[§431:4A-102]  Reduction from liability forreinsurance ceded by a domestic insurer to an assuming insurer.  Areduction from liability for the reinsurance ceded by a domestic insurer to anassuming insurer not meeting the requirements of section 431:4A-101 shall beallowed in an amount not exceeding the liabilities carried by the cedinginsurer.  The reduction shall be in the amount of funds held by or on behalf ofthe ceding insurer, including funds held in trust for the ceding insurer, undera reinsurance contract with the assuming insurer as security for the payment ofobligations thereunder, if that security is held in the United States subjectto withdrawal solely by, and under the exclusive control of, the cedinginsurer; or, in the case of a trust, held in a qualified United Statesfinancial institution.  This security may be in the form of:

(1)  Cash;

(2)  Securities listed by the securities valuationoffice of the National Association of Insurance Commissioners and qualifying asadmitted assets;

(3)  Clean, irrevocable, unconditional letters ofcredit, issued or confirmed by a qualified United States financial institution,no later than December 31st in respect of the year for which filing is beingmade, and in the possession of the ceding company on or before the filing dateof its annual statement.  Letters of credit issued by issuing (or confirming)institutions meeting applicable standards of issuer acceptability as of thedates of their issuance (or confirmation) shall, notwithstanding the issuing(or confirming) institution's subsequent failure to meet applicable standardsof issuer acceptability, continue to be acceptable as security until theirexpiration, extension, renewal, modification, or amendment, whichever firstoccurs; or

(4)  Any other form of security acceptable to thecommissioner. [L 1992, c 176, pt of §5]