Section 375.246

Title XXIV BUSINESS AND FINANCIAL INSTITUTIONS

Chapter 375

Effective - 01 Jan 2014, 4 histories, see footnote   (history) 

  375.246.  Reinsurance, when allowed as an asset or reduction from liability. — 1.  Credit for reinsurance shall be allowed a domestic ceding insurer as either an asset or a reduction from liability on account of reinsurance ceded only when the reinsurer meets the requirements of subdivisions (1) to (6) of this subsection.  Credit shall be allowed pursuant to subdivision (1), (2) or (3) of this subsection only as respects cessions of those kinds or classes of business which the assuming insurer is licensed or otherwise permitted to write or assume in its state of domicile or, in the case of a United States branch of an alien assuming insurer, in the state through which it is entered and licensed to transact insurance or reinsurance.  Credit shall be allowed pursuant to subdivision (3), (4), or (5) of this subsection only if the applicable requirements of subdivision (7) have been satisfied.

  (1)  Credit shall be allowed when the reinsurance is ceded to an assuming insurer that is licensed to transact insurance in this state;

  (2)  Credit shall be allowed when the reinsurance is ceded to an assuming insurer that is accredited by the director as a reinsurer in this state.  In order to be eligible for accreditation, a reinsurer shall:

  (a)  File with the director evidence of its submission to this state's jurisdiction;

  (b)  Submit to the authority of the department of commerce and insurance to examine its books and records;

  (c)  Be licensed to transact insurance or reinsurance in at least one state, or in the case of a United States branch of an alien assuming insurer is entered through and licensed to transact insurance or reinsurance in at least one state;

  (d)  File annually with the director a copy of its annual statement filed with the insurance department of its state of domicile and a copy of its most recent audited financial statement; and

  (e)  Demonstrate to the satisfaction of the director that it has adequate financial capacity to meet its reinsurance obligations and is otherwise qualified to assume reinsurance from domestic insurers.  An assuming insurer is deemed to meet such requirement as of the time of its application if it maintains a surplus regarding policyholders in an amount not less than twenty million dollars and its accreditation has not been denied by the director within ninety days after submission of its application;

  (3)  Credit shall be allowed when the reinsurance is ceded to an assuming insurer that is domiciled in, or in the case of a United States branch of an alien assuming insurer is entered through, a state that employs standards regarding credit for reinsurance substantially similar to those applicable under this statute and the assuming insurer or United States branch of an alien assuming insurer:

  (a)  Maintains a surplus as regards policyholders in an amount not less than twenty million dollars; except that this paragraph does not apply to reinsurance ceded and assumed pursuant to pooling arrangements among insurers in the same holding company system; and

  (b)  Submits to the authority of the department of commerce and insurance to examine its books and records;

  (4)  (a)  Credit shall be allowed when the reinsurance is ceded to an assuming insurer that maintains a trust fund in a qualified United States financial institution, as defined in subdivision (2) of subsection 3 of this section, for the payment of the valid claims of its United States ceding insurers, their assigns and successors in interest.  To enable the director to determine the sufficiency of the trust fund, the assuming insurer shall report annually to the director information substantially the same as that required to be reported on the National Association of Insurance Commissioners' annual statement form by licensed insurers.  The assuming insurer shall submit to examination of its books and records by the director.

  (b)  Credit for reinsurance shall not be granted pursuant to this subdivision unless the form of the trust and any amendments to the trust have been approved by:

  a.  The commissioner or director of the state agency regulating insurance in the state where the trust is domiciled; or

  b.  The commissioner or director of another state who, pursuant to the terms of the trust instrument, has accepted principal regulatory oversight of the trust.

  (c)  The form of the trust and any trust amendments shall also be filed with the commissioner or director in every state in which the ceding insurer beneficiaries of the trust are domiciled.  The trust instrument shall provide that contested claims shall be valid and enforceable upon the final order of any court of competent jurisdiction in the United States.  The trust shall vest legal title to its assets in its trustees for the benefit of the assuming insurer's United States ceding insurers, their assigns and successors in interest.  The trust and the assuming insurer shall be subject to examination as determined by the director.

  (d)  The trust shall remain in effect for as long as the assuming insurer has outstanding obligations due under the reinsurance agreements subject to the trust.  No later than February twenty-eighth of each year the trustees of the trust shall report to the director in writing the balance of the trust and listing the trust's investments at the preceding year end and shall certify the date of termination of the trust, if so planned, or certify that the trust will not expire prior to the next following December thirty-first.

