New York Laws
Article 13 - Assets and Deposits
1308 - Reinsurance, When Permitted; Effect on Reserves.

(2) (A) No credit shall be allowed, as an admitted asset or deduction
from liability, to any ceding insurer for reinsurance ceded, renewed, or
otherwise becoming effective after January first, nineteen hundred
forty, unless:
(i) the reinsurance shall be 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, and
(ii) under the reinsurance agreement the liability for such
reinsurance is assumed by the assuming insurer as of the same effective
date.
(B) Except as provided by subsection (a) of section four thousand one
hundred eighteen of this chapter, no such credit shall be allowed any
ceding insurer for reinsurance ceded, renewed, or otherwise becoming
effective after September first, nineteen hundred fifty-two, unless the
reinsurance agreement provides that payments by the assuming insurer
shall be made directly to the ceding insurer or its liquidator, receiver
or statutory successor, except where:
(i) the agreement specifies another payee of such reinsurance in the
event of the insolvency of the ceding insurer, or
(ii) the assuming insurer with the consent of the direct insureds has
assumed such policy obligations of the ceding insurer as its direct
obligations to the payees under such policies, in substitution for the
obligations of the ceding insurer to such payees.
(3) Such reinsurance agreement may provide that the liquidator,
receiver or statutory successor of an insolvent ceding insurer shall
give written notice of the pendency of a claim against such insurer on
the contract reinsured within a reasonable time after such claim is
filed in the insolvency proceeding and that during the pendency of such
claim any assuming insurer may investigate such claim and interpose, at
its own expense, in the proceeding where such claim is to be adjudicated
any defenses which it deems available to the ceding company, its
liquidator, receiver or statutory successor. Such expense shall be
chargeable subject to court approval against the insolvent ceding
insurer as 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. Where two or more assuming insurers are involved in the same
claim and a majority in interest elect to interpose defense to such
claim, the expense shall be apportioned in accordance with the terms of
the reinsurance agreement as though such expense had been incurred by
the ceding company.
(b) In determining the ceding insurer's financial condition, if
reinsurance is effected by the ceding insurer in any assuming insurer,
the ceding insurer shall, in addition to any credit allowed against its
loss reserves, and any reduction of reserves allowed pursuant to
paragraph nine of subsection (a) of section one thousand three hundred
one of this article for reinsurance recoverable from insurers not
authorized in this state, receive credit for reinsurance effected with
any assuming insurer authorized to do such business in this state,
calculated as follows:
(1) as to reinsurance of all or any part of any risk not specified in
paragraph two hereof, by way of deduction from its unearned premium
liability calculated in accordance with the provisions of section one
thousand three hundred five of this article; or
(2) as to reinsurance of all or any part of any life insurance or
annuity or non-cancellable disability risk, by way of deduction from its
reserve liability, in an amount not exceeding the reserve on the
reinsured portion of such risk which the ceding insurer would have
maintained if such portion had not been reinsured.
(c) Nothing in this section shall be deemed to permit the ceding
insurer to receive through the cession of all or any part of any risk
any advantage whereby its unearned premium reserve, or the net amount of
its valuation reserves, is reduced below the amount required by this
chapter.
(d) In determining its financial condition, any assuming insurer shall
be charged:
(1) in its unearned premium liability with an amount equal to the
deduction specified in paragraph one of subsection (b) hereof, and
(2) in its valuation reserve liability with an amount at least equal
to the amount which it would be required to maintain in accordance with
the provisions of this chapter if it were the direct insurer of such
assumed risks on the basis specified in the reinsurance agreement.
(e) (1) During any period of twelve consecutive months, without the
superintendent's permission:
(A) no domestic insurer, except life, shall by any reinsurance
agreement or agreements cede an amount of its insurance on which the
total gross reinsurance premiums are more than fifty percent of the
unearned premiums on the net amount of its insurance in force at the
beginning of such period, and
(B) no alien insurer, except life, shall by any reinsurance agreement
or agreements, involving the withdrawal or transfer of any interest in
any of its trusteed assets in the United States, cede an amount of its
insurance on which the total gross reinsurance premiums are more than
fifty percent of the unearned premiums on the net amount of its
insurance in force in the United States, at the beginning of such
period.
(2) Paragraph one hereof shall not apply to reinsurance made in the
ordinary course of business reinsuring specified individual risks under
reinsurance agreements relating to current business.
(3) If any agreement or agreements at any time effect reinsurance of
substantially all of the net insurance in force of such ceding insurer,
no credit by way of deduction pursuant to subsection (b) hereof shall be
allowed to such ceding insurer, unless either:
(A) the assuming insurer or insurers assume or have assumed the policy
obligations of the ceding insurer as their direct obligations to the
obligees under such policies and the provisions for cancellation, if
any, of such reinsurance agreements have been approved by the
superintendent, or
(B) such reinsurance agreement or agreements were made under pooling
arrangements between insurers associated in a group for underwriting
purposes and were approved by the superintendent as not impairing the
protection of policyholders of such ceding or assuming insurers.
(f) (1) Unless the superintendent permits:
(A) No domestic life insurance company shall (i) reinsure its whole
risk on any individual life or joint lives, or (ii) reinsure a
substantial portion of its life insurance in force.
(B) No foreign or alien insurer shall reinsure its whole risk on any
individual life or joint lives, written under a policy or contract
delivered or issued for delivery in this state.
(2) Any domestic life insurance company proposing to assume by
reinsurance all or any part of the business in force, other than
portions of individual risks, of any domestic, foreign or alien life
insurance company, fraternal benefit society or other organization
having outstanding policies or certificates of life insurance or
accident and health insurance or annuity contracts shall make written
application to the superintendent for permission to do so. If after due
consideration the superintendent is satisfied that the proposed
reinsurance will not prejudice the interests of the policyholders of
either the applicant or the companies which are members of The Life
Insurance Guaranty Corporation or of The Life Insurance Company Guaranty
Corporation of New York, he shall grant the permission.
(3) The superintendent, after notice to and an opportunity to be heard
by all domestic life insurance companies, may issue and from time to
time amend regulations establishing standards which tend to promote
orderly growth and financial stability among the companies and otherwise
effectuate the purposes of this subsection.
(g) Any domestic life insurance company which has discontinued doing
any new business in a foreign country may, with the permission of the
superintendent, reinsure all or any part of its risks outstanding in
such country in any solvent insurer authorized to transact business
therein. Thereafter such life insurance company shall not be required to
charge as liabilities the reserves and other liabilities pertaining to
the reinsured risks.