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            A. The commissioner shall allow credit for reinsurance to a domestic ceding insurer as either an asset or deduction from liability when the assuming insurer satisfies the requirements of Subsection B, C, D, E, F, or G of this Section. Additionally, the commissioner may adopt by regulation pursuant to La. Rev. Stat. 22:661(B) specific additional requirements relating to or setting forth the valuation of assets or reserve credits, the amount and forms of security supporting reinsurance arrangements described in La. Rev. Stat. 22:661(B), or the circumstances pursuant to which credit will be reduced or eliminated. The commissioner shall allow credit under Subsection B or C of this Section pertaining only to cessions of those kinds or classes of business that 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. The commissioner shall allow the credit for reinsurance pursuant to Subsection D of this Section only if the assuming insurer satisfies the requirements of Subsection H of this Section.

            B. The commissioner shall allow credit for reinsurance when the assuming insurer holds a certificate of authority to transact insurance or reinsurance in this state.

            C. The commissioner shall allow credit for reinsurance when the assuming insurer is an accredited reinsurer in this state. To be eligible for accreditation and to receive the commissioner’s approval of its application for accreditation, a reinsurer shall complete each of the following:

            (1) File with the commissioner evidence of its submission to the jurisdiction of this state.

            (2) Submit to the authority of the commissioner to examine its books and records.

            (3) Demonstrate that it is licensed or authorized to transact insurance or reinsurance in, or in the case of a United States branch of an alien assuming insurer, is entered through, at least one state that employs standards regarding credit for reinsurance equal to or exceeding those applicable under this Subpart.

            (4) File annually with the commissioner a true copy of its annual statement filed with the insurance regulator of its state of domicile and a copy of its most recent audited financial statement.

            (5) Demonstrate to the satisfaction of the commissioner that it has adequate financial capacity to meet its reinsurance obligations and is otherwise qualified to assume reinsurance from domestic insurers. The commissioner shall deem that an assuming insurer meets this requirement as of the time of its application if it maintains a surplus as regards policyholders in an amount not less than twenty million dollars and the commissioner has not denied it accreditation within ninety days after submission of its application.

            D.(1) The commissioner shall allow a domestic ceding insurer credit for reinsurance under Paragraph (2) of this Subsection when the reinsurance is ceded to an assuming insurer that maintains a trust fund in a qualified United States financial institution, as defined in La. Rev. Stat. 22:653(B), for the payment of the valid claims of its United States policyholders and ceding insurers, their assigns, and successors in interest. The assuming insurer shall report and submit annually to the commissioner information substantially the same as that required to be reported on the National Association of Insurance Commissioners (NAIC) annual statement form by authorized insurers to enable the commissioner to determine the sufficiency of the trust fund. The assuming insurer shall submit to examination of its books and records by the commissioner and bear the expense of examination.

            (2)(a) The commissioner shall not grant credit for reinsurance under this Subsection unless the form of the trust and any amendments to the trust receive the approval of either of the following:

            (i) The commissioner of the state of domicile of the trust.

            (ii) The commissioner of another state who, pursuant to the terms of the trust instrument, accepts principal regulatory oversight of the trust.

            (b) The assuming insurer shall also file the form of the trust and any trust amendments with the commissioner of every domiciliary state of the ceding insurer beneficiaries of the trust. 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 commissioner.

            (c) 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 the last day of February of each year the trustee of the trust shall report to the commissioner in writing the balance of the trust and list 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 following thirty-first day of December.

            (3)(a) In the case of a single assuming insurer, the trust fund shall consist of funds in trust in an amount not less than the assuming insurer’s liabilities attributable to business written in the United States 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 commissioner with principal regulatory oversight of the trust may authorize a reduction in the required trusteed surplus, but only after a finding, based on an assessment of the risk, that the new required surplus level is adequate for the protection of the 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 flow, 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 may 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 assuming insurers that includes incorporated and individual unincorporated underwriters, the following provisions apply:

            (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 underwriters’ 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 Subpart, the trust shall consist of a trusteed account in an amount not less than the respective underwriters’ several insurance and reinsurance liabilities attributable to business written in the United States.