  (e)  The following requirements apply to the following categories of assuming insurers:

  a.  The trust fund for a single assuming insurer shall consist of funds in trust in an amount not less than the assuming insurer's liabilities attributable to reinsurance ceded by the United States ceding insurers, and, in addition, the assuming insurer shall maintain a trusteed surplus of not less than twenty million dollars, except as provided in subparagraph b. of this paragraph;

  b.  At any time after the assuming insurer has permanently discontinued underwriting new business secured by the trust for at least three full years, the director with principal regulator oversight of the trust may authorize a reduction in the required trusteed surplus, but only after a finding based on an assessment of risk that the new required surplus level is adequate for the protection of United States ceding insurers, policyholders, and claimants in light of reasonably foreseeable adverse loss development.  The risk assessment may involve an actuarial review, including an independent analysis of reserves and cash flows, and shall consider all material risk factors including, when applicable, the lines of business involved, the stability of the incurred loss estimates, and the effect of the surplus requirements on the assuming insurer's liquidity or solvency.  The minimum required trusteed surplus shall not be reduced to an amount less than thirty percent of the assuming insurer's liabilities attributable to reinsurance ceded by United States ceding insurers covered by the trust;

  c.  In the case of a group of incorporated and individual unincorporated underwriters:

  (i)  For reinsurance ceded under reinsurance agreements with an inception, amendment or renewal date on or after January 1, 1993, the trust shall consist of a trusteed account in an amount not less than the respective underwriter's several liabilities attributable to business ceded by United States domiciled ceding insurers to any underwriter of the group;

  (ii)  For reinsurance ceded under reinsurance agreements with an inception date on or before December 31, 1992, and not amended or renewed after that date, notwithstanding the other provisions of this section, the trust shall consist of a trustee account in an amount not less than the respective underwriter's several insurance and reinsurance liabilities attributable to business in the United States; and

  (iii)  In addition to these trusts, the group shall maintain in trust a trusteed surplus of which one hundred million dollars shall be held jointly for the benefit of the United States domiciled ceding insurers of any member of the group for all years of account;

  d.  The incorporated members of the group shall not be engaged in any business other than underwriting as a member of the group and shall be subject to the same level of regulation and solvency control by the group's domiciliary regulator as are the unincorporated members;

  e.  Within ninety days after its financial statements are due to be filed with the group's domiciliary regulator, the group shall provide to the director an annual certification by the group's domiciliary regulator of the solvency of each underwriter member; or if a certification is unavailable, financial statements, prepared by independent public accountants, of each underwriter member of the group;

  (5)  (a)  Credit shall be allowed when the reinsurance is ceded to an assuming insurer that has been certified by the director as a reinsurer in this state and secures its obligations in accordance with the requirements of this subdivision.

  (b)  In order to be eligible for certification, the assuming insurer shall meet the following requirements:

  a.  The assuming insurer shall be domiciled and licensed to transact insurance or reinsurance in a qualified jurisdiction, as determined by the director under paragraph (d) of this subdivision;

  b.  The assuming insurer shall maintain minimum capital and surplus, or its equivalent, in an amount to be determined by the director by rule;

  c.  The assuming insurer shall maintain financial strength ratings from two or more rating agencies deemed acceptable by the director by rule;

  d.  The assuming insurer shall agree to submit to the jurisdiction of this state, appoint the director as its agent for service of process in this state, and agree to provide security for one hundred percent of the assuming insurer's liabilities attributable to reinsurance ceded by United States ceding insurers if it resists enforcement of a final United States judgment;

  e.  The assuming insurer shall agree to meet applicable information filing requirements as determined by the director, both with respect to an initial application for certification and on an ongoing basis; and

  f.  The assuming insurer shall satisfy any other requirements for certification deemed relevant by the director.

  (c)  An association including incorporated and individual unincorporated underwriters may be a certified reinsurer.  To be eligible for certification, in addition to satisfying requirements of paragraph (b) of this subdivision:

  a.  The association shall satisfy its minimum capital and surplus requirements through the capital and surplus equivalents (net of liabilities) of the association and its members, which shall include a joint central fund that may be applied to any unsatisfied obligation of the association or any of its members, in an amount determined by the director to provide adequate protection;

  b.  The incorporated members of the association shall not be engaged in any business other than underwriting as a member of the association and shall be subject to the same level of regulation and solvency control by the association's domiciliary regulator as are the unincorporated members; and

  c.  Within ninety days after its financial statements are due to be filed with the association's domiciliary regulator, the association shall provide to the director:

  (i)  An annual certification by the association's domiciliary regulator of the solvency of each underwriter member; or

  (ii)  If a certification is unavailable, financial statements prepared by independent public accountants of each underwriter member of the association.

