20-261. Authorized reinsurance
A. An insurer shall reinsure its risks, or any part of its risks, only in solvent
insurers having surplus to policyholders not less in amount than the minimum required
capital stock required under this title of a domestic stock insurer, other than a limited
stock insurer or a domestic life and disability reinsurer, authorized to transact like
kinds of insurance. A domestic limited stock life insurer or domestic life and
disability reinsurer may accept reinsurance of the risks of other limited stock insurers
or domestic life and disability reinsurers.
B. An insurer may reinsure in alien insurers if the alien insurers are authorized
to transact insurance in at least one state of the United States or have in the United
States a duly authorized attorney-in-fact to accept service of legal process against the
insurer as to any liability that might arise on account of such reinsurance.
C. A credit shall not be allowed, as an admitted asset or as a deduction from
liability, to any ceding insurer for reinsurance unless the reinsurance is payable by the
reinsurer on the basis of the liability of the ceding insurer under the contracts
reinsured without diminution because of the insolvency of the ceding insurer nor unless
under the reinsurance contract the reinsurer assumes the liability for the reinsurance as
of the same effective date. The reinsurer shall make payment directly to the ceding
insurer or to its statutory successor by whatever name called for the purpose of
liquidating or rehabilitating the business of the insurer unless either the reinsurance
contract or the policies reinsured required the reinsurer to make payment to the payees
under the policies reinsured in the event the ceding insurer becomes insolvent, or the
reinsurer with the consent of the direct insured assumes the policy obligations of the
ceding insurer to the payees under the policies reinsured in substitution for the
obligations of the ceding insurer to those payees.
D. A domestic insurer shall not be a party to any agreement of reinsurance with an
unauthorized insurer until the agreement is filed with and approved in writing by the
director. The director shall approve the agreement within a reasonable time after filing
unless in the director's opinion the effect of the agreement would be to reduce
protection or service substantially either to policyholders resident of this state or to
policyholders anywhere of the domestic insurer. If the director does not approve the
agreement, the director shall notify the domestic insurer in writing specifying the
reasons for not approving the agreement.
E. This section does not apply to insurance of ocean marine risks or marine
protection and indemnity risks.
F. Unless the director requires the assuming insurer to file assumption reinsurance
contracts, assumption reinsurance contracts are exempt from the filing requirements
prescribed in subsection D if the assuming insurer has a surplus as to policyholders of
at least fifty million dollars as shown in the most recent financial statement that is
filed by the insurer with the department.
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