            (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 or any member of the group for all years of account.

            (iv) The incorporated members of the group shall not engage 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.

            (v) Within ninety days after its financial statements are due to be filed with the group’s domiciliary regulator, the group shall provide to the commissioner 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.

            (d) In the case of a group of incorporated underwriters under common administration, the group shall:

            (i) Submit to the commissioner’s authority to examine its books and records and bear the expense of any examination.

            (ii) Maintain aggregate policyholders’ surplus of ten billion dollars.

            (iii) Maintain a trust fund in an amount not less than the group’s several liabilities attributable to business ceded by United States ceding insurers to any member of the group.

            (iv) In addition, maintain a joint trusteed surplus of which one hundred million dollars shall be held jointly for the benefit of the United States ceding insurers of any member of the group as additional security for these liabilities.

            (v) Within ninety days after its financial statements are due to be filed with the group’s domiciliary regulator make available to the commissioner an annual certification of the member’s solvency by the member’s domiciliary regulator and financial statements of each underwriter member of the group audited by independent public accountants.

            E.(1) The commissioner shall allow credit for reinsurance when the assuming insurer is a certified reinsurer in this state and secures its obligations in accordance with the requirements of this Subsection. 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 commissioner pursuant to Paragraph (3) of this Subsection.

            (b) The assuming insurer shall maintain minimum capital and surplus or its equivalent, in an amount determined by the commissioner, pursuant to regulation.

            (c) The assuming insurer shall maintain financial strength ratings from two or more rating agencies deemed acceptable by the commissioner pursuant to regulation.

            (d) The assuming insurer shall agree to submit to the jurisdiction of this state, appoint the commissioner 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 commissioner for its initial application for certification and for its continual maintenance of certification as a reinsurer.

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

            (2) 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 (1) of this Subsection:

            (a) The association shall satisfy its minimum capital and surplus requirements through the capital and surplus equivalents and 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 commissioner to provide adequate protection.

            (b) The incorporated members of the association shall not engage 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 to which the unincorporated members are subject, pursuant to the authority of the association’s domiciliary regulator.

            (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 commissioner an annual certification by the association’s domiciliary regulator of the solvency of each underwriter member; or, if a certification is unavailable, the association shall provide financial statements, prepared by independent public accountants, of each underwriter member of the association.

            (3) The commissioner shall create and publish a list of qualified jurisdictions.

            (a) To determine the eligibility of the domiciliary jurisdiction of a non-United States assuming insurer for recognition as a qualified jurisdiction, the commissioner shall evaluate the appropriateness and effectiveness of the reinsurance supervisory system of the jurisdiction, both initially and continually thereafter, and consider the rights, benefits, and the 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 commissioner with respect to all certified reinsurers domiciled within that jurisdiction. The commissioner may not recognize a jurisdiction as a qualified jurisdiction if the commissioner determines that it does not adequately and promptly enforce final United States judgments and arbitration awards. The commissioner may consider additional factors in determining qualified jurisdictions.

            (b) The commissioner shall consider the list of qualified jurisdictions published by the NAIC through the NAIC committee process in determining qualified jurisdictions. If the commissioner approves a jurisdiction as qualified that does not appear on the list of qualified jurisdictions, the commissioner shall provide thoroughly documented justification in accordance with criteria to be developed pursuant to regulations.

            (c) The commissioner shall recognize as qualified jurisdictions those United States jurisdictions that meet the requirements for accreditation under the NAIC financial standards and accreditation program.

            (d) If a certified reinsurer’s domiciliary jurisdiction ceases to be a qualified jurisdiction, the commissioner has the discretion to suspend the reinsurer’s certification indefinitely, in lieu of revocation.

            (4) The commissioner shall publish a list of all certified reinsurers and their ratings assigned by the commissioner giving due consideration to the financial strength ratings assigned by rating agencies acceptable to the commissioner pursuant to regulation.

