§ 6048i. Permitted reinsurance
(a) A special purpose financial insurance company may reinsure only the risks of a ceding
insurer, pursuant to a reinsurance contract. A special purpose financial insurance
company may not issue a contract of insurance or a contract for assumption of risk
or indemnification of loss other than such reinsurance contract.
(b) Unless otherwise approved in advance by the Commissioner, a special purpose financial
insurance company may not assume or retain exposure to insurance or reinsurance losses
for its own account that are not funded by:
(1) proceeds from a special purpose financial insurance company securitization or letters
of credit or other assets described in subdivision 6048c(3) of this chapter;
(2) premium and other amounts payable by the ceding insurer to the special purpose financial
insurance company pursuant to the reinsurance contract; and
(3) any return on investment of the items in subdivisions (1) and (2) of this subsection.
(c) The reinsurance contract shall contain all provisions reasonably required or approved
by the Commissioner, which requirements shall take into account the laws applicable
to the ceding insurer regarding the ceding insurer taking credit for the reinsurance
provided under such reinsurance contract.
(d) A special purpose financial insurance company may cede risks assumed through a reinsurance
contract to one or more reinsurers through the purchase of reinsurance, subject to
the prior approval of the Commissioner.
(e) A special purpose financial insurance company may enter into contracts and conduct
other commercial activities related or incidental to and necessary to fulfill the
purposes of the reinsurance contract, the insurance securitization, and this subchapter,
provided such contracts and activities are included in the special purpose financial
insurance company’s plan of operation or are otherwise approved in advance by the
Commissioner. Such contracts and activities may include: entering into reinsurance
contracts; issuing special purpose financial insurance company securities; complying
with the terms of these contracts or securities; entering into trust, guaranteed investment
contract, swap, or other derivative, tax, administration, reimbursement, or fiscal
agent transactions; complying with trust indenture, reinsurance, or retrocession;
and other agreements necessary or incidental to effect an insurance securitization
in compliance with this subchapter and the special purpose financial insurance company’s
plan of operation.
(f) Unless otherwise approved in advance by the Commissioner, a reinsurance contract shall
not contain any provision for payment by the special purpose financial insurance company
in discharge of its obligations under the reinsurance contract to any person other
than the ceding insurer or any receiver of the ceding insurer.
(g) A special purpose financial insurance company shall notify the Commissioner immediately
of any action by a ceding insurer or any other person to foreclose on or otherwise
take possession of collateral provided by the special purpose financial insurance
company to secure any obligation of the special purpose financial insurance company. (Added 2007, No. 49, § 17; amended 2013, No. 29, § 60, eff. May 13, 2013.)