsection must satisfy to qualify for credit.
3.
An asset or a reduction from liability for the reinsurance ceded to an assuming insurer not meeting the requirements of subsection 1 is allowed in an amount not exceeding the liabilities carried by the ceding insurer. The reduction must equal the value of funds held by or on behalf of the ceding insurer, including funds held in trust for the ceding insurer, under a reinsurance contract with such assuming insurer as security for the payment of obligations under the contract, if such security is held in the United States subject to withdrawal solely by, and under the exclusive control of, the ceding insurer or, in the case of a trust, held in a qualified United States financial institution. This security may be in the form of:
4.
For purposes of this section, a "qualified United States financial institution" means an institution that:
4-A.
"Qualified United States financial institution" means for purposes of those provisions of this section specifying those institutions that are eligible to act as a fiduciary of a trust an institution that:
5.
Credit is allowed as an asset or deduction from liability to any ceding insurer only for reinsurance ceded to an assuming insurer qualified under this section, except that no credit is allowed, unless the reinsurance contract provides, in substance, that in the event of the insolvency of the ceding insurer, the reinsurance is payable under a contract or contracts reinsured by the assuming insurer on the basis of reported claims allowed by the court, without diminution because of the insolvency of the ceding insurer. The payments must be made directly to the ceding insurer or to the ceding insurer's domiciliary receiver unless the contract or other written agreement specifically provides another payee in the event of the insolvency of the ceding insurer or unless the assuming insurer, with the consent of the direct insured or insureds, has assumed the policy obligations of the ceding insurer as direct obligations of the assuming insurer to the payees under the reinsured policies and in substitution for the obligations of the ceding insurer to those payees.
6.
7.
The superintendent may adopt rules, subject to Title 5, chapter 375, to implement this section. Rules adopted under this section are routine technical rules pursuant to Title 5, chapter 375, subchapter II‑A.

Legislative History

PL 1989, c. 846, Pt. E, §§2, 4 (NEW). PL 1991, c. 38 (AMD). PL 1991, c. 828, §§16-18 (AMD). RR 1993, c. 1, §56 (COR). PL 1993, c. 313, §§17, 18 (AMD). PL 1993, c. 666, Pt. C, §1 (AMD). PL 1999, c. 113, §§19-21 (AMD). PL 2001, c. 47, §§2-8 (AMD). PL 2003, c. 249, §1 (AMD). PL 2007, c. 386, §1 (AMD). PL 2013, c. 238, Pt. B, §§3-8 (AMD). PL 2017, c. 169, Pt. C, §§1, 2 (AMD). PL 2021, c. 16, §§6-10 (AMD).