  (d)  a.  The director shall create and publish a list of qualified jurisdictions, under which an assuming insurer licensed and domiciled in such jurisdiction is eligible to be considered for certification by the director as a certified reinsurer.

  b.  To determine whether the domiciliary jurisdiction of a non-United States assuming insurer is eligible to be recognized as a qualified jurisdiction, the director shall evaluate the appropriateness and effectiveness of the reinsurance supervisory system of the jurisdiction, both initially and on an ongoing basis, and consider the rights, benefits, and extent of reciprocal recognition afforded by the non-United States jurisdiction to reinsurers licensed and domiciled in the United States.  A qualified jurisdiction shall agree to share information and cooperate with the director with respect to all certified reinsurers domiciled within that jurisdiction.  A jurisdiction shall not be recognized as a qualified jurisdiction if the director has determined that the jurisdiction does not adequately and promptly enforce final United States judgments and arbitration awards.  Additional factors may be considered at the discretion of the director.

  c.  The director may consider a list of qualified jurisdictions published by the National Association of Insurance Commissioners (NAIC) in determining qualified jurisdictions for the purposes of this section.  If the director approves a jurisdiction as qualified that does not appear on the list of qualified jurisdictions, the director shall provide thoroughly documented justification in accordance with criteria to be developed by rule.

  d.  United States jurisdictions that meet the requirement for accreditation under the NAIC financial standards and accreditation program shall be recognized as qualified jurisdictions.

  e.  If a certified reinsurer's domiciliary jurisdiction ceases to be a qualified jurisdiction, the director has the discretion to suspend the reinsurer's certification indefinitely, in lieu of revocation.

  (e)  The director shall assign a rating to each certified reinsurer, giving due consideration to the financial strength ratings that have been assigned by rating agencies deemed acceptable to the director by rule.  The director shall publish a list of all certified reinsurers and their ratings.

  (f)  a.  A certified reinsurer shall secure obligations assumed from United States ceding insurers under this subdivision at a level consistent with its rating, as specified in regulations promulgated by the director.

  b.  For a domestic ceding insurer to qualify for full financial statement credit for reinsurance ceded to a certified reinsurer, the certified reinsurer shall maintain security in a form acceptable to the director and consistent with the provisions of this section or in a multibeneficiary trust in accordance with paragraph (e) of subdivision (4) of this subsection, except as otherwise provided in this subdivision.

  c.  If a certified reinsurer maintains a trust to fully secure its obligations under paragraph (d) of subdivision (4) of this subsection and chooses to secure its obligations incurred as a certified reinsurer in the form of a multibeneficiary trust, the certified reinsurer shall maintain separate trust accounts for its obligations incurred under reinsurance agreements issued or renewed as a certified reinsurer with reduced security as permitted by this subsection or comparable laws of other United States jurisdictions and for its obligations subject to paragraph (e) of subdivision (4) of this subsection.  It shall be a condition to the grant of certification under this section that the certified reinsurer shall have bound itself, by the language of the trust and agreement with the director with principal regulatory oversight of each such trust account, to fund, upon termination of any such trust account, out of the remaining surplus of such trust any deficiency of any other such trust account.

  d.  The minimum trusteed surplus requirements provided in paragraph (e) of subdivision (4) of this subsection are not applicable with respect to a multibeneficiary trust maintained by a certified reinsurer for the purpose of securing obligations incurred under this paragraph, except that such trust shall maintain a minimum trusteed surplus of ten million dollars.

  e.  With respect to obligations incurred by a certified reinsurer under this paragraph, if the security is insufficient, the director shall order the certified reinsurer to provide sufficient security for such incurred obligations within thirty days.  If a certified reinsurer does not provide sufficient security for its obligations incurred under this subsection within thirty days of being ordered to do so by the director, the director has the discretion to allow credit in the amount of the required security for one year.  Following this one-year period, the director shall impose reductions in allowable credit upon finding that there is a material risk that the certified reinsurer's obligations will not be paid in full when due.

  f.  (i)  For purposes of this paragraph, a certified reinsurer whose certification has been terminated for any reason shall be treated as a certified reinsurer required to secure one hundred percent of its obligations.