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

            (a) 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 commissioner and consistent with the provisions of La. Rev. Stat. 22:652, or in a multi-beneficiary trust in accordance with Subsection D of this Section, except as otherwise provided in this Subsection.

            (b) If a certified reinsurer maintains a trust to fully secure its obligations subject to Subsection D of this Section, and chooses to secure its obligations incurred as a certified reinsurer in the form of a multi-beneficiary 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 this Subsection. It shall be a condition to the grant of certification pursuant to this Subsection that the certified reinsurer shall have bound itself, by the language of the trust and agreement with the commissioner 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.

            (c) The minimum trusteed surplus requirements provided in Subsection D of this Section are not applicable with respect to a multi-beneficiary trust maintained by a certified reinsurer for the purpose of securing obligations incurred pursuant to this Subsection, except that such trust shall maintain a minimum trusteed surplus of ten million dollars.

            (d) With respect to obligations incurred by a certified reinsurer pursuant to this Subsection, if the security is insufficient, the commissioner shall reduce the allowable credit by an amount proportionate to the deficiency, and has the discretion to impose further 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.

            (e) For purposes of this Subsection, 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.

            (i) As used in this Subsection, the term “terminated” refers to revocation, suspension, voluntary surrender, and inactive status.

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

            (6) The commissioner may certify a reinsurer in this state based on the certification and assigned rating granted to that reinsurer by another NAIC accredited jurisdiction.

            (7) 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 commissioner shall assign a rating that takes into account, if relevant, the reasons why the reinsurer is not assuming new business.

            F.(1) The commissioner shall allow credit for reinsurance when the reinsurance is ceded to an assuming insurer meeting each of the following conditions:

            (a)(i) The assuming insurer has its head office or is domiciled in, as applicable, and is licensed in a reciprocal jurisdiction.

            (ii) As used in this Subsection, a “reciprocal jurisdiction” is a jurisdiction that meets one of the following criteria:

            (aa) A non-United States jurisdiction that is subject to an in-force covered agreement with the United States, each within its legal authority, or, in the case of a covered agreement between the United States and the European Union, is a member state of the European Union. For purposes of this Subsection, a “covered agreement” is an agreement entered into pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, 31 U.S.C. § 313 and 314, which is currently in effect or in a period of provisional application and addresses the elimination, under specified conditions, of collateral requirements as a condition for entering into any reinsurance agreement with a ceding insurer domiciled in this state or for allowing the ceding insurer to recognize credit for reinsurance.

            (bb) A United States jurisdiction that meets the requirements for accreditation under the NAIC financial standards and accreditation program.

            (cc) A qualified jurisdiction, as determined by the commissioner pursuant to Paragraph (E)(3) of this Section, which is not otherwise described in Subitem (aa) or (bb) of this Item and which meets certain additional requirements, consistent with the terms and conditions of in-force covered agreements, as specified by the commissioner pursuant to regulation.

            (b) The assuming insurer has and maintains, on an ongoing basis, minimum capital and surplus, or its equivalent, calculated according to the methodology of its domiciliary jurisdiction, in an amount to be set forth in regulation. If the assuming insurer is an association, including incorporated and individual unincorporated underwriters, it shall have and maintain, on an ongoing basis, minimum capital and surplus equivalents, net of liabilities, calculated according to the methodology applicable in its domiciliary jurisdiction, and a central fund containing a balance in amounts to be set forth in regulation.

            (c) The assuming insurer has and maintains, on an ongoing basis, a minimum solvency or capital ratio, as applicable, which will be set forth in regulation. If the assuming insurer is an association, including incorporated and individual unincorporated underwriters, it shall have and maintain, on an ongoing basis, a minimum solvency or capital ratio in the reciprocal jurisdiction where the assuming insurer has its head office or is domiciled, as applicable, and is also licensed.

            (d) The assuming insurer agrees and provides adequate assurance to the commissioner, in a form specified by the commissioner pursuant to regulation, that it will comply with all of the following:

            (i) The assuming insurer shall provide prompt written notice and explanation to the commissioner if it falls below the minimum requirements set forth in Subparagraph (b) or (c) of this Paragraph or if any regulatory action is taken against it for serious noncompliance with applicable law.

