2023 New York Laws › ISC - Insurance › Article 69 - Financial Guaranty Insurance Corporations › 6906 - Reinsurance.

§  6906.  Reinsurance. (a) For financial guaranty insurance that takes
effect on or after the  effective  date  of  this  article,  an  insurer
authorized to transact financial guaranty insurance shall receive credit
for  reinsurance,  in  accordance  with  the  provisions of this chapter
applicable to property/casualty insurers, as an asset or as a  reduction
from  liabilities  provided  that  such  reinsurance  is  subject  to an
agreement that, for its  stated  term  and  with  respect  to  any  such
reinsured   financial  guaranty  insurance  in  force,  the  reinsurance
agreement (facultative or treaty) may only be terminated or amended  (i)
at the option of the reinsurer or the ceding insurer, if the reinsurance
agreement  provides  that the liability of the reinsurer with respect to
policies in effect at the date of termination shall continue  until  the
expiration or cancellation of each such policy, or (ii) with the consent
of  the  ceding  company,  if  the  reinsurance agreement provides for a
cutoff of the reinsurance in force at the date of termination, or  (iii)
at  the  discretion  of  the  superintendent  acting  as  rehabilitator,
liquidator or receiver of the ceding or assuming insurer;  and  provided
that such reinsurance is:
(1)  placed  with  a financial guaranty insurance corporation licensed
under this  article  or  an  insurer  writing  only  financial  guaranty
insurance as is or would be permitted by this article; or
(2) placed with a property/casualty insurer or an accredited reinsurer
licensed  or  accredited  to reinsure risks of every kind or description
(including municipal obligation bonds), as set forth in  subsection  (c)
of  section  four  thousand  one  hundred  two  of  this chapter, if the
reinsurance agreement with such insurer requires that such insurer:
(A) have and maintain surplus to policyholders of at least thirty-five
million dollars;
(B) establish and  maintain  the  reserves  required  in  section  six
thousand  nine  hundred  three  of  this  article,  except  that  if the
reinsurance  agreement  is  not  pro  rata  the  contribution   to   the
contingency  reserve  shall  be  equal to fifty percent of the quarterly
earned reinsurance premium.  However,  the  assuming  insurer  need  not
establish  and  maintain  such  reserve  to  the  extent that the ceding
insurer has established and continues to maintain such reserve;
(C) comply with the  provisions  of  subsection  (c)  of  section  six
thousand  nine  hundred  four  of  this article, except that the maximum
total exposures reinsured net of retrocessions and collateral  shall  be
one-half   of   that   permitted  for  a  financial  guaranty  insurance
corporation;
(D) if a parent of the insurer, another subsidiary of  the  parent  of
the  insurer,  or a subsidiary of the insurer, then the aggregate of all
risks assumed by such reinsurers shall not exceed  ten  percent  of  the
insurer's  exposures,  net  of  retrocessions  and collateral. Direct or
indirect ownership interests of fifty percent or more shall be deemed  a
parent/subsidiary relationship;
(E)  if an affiliate of the insurer, such affiliate shall not assume a
percentage of the insurer's total exposures insured net of retrocessions
and collateral in excess of its percentage of  equity  interest  in  the
insurer; and
(F)  assumes  from  the  financial guaranty insurer and any affiliate,
parent of the insurer, another subsidiary of the parent of the  insurer,
or  subsidiary  of  the  insurer  that is a financial guaranty insurance
corporation or an insurer writing only financial guaranty  insurance  as
is  or  would  be  permitted  by  this  article  and such other kinds of
insurance that a financial guaranty insurance corporation may  write  in
this   state,  together  with  all  other  reinsurers  subject  to  this
paragraph, less than fifty percent of the total exposures insured by the

financial guaranty insurer and such affiliates, parents or  subsidiaries
of  the  insurer,  net  of  collateral,  remaining  after  deducting any
reinsurance placed with another financial guaranty insurance corporation
that  is  not  an affiliate, a parent of the financial guaranty insurer,
another subsidiary of the parent of the insurer, or a subsidiary of  the
insurer  or a financial guaranty insurer writing only financial guaranty
insurance as is or would be permitted by this article  that  is  not  an
affiliate,   a   parent  of  the  financial  guaranty  insurer,  another
subsidiary of the parent of the insurer, or a subsidiary of the insurer;
or
(3) if placed with an unauthorized  or  unaccredited  reinsurer  which
otherwise meets the requirements of either the opening paragraph of this
subsection  and  paragraph  one  of  this  subsection,  or  the  opening
paragraph of this subsection and subparagraphs (A), (D), (E) and (F)  of
paragraph  two  of  this  subsection,  in  an  amount  not exceeding the
liabilities carried by the ceding insurer for amounts withheld  under  a
reinsurance  treaty  with  such  reinsurer  or amounts deposited by such
reinsurer as security for the payment of obligations under the treaty if
such funds or deposit are held subject to withdrawal by, and  under  the
control of, the ceding insurer.
(b)  In  determining  whether  the  insurer  meets  the aggregate risk
limitations, in  addition  to  credit  for  other  types  of  qualifying
reinsurance,  the  insurer's aggregate risk may be reduced to the extent
of the limit for aggregate excess reinsurance, but in  no  event  in  an
amount  greater than the amount of the aggregate risks which will become
due during the unexpired term of such reinsurance agreement in excess of
the insurer's retention pursuant to such reinsurance agreement.