  (ii)  As used in this subparagraph, the term "terminated" refers to revocation, suspension, voluntary surrender, and inactive status.

  (iii)  If the director continues to assign a higher rating as permitted by other provisions of this subdivision, this requirement does not apply to a certified reinsurer in inactive status or to a reinsurer whose certification has been suspended.

  g.  If an applicant for certification has been certified as a reinsurer in an NAIC-accredited jurisdiction, the director has the discretion to defer to that jurisdiction's certification and to the rating assigned by that jurisdiction, and such assuming insurer shall be considered to be a certified reinsurer in this state.

  h.  A certified reinsurer that ceases to assume new business in this state may request to maintain its certification in inactive status in order to continue to qualify for a reduction in security for its in-force business.  An inactive certified reinsurer shall continue to comply with all applicable requirements of this subsection, and the director shall assign a rating that takes into account, if relevant, the reasons why the reinsurer is not assuming new business.

  (6)  Credit:

  (a)  Shall be allowed when the reinsurance is ceded to an assuming insurer not meeting the requirements of subdivision (1), (2), (3), (4), or (5) of this subsection, but only as to the insurance of risks located in a jurisdiction of the United States where the reinsurance is required by applicable law or regulation of that jurisdiction;

  (b)  May be allowed in the discretion of the director when the reinsurance is ceded to an assuming insurer not meeting the requirements of subdivision (1), (2), (3), (4), or (5) of this subsection, but only as to the insurance of risks located in a foreign country where the reinsurance is required by applicable law or regulation of that country;

  (7)  If the assuming insurer is not licensed, accredited, or certified to transact insurance or reinsurance in this state, the credit permitted by subdivisions (3) and (4) of this subsection shall not be allowed unless the assuming insurer agrees in the reinsurance agreements:

  (a)  That in the event of the failure of the assuming insurer to perform its obligations under the terms of the reinsurance agreement, the assuming insurer, at the request of the ceding insurer shall submit to the jurisdiction of the courts of this state, will comply with all requirements necessary to give such courts jurisdiction, and will abide by the final decisions of such courts or of any appellate courts in this state in the event of an appeal; and

  (b)  To designate the director or a designated attorney as its true and lawful attorney upon whom may be served any lawful process in any action, suit or proceeding instituted by or on behalf of the ceding insurer.  This paragraph is not intended to conflict with or override the obligation of the parties to a reinsurance agreement to arbitrate their disputes, if this obligation is created in the agreement and the jurisdiction and situs of the arbitration is, with respect to any receivership of the ceding company, any jurisdiction of the United States;

  (8)  If the assuming insurer does not meet the requirements of subdivision (1), (2) or (3) of this subsection, the credit permitted by subdivision (4) or (5) of this subsection shall not be allowed unless the assuming insurer agrees in the trust agreements to the following conditions:

  (a)  Notwithstanding any other provisions in the trust instrument, if the trust fund is inadequate because it contains an amount less than the amount required by paragraph (e) of subdivision (4) of this subsection, or if the grantor of the trust has been declared insolvent or placed into receivership, rehabilitation, liquidation or similar proceedings under the laws of its state or country of domicile, the trustee shall comply with an order of the commissioner or director with regulatory oversight over the trust or with an order of a court of competent jurisdiction directing the trustee to transfer to the commissioner or director with regulatory oversight all of the assets of the trust fund;

  (b)  The assets shall be distributed by and claims shall be filed with and valued by the commissioner or director with regulatory oversight in accordance with the laws of the state in which the trust is domiciled that are applicable to the liquidation of domestic insurance companies;

  (c)  If the commissioner or director with regulatory oversight determines that the assets of the trust fund or any part thereof are not necessary to satisfy the claims of the United States ceding insurers of the grantor of the trust, the assets or part thereof shall be returned by the commissioner or director with regulatory oversight to the trustee for distribution in accordance with the trust agreement; and

  (d)  The grantor shall waive any right otherwise available to it under United States law that is inconsistent with this subsection.

  (9)  (a)  If an accredited or certified reinsurer ceases to meet the requirements for accreditation or certification, the director may suspend or revoke the reinsurer's accreditation or certification.