            (ii) The assuming insurer shall consent in writing to the jurisdiction of the courts of this state and to the appointment of the commissioner as agent for service of process. The commissioner may require that consent for service of process be provided to the commissioner and included in each reinsurance agreement. Nothing in this Section limits, or in any way alters, the capacity of parties to a reinsurance agreement to agree to alternative dispute resolution mechanisms, except to the extent such agreements are unenforceable under applicable insolvency or delinquency laws.

            (iii) The assuming insurer shall consent in writing to pay any final judgment that has been declared enforceable in a jurisdiction where the judgment was obtained, wherever enforcement is sought by a ceding insurer or its legal successor.

            (iv) Each reinsurance agreement shall include a provision requiring the assuming insurer to provide security in an amount equal to one hundred percent of the assuming insurer’s liabilities attributable to reinsurance ceded pursuant to that agreement if the assuming insurer resists enforcement of a final judgment that is enforceable under the law of the jurisdiction in which it was obtained or a properly enforceable arbitration award, whether obtained by the ceding insurer or by its legal successor on behalf of its resolution estate.

            (v) The assuming insurer shall confirm that it is not presently participating in any solvent scheme of arrangement which involves this state’s ceding insurers and agree to notify the ceding insurer and the commissioner and to provide security in an amount equal to one hundred percent of the assuming insurer’s liabilities to the ceding insurer, should the assuming insurer enter into such a solvent scheme of arrangement. Such security shall be in a form consistent with Subsection E of this Section, La. Rev. Stat. 22:652, and as specified by the commissioner pursuant to regulations.

            (e) The assuming insurer or its legal successor provides, if requested by the commissioner, on behalf of itself and any legal predecessors, certain documentation to the commissioner, as specified by the commissioner pursuant to regulations.

            (f) The assuming insurer maintains a practice of prompt payment of claims under reinsurance agreements, pursuant to criteria set forth in regulation.

            (g) The assuming insurer’s supervisory authority confirms to the commissioner on an annual basis, as of the preceding December thirty-first or at the annual date otherwise statutorily reported to the reciprocal jurisdiction, that the assuming insurer complies with the requirements set forth in Subparagraphs (b) and (c) of this Paragraph.

            (2) Nothing in this Subsection precludes an assuming insurer from providing the commissioner with information on a voluntary basis.

            (3) The commissioner shall timely create and publish a list of reciprocal jurisdictions, subject to the following:

            (a) A list of reciprocal jurisdictions is published through the NAIC Committee Process. The commissioner’s list shall include any reciprocal jurisdiction as defined pursuant to Subitems (1)(a)(ii)(aa) and (bb) of this Subsection, and shall consider any other reciprocal jurisdiction included on the NAIC list. The commissioner may approve a jurisdiction that does not appear on the NAIC list of reciprocal jurisdictions in accordance with criteria developed pursuant to regulations.

            (b) The commissioner may remove a jurisdiction from the list of reciprocal jurisdictions upon a determination that the jurisdiction no longer meets the requirements of a reciprocal jurisdiction, in accordance with a process set forth in regulations, except that the commissioner shall not remove from the list a reciprocal jurisdiction as defined pursuant to Subitems (1)(a)(ii)(aa) and (bb) of this Subsection. Upon removal of a reciprocal jurisdiction from this list, credit for reinsurance ceded to an assuming insurer which has its home office or is domiciled in that jurisdiction shall be allowed, if otherwise allowed pursuant to this Section.

            (4) The commissioner shall timely create and publish a list of assuming insurers that have satisfied the conditions set forth in this Subsection and to which cessions shall be granted credit in accordance with this Subsection. The commissioner may add an assuming insurer to the list if an NAIC-accredited jurisdiction has added the assuming insurer to a list of the assuming insurers or if, upon initial eligibility, the assuming insurer submits the information to the commissioner as required pursuant to Subparagraph (1)(d) of this Subsection and complies with any additional requirements that the commissioner may impose by regulation, except to the extent that those requirements conflict with an applicable covered agreement.

