2013 New York Consolidated Laws
ISC - Insurance
Article 65 - (6501 - 6508) MORTGAGE GUARANTY INSURANCE COMPANIES
6507 - Reinsurance.

 
    § 6507. Reinsurance. (a) A mortgage insurer may, by contract, reinsure
  any insurance it transacts and receive credit for such reinsurance as an
  asset  or  as  a  reduction  from liabilities, including its contingency
  reserve liability, in its financial statements where such reinsurance is
  placed with another mortgage insurer licensed under this article.
    (b) Notwithstanding any provision of law  to  the  contrary,  mortgage
  guaranty  insurance  may,  by  contract, be reinsured, provided that any
  reinsurance arrangements entered into  by  a  mortgage  insurer  and  an
  assuming  insurer  comply  with  the  provisions  of  this  article. The
  unearned premium reserve required by section one thousand three  hundred
  five  of this chapter, the contingency reserve required by paragraph two
  of subsection (a) of section six  thousand  five  hundred  two  of  this
  article  and  loss reserve required by paragraph three of subsection (a)
  of section six thousand five  hundred  two  of  this  article  shall  be
  established  and  maintained  by the mortgage insurer or by the assuming
  insurer so that the aggregate  reserves  shall  not  be  less  than  the
  reserves required by such subsection.
    (c)  Where  a  mortgage insurer cedes any insurance to an insurer that
  insures or reinsures other lines of insurance in  addition  to  mortgage
  guaranty  insurance,  the  amount of insurance so ceded shall not exceed
  thirty-five percent of  the  total  exposure  insured  by  the  mortgage
  insurer after deducting insurance ceded to any other mortgage insurer.
    (d) Where a mortgage insurer cedes any insurance to a mortgage insurer
  not  licensed under this article or an insurer that insures or reinsures
  other lines of insurance in addition to mortgage guaranty insurance,  in
  order for the mortgage insurer to receive credit for such reinsurance as
  an  asset  or as a reduction from liabilities, including its contingency
  reserve liability, in its financial statements,  such  assuming  insurer
  must maintain a surplus to policyholders of at least thirty-five million
  dollars and the following must occur;
    (1)  the  insurer must establish and maintain in a segregated trust an
  amount equal to the greater of either the contingency  reserve  required
  by  paragraph two of subsection (a) of section six thousand five hundred
  two of this article, or four percent of the outstanding total  liability
  under  the  aggregate  insurance  policies  assumed  from  the  mortgage
  insurer;
    (2) the insurer must establish and maintain in a segregated trust,  or
  provide  a letter of credit in a form approved by the superintendent, an
  amount equal to the unearned premium and loss reserves;
    (3) any such aggregated trust shall be funded by assets  permitted  by
  article  fourteen  of  this  chapter  for  the  loss reserve required by
  paragraph three of subsection (a) of section six thousand  five  hundred
  two  of  this  article  and for the unearned premium reserve required by
  section one thousand three hundred five of this chapter,  and  shall  be
  funded  by  either  the types of assets specified in paragraphs one, two
  and three of subsection (b) of section one thousand four hundred two and
  paragraphs one, two and twelve of subsection (a) of section one thousand
  four hundred four of this chapter or by tax  and  loss  bonds  purchased
  pursuant to § 832(e) of the Internal Revenue Code for the greater of the
  amount  of  reserves  required  by  paragraph  two  of subsection (a) of
  section six thousand five hundred two of this article or  paragraph  one
  of  subsection  (b)  of  section  six  thousand five hundred two of this
  article;
    (4) the reinsurance agreement must be submitted to the commissioner or
  superintendent of insurance  of  the  mortgage  insurer's  domicile  for
  approval; and
    (5) the reinsurance agreement must provide that:

    (A)   it   is   not  valid  until  approved  by  the  commissioner  or
  superintendent of insurance of the mortgage insurer's domicile;
    (B)  any  amendments to the reinsurance agreement must be submitted to
  the  commissioner  or  superintendent  of  insurance  of  the   mortgage
  insurer's domicile for approval prior to becoming effective;
    (C) the ceding mortgage insurer has a right to terminate the ceding of
  additional  insurance  under  the reinsurance agreement if so ordered by
  the superintendent;
    (D) the superintendent has the right  to  request  from  the  assuming
  reinsurer information concerning its financial condition;
    (E)  the  assuming  reinsurer  shall  notify the superintendent of any
  material change in its financial condition; and
    (F) such agreements and any amendments thereto shall  be  provided  to
  the  superintendent,  who  shall  have  the  right  to disapprove of any
  agreement. Such agreements and any amendments thereto  shall  be  deemed
  approved  by  the  superintendent  unless disapproved within thirty days
  from the date provided to  the  superintendent.  If  the  superintendent
  disapproves  of  any  reinsurance  agreement  or  amendments thereto the
  mortgage insurer shall not receive credit for  such  reinsurance  as  an
  asset or as a reduction from liabilities in its financial statement.
    (e) Nothing contained herein shall be deemed to permit an insurer that
  insures  or  reinsures  other lines of insurance in addition to mortgage
  guaranty insurance to write directly mortgage guaranty insurance.
    (f) Any reinsurance agreement that was valid under this chapter at the
  time entered into shall not be invalidated by this section.