A. An insurer shall reinsure its risks, or any part of its risks, only in solvent insurers having surplus to policyholders not less in amount than the minimum required capital stock required under this title of a domestic stock insurer, other than a limited stock insurer or a domestic life and disability reinsurer, authorized to transact like kinds of insurance. A domestic limited stock life insurer or domestic life and disability reinsurer may accept reinsurance of the risks of other limited stock insurers or domestic life and disability reinsurers.

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B. An insurer may reinsure in alien insurers if the alien insurers are authorized to transact insurance in at least one state of the United States or have in the United States a duly authorized attorney-in-fact to accept service of legal process against the insurer as to any liability that might arise on account of such reinsurance.

C. A credit shall not be allowed, as an admitted asset or as a deduction from liability, to any ceding insurer for reinsurance unless the reinsurance is payable by the reinsurer on the basis of the liability of the ceding insurer under the contracts reinsured without diminution because of the insolvency of the ceding insurer nor unless under the reinsurance contract the reinsurer assumes the liability for the reinsurance as of the same effective date. The reinsurer shall make payment directly to the ceding insurer or to its statutory successor by whatever name called for the purpose of liquidating or rehabilitating the business of the insurer unless either the reinsurance contract or the policies reinsured required the reinsurer to make payment to the payees under the policies reinsured in the event the ceding insurer becomes insolvent, or the reinsurer with the consent of the direct insured assumes the policy obligations of the ceding insurer to the payees under the policies reinsured in substitution for the obligations of the ceding insurer to those payees.

D. A domestic insurer shall not be a party to any agreement of reinsurance with an unauthorized insurer until the agreement is filed with and approved in writing by the director. The director shall approve the agreement within a reasonable time after filing unless in the director’s opinion the effect of the agreement would be to reduce protection or service substantially either to policyholders resident of this state or to policyholders anywhere of the domestic insurer. If the director does not approve the agreement, the director shall notify the domestic insurer in writing specifying the reasons for not approving the agreement.

E. This section does not apply to insurance of ocean marine risks or marine protection and indemnity risks.

F. Unless the director requires the assuming insurer to file assumption reinsurance contracts, assumption reinsurance contracts are exempt from the filing requirements prescribed in subsection D if the assuming insurer has a surplus as to policyholders of at least fifty million dollars as shown in the most recent financial statement that is filed by the insurer with the department.