            (5) If the commissioner determines that an assuming insurer no longer meets one or more of the requirements of this Subsection, the commissioner may revoke or suspend the eligibility of the assuming insurer for recognition under this Subsection in accordance with procedures set forth in regulations.

            (a) While an assuming insurer’s eligibility is suspended, no reinsurance agreement issued, amended, or renewed after the effective date of the suspension qualifies for credit except to the extent that the assuming insurer’s obligations under the contract are secured in accordance with La. Rev. Stat. 22:652.

            (b) If an assuming insurer’s eligibility is revoked, no credit for reinsurance may be granted after the effective date of the revocation with respect to any reinsurance agreements entered into by the assuming insurer, including reinsurance agreements entered into prior to the date of revocation, except to the extent that the assuming insurer’s obligations under the contract are secured in a form acceptable to the commissioner and consistent with the provisions of La. Rev. Stat. 22:652.

            (6) If subject to a legal process of rehabilitation, liquidation, or conservation, as applicable, the ceding insurer, or its representative, may seek and, if determined appropriate by the court in which the proceedings are pending, may obtain an order requiring that the assuming insurer post security for all outstanding ceded liabilities.

            (7) Nothing in this Subsection shall limit or, in any way, alter the capacity of parties to a reinsurance agreement to agree on requirements for security or other terms in that reinsurance agreement, except as expressly prohibited by this Subpart or other applicable law or regulation.

            (8)(a) Credit may be taken pursuant to this Subsection only for reinsurance agreements entered into, amended, or renewed on or after the effective date of this Subsection and only with respect to losses incurred and reserves reported on or after the date on which the assuming insurer has met all eligibility requirements pursuant to Paragraph (1) of this Subsection or the effective date of the new reinsurance agreement, amendment, or renewal, whichever is later.

            (b) This Paragraph does not alter or impair a ceding insurer’s right to take credit for reinsurance, to the extent that credit is not available pursuant to this Subsection, as long as the reinsurance qualifies for credit pursuant to any other applicable provision of this Subpart.

            (9) Nothing in this Subsection authorizes an assuming insurer to withdraw or reduce the security provided under any reinsurance agreement except as permitted by the terms of the agreement.

            (10) Nothing in this Subsection limits, or in any way alters the capacity of parties to any reinsurance agreement to renegotiate the agreement.

            G. Any credit for reinsurance shall also be allowed when the reinsurance is ceded to an assuming insurer not meeting the requirements of Subsection B, C, D, E, or F of this Section, but only as to the insurance of risks located in jurisdictions where the reinsurance is required by applicable law of that jurisdiction.

            H. If the assuming insurer is not accredited or certified or does not hold a certificate of authority to transact insurance or reinsurance in this state, the commissioner shall not allow the credit permitted by Subsection D of this Section unless each of the following criteria is met:

            (1)(a) The assuming insurer provides the following in all reinsurance agreements:

            (i) 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 any court of competent jurisdiction in any state of the United States, comply with all requirements necessary to give such court jurisdiction, and abide by the final decision of the district court or appellate court.

            (ii) To designate the commissioner as its true and lawful attorney, who may be served any lawful service of process in any action, suit, or proceeding instituted by or on behalf of the ceding insurer.

            (b) The provisions of Items (a)(i) and (ii) of this Paragraph shall not be construed to conflict with or override the obligation of the parties to a reinsurance agreement to arbitrate their disputes, if such an obligation is created in the reinsurance agreement.

            (2) The assuming insurer files with the commissioner a list identifying its officers and directors, or similar principals, along with biographical information for each and provides an annual update of this information.

            (3) The assuming insurer agrees to allow the commissioner to examine its books and records and to waive any protection it has under any secrecy laws of its domiciliary jurisdiction of the reinsurer, except that any examination shall take place only upon showing of good cause by the commissioner for concern about the financial soundness or solvency of the subject entity.

