§431:5-306  Reserve credit for reinsurance. 
(a)  An insurer may take credit for reserves on risks ceded to a reinsurer to
the extent reinsured, except that:



(1)  No credit shall be taken on account of
reinsurance in any reinsurer not qualified under article 4A or in any reinsurer
that has been disapproved by the commissioner; and



(2)  No credit shall be allowed, as an asset or as a
deduction from liability, to any ceding insurer for reinsurance unless the
reinsurance is payable by the assuming insurer on the basis of the liability of
the ceding insurer under the contracts reinsured without diminution because of
the insolvency of the ceding insurer.



(b)  A reinsurance agreement may provide that:



(1)  The liquidator, receiver or statutory successor
of an insolvent ceding insurer shall be given written notice of the pendency of
a claim against the insolvent ceding insurer on the policy or bond reinsured
within a reasonable time after the claim is filed in the insolvency proceeding;
and



(2)  Any assuming insurer may investigate such claim
and interpose any defense or defenses which it may deem available to the ceding
insurer, its liquidator, receiver, or statutory successor, during the pendency
of the claim, in the proceeding where the claim is to be adjudicated, at its
own expense.



(c)  Subject to court approval, the expense
thus incurred by the assuming insurer shall be chargeable against the insolvent
ceding insurer as a part of the expense of liquidation to the extent of a
proportionate share of the benefit which may accrue to the ceding insurer
solely as a result of the defense undertaken by the assuming insurer.



(d)  Where two or more assuming insurers are
involved in the same claim and a majority in interest elect to interpose
defense to the claim, the expense shall be apportioned in accordance with the
terms of the reinsurance agreement as though the expense had been incurred by
the ceding insurer. [L 1987, c 347, pt of §2; am L 2004, c 122, §18]