2010 New York Code
ISC - Insurance
Article 69 - (6901 - 6909) 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.