§432:2-304  Reinsurance.  (a)  A
domestic society may, by a reinsurance agreement, cede any individual risk or
risks in whole or in part to an insurer (other than another fraternal benefit
society) having the power to make such reinsurance and authorized to do
business in this State, or if not so authorized, one which is approved by the
commissioner.  No such society may reinsure substantially all of its insurance
in force without the written permission of the commissioner.  It may take
credit for the reserves on such ceded risks to the extent reinsured, but no
credit shall be allowed as an admitted asset or as a deduction from liability,
to a ceding society for reinsurance made, ceded, renewed, or otherwise becoming
effective after July 1, 1988, unless the reinsurance is payable by the assuming
insurer on the basis of the liability of the ceding society under the contract
or contracts reinsured without diminution because of the insolvency of the
ceding society.



(b)  Notwithstanding the limitation in subsection
(a), a society may reinsure the risks of another society in a consolidation or
merger approved by the commissioner under section 432:2-305. [L 1987, c 347, pt
of §2]



 



Revision Note



 



  "July 1, 1988" substituted for "the effective
date of this article".