  (b)  The director shall give the reinsurer notice and opportunity for a hearing.  The suspension or revocation shall not take effect until after the director's order on hearing, unless:

  a.  The reinsurer waives its right to hearing;

  b.  The director's order is based on regulatory action by the reinsurer's domiciliary jurisdiction or the voluntary surrender or termination of the reinsurer's eligibility to transact insurance or reinsurance business in its domiciliary jurisdiction or in the primary certifying state of the reinsurer under subdivision (5)^* of this subsection; or

  c.  The director finds that an emergency requires immediate action, and a court of competent jurisdiction has not stayed the commissioner's action.

  (c)  While a reinsurer's accreditation or certification is suspended, no reinsurance contract issued or renewed after the effective date of the suspension qualifies for credit except to the extent that the reinsurer's obligations under the contract are secured in accordance with subdivision (5) of this subsection or subsection 2 of this section.  If a reinsurer's accreditation or certification is revoked, no credit for reinsurance shall be granted after the effective date of the revocation except to the extent that the reinsurer's obligations under the contract are secured in accordance with subdivision (5) of this subsection or subsection 2 of this section.

  (10)  (a)  A ceding insurer shall take steps to manage its reinsurance recoverables proportionate to its own book of business.  A domestic ceding insurer shall notify the director within thirty days after reinsurance recoverables from any single assuming insurer or group of affiliated assuming insurers exceeds fifty percent of the domestic ceding insurer's last reported surplus to policyholders or after it is determined that reinsurance recoverables from any single assuming insurer or group of affiliated assuming insurers is likely to exceed such limit.  The notification shall demonstrate that the exposure is safely managed by the domestic ceding insurer.

  (b)   A ceding insurer shall take steps to diversify its reinsurance program.  A domestic ceding insurer shall notify the director within thirty days after ceding to any single assuming insurer or group of affiliated assuming insurers more than twenty percent of the ceding insurer's gross written premium in the prior calendar year or after it has determined that the reinsurance ceded to any single assuming insurer or group of affiliated assuming insurers is likely to exceed such limit.  The notification shall demonstrate that the exposure is safely managed by the domestic ceding insurer.

  2.  An asset or reduction from liability for the reinsurance ceded by a domestic insurer to an assuming insurer not meeting the requirements of subsection 1 of this section shall be allowed in an amount not exceeding the liabilities carried by the ceding insurer.  The reduction shall be in the amount of funds held by or on behalf of the ceding insurer, including funds held in trust for the ceding insurer, under a reinsurance contract with the assuming insurer as security for the payment of obligations thereunder, if the security is held in the United States subject to withdrawal solely by, and under the exclusive control of, the ceding insurer; or, in the case of a trust, held in a qualified United States financial institution, as defined in subdivision (2) of subsection 3 of this section.  This security may be in the form of:

  (1)  Cash;

  (2)  Securities listed by the securities valuation office of the National Association of Insurance Commissioners, including those deemed exempt from filing as defined by the Purposes and Procedures Manual of the Securities Valuation Office, and qualifying as admitted assets;

  (3)  (a)  Clean, irrevocable, unconditional letters of credit issued or confirmed by a qualified United States financial institution, as defined in subdivision (1) of subsection 3 of this section, no later than December thirty-first of the year for which filing is being made, and in the possession of, or in trust for, the ceding insurer on or before the filing date of its annual statement.

  (b)  Letters of credit meeting applicable standards of issuer acceptability as of the dates of their issuance or confirmation, notwithstanding the issuing or confirming institution's subsequent failure to meet applicable standards of issuer acceptability, shall continue to be acceptable as security until their expiration, extension, renewal, modification or amendment, whichever first occurs;

  (4)  Any other form of security acceptable to the director.

  3.  (1)  For purposes of subdivision (3) of subsection 2 of this section, a "qualified United States financial institution" means an institution that:

  (a)  Is organized or, in the case of a United States office of a foreign banking organization, licensed under the laws of the United States or any state thereof;

  (b)  Is regulated, supervised and examined by federal or state authorities having regulatory authority over banks and trust companies; and

  (c)  Has been determined by either the director, or the securities valuation office of the National Association of Insurance Commissioners, to meet such standards of financial condition and standing as are considered necessary and appropriate to regulate the quality of financial institutions whose letters of credit will be acceptable to the director.

  (2)  A "qualified United States financial institution" means, for purposes of those provisions of this law specifying those institutions that are eligible to act as a fiduciary of a trust, an institution that:

  (a)  Is organized, or in the case of a United States branch or agency office of a foreign banking organization, licensed under the laws of the United States or any state thereof and has been granted authority to operate with fiduciary powers; and

  (b)  Is regulated, supervised and examined by federal or state authorities having regulatory authority over banks and trust companies.

  4.  The director may adopt rules and regulations implementing the provisions of this section.

  5.  (1)  The director shall disallow any credit as an asset or as a deduction from liability for any reinsurance found by him to have been arranged for the purpose principally of deception as to the ceding company's financial condition as of the date of any financial statement of the company.  Without limiting the general purport of this provision, reinsurance of any substantial part of the company's outstanding risks contracted for in fact within four months prior to the date of any such financial statement and cancelled in fact within four months after the date of such statement, or reinsurance under which the assuming insurer bears no substantial insurance risk or substantial risk of net loss to itself, shall prima facie be deemed to have been arranged for the purpose principally of deception within the intent of this provision.

  (2)  (a)  The director shall also disallow as an asset or deduction from liability to any ceding insurer any credit for reinsurance unless the reinsurance is payable to the ceding company, and if it be insolvent to its receiver, by the assuming insurer on the basis of the liability of the ceding company under the contracts reinsured without diminution because of the insolvency of the ceding company.

  (b)  Such payments shall be made directly to the ceding insurer or to its domiciliary liquidator except:

  a.  Where the contract of insurance or reinsurance specifically provides for payment to the named insured, assignee or named beneficiary of the policy issued by the ceding insurer in the event of the insolvency of the ceding insurer; or

  b.  Where the assuming insurer, with the consent of it and the direct insured or insureds in an assumption reinsurance transaction subject to sections 375.1280 to 375.1295, has assumed such policy obligations of the ceding insurer as direct obligations of the assuming insurer to the payees under such policies and in substitution for the obligations of the ceding insurer to such payees.

  (c)  Notwithstanding paragraphs (a) and (b) of this subdivision, in the event that a life and health insurance guaranty association has made the election to succeed to the rights and obligations of the insolvent insurer under the contract of reinsurance, then the reinsurer's liability to pay covered reinsured claims shall continue under the contract of reinsurance, subject to the payment to the reinsurer of the reinsurance premiums for such coverage.  Payment for such reinsured claims shall only be made by the reinsurer pursuant to the direction of the guaranty association or its designated successor.  Any payment made at the direction of the guaranty association or its designated successor by the reinsurer will discharge the reinsurer of all further liability to any other party for such claim payment.

  (d)  The reinsurance agreement may provide that the domiciliary liquidator of an insolvent ceding insurer shall give written notice to the assuming insurer of the pendency of a claim against such ceding insurer on the contract reinsured within a reasonable time after such claim is filed in the liquidation proceeding.  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 insurer, or its liquidator.  Such expense may be filed as a claim against the insolvent ceding insurer 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 a 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 insurer.

  6.  To the extent that any reinsurer of an insurance company in liquidation would have been required under any agreement pertaining to reinsurance to post letters of credit or other security prior to an order of liquidation to cover such reserves reflected upon the last financial statement filed with a regulatory authority immediately prior to receivership, such reinsurer shall be required to post letters of credit or other security to cover reserves after a company has been placed in liquidation or receivership.  If a reinsurer shall fail to post letters of credit or other security as required by a reinsurance agreement or the provisions of this subsection, the director may consider disallowing as a credit or asset, in whole or in part, any future reinsurance ceded to such reinsurer by a ceding insurance company that is incorporated under the laws of the state of Missouri.

  7.  The provisions of section 375.420 shall not apply to any action, suit or proceeding by a ceding insurer against an assuming insurer arising out of a contract of reinsurance effectuated in accordance with the laws of Missouri.

  8.  Notwithstanding any other provision of this section, a domestic insurer may take credit for reinsurance ceded either as an asset or a reduction from liability only to the extent such credit is allowed by the consistent application of either applicable statutory accounting principles adopted by the NAIC or other accounting principles approved by the director.

  9.  The director may suspend the accreditation, approval, or certification under subsection 1 of this section of any reinsurer for failure to comply with the applicable requirements of subsection 1 of this section after providing the affected reinsurer with notice and opportunity for hearing.

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(L. 1967 p. 516, A.L. 1990 H.B. 1739, A.L. 1991 H.B. 385, et al., A.L. 1994 H.B. 1449 merged with S.B. 687, A.L. 2002 H.B. 1568, A.L. 2004 H.B. 1253 merged with S.B. 1235, A.L. 2013 H.B. 133)

Effective 1-01-14

*Words "subdivision (6)" appear in original rolls