            I. The ceding insurer may take credit for the reserves on such ceded risks to the extent reinsured, except that:

            (1) The ceding insurer shall not take credit for such reserves unless the insurer accepting the reinsurance meets the requirements set forth in this Section as valid assuming insurers.

            (2) The commissioner shall not allow credit to any ceding insurer for reinsurance, as an admitted asset or as a deduction from liability, unless the reinsurance shall be payable, in the event of insolvency of the ceding insurer, to its liquidator or receiver on the basis of the claim or claims allowed against the insolvent ceding insurer by any court of competent jurisdiction or any justice or judge thereof, or by any receiver or liquidator having authority to determine and allow such claims, except either where the reinsurance contract with the consent of the direct insured or insureds specifically provides another payee of such reinsurance in the event of the insolvency of the ceding insurer, or when the assuming insurer with the consent of the direct insured or insureds 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.

            (3) The commissioner shall not permit credit for reinsurance unless the assuming insurer has been doing business in its country of domicile for at least three years, or is an affiliate of an insurer or reinsurer that has been doing business in its country of domicile for at least three years, unless the commissioner, for good cause shown, waives this three-year operating requirement by rule or regulation.

            J. If the assuming insurer does not meet the requirements of Subsection B, C, or F of this Section, the credit permitted by Subsection D or E of this Section shall not be allowed unless the assuming insurer agrees in the trust agreements to each of the following conditions:

            (1) 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 (D)(3) of this Section, 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 with regulatory oversight over the trust or with an order of a court of competent jurisdiction directing the trustee to transfer to the commissioner with regulatory oversight all of the assets of the trust fund.

            (2) The commissioner with regulatory oversight, according to the laws relative to the liquidation of domestic insurance companies of the state in which the trust is domiciled, shall distribute the assets and shall value claims. Claims shall also be directed to the commissioner with the regulatory oversight as provided in this Paragraph.

            (3) If the commissioner 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 with regulatory oversight to the trustee for distribution in accordance with the trust agreement.

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

            K.(1) If an accredited or certified reinsurer ceases to meet the requirements for accreditation or certification, the commissioner may suspend or revoke the reinsurer’s accreditation or certification.

            (2) The commissioner shall give the reinsurer notice of the suspension or revocation and opportunity for a hearing in accordance with Chapter 12 of this Title, La. Rev. Stat. 22:2191 et seq. The suspension or revocation may not take effect until after the commissioner’s order and a hearing unless one of the following circumstances are present:

            (a) The reinsurer waives its right to a hearing.

            (b) The commissioner’s order is based upon regulatory action by the reinsurer’s domiciliary jurisdiction or upon 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 Paragraph (E)(6) of this Section.

            (c) The commissioner finds that an emergency requires immediate action and a court of competent jurisdiction has not stayed the commissioner’s action.

            (3) 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 La. Rev. Stat. 22:652. If a reinsurer’s accreditation or certification is revoked, no credit for reinsurance may 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 the provisions of Paragraph (E)(5) of this Section or in accordance with La. Rev. Stat. 22:652.

            L.(1) 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 commissioner within thirty days after reinsurance recoverables from any single assuming insurer, or group of affiliated 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 this limit. The notification shall demonstrate that the exposure is safely managed by the domestic ceding insurer.

            (2) A ceding insurer shall take steps to diversify its reinsurance program. A domestic ceding insurer shall notify the commissioner 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 this limit. The notification shall demonstrate that the exposure is safely managed by the domestic ceding insurer.

            Acts 1958, No. 125; Acts 1985, No. 510, §1; Acts 1988, No. 168, §1, eff. Sept. 1, 1988; Acts 1989, No. 560, §1, eff. Sept. 1, 1989; Acts 1990, No. 673, §1; Acts 1991, No. 996, §1, eff. Jan. 1, 1992; Acts 1993, No. 788, §1; Acts 1993, No. 902, §1; Acts 1995, No. 1182, §1; Redesignated from La. Rev. Stat. 22:941 by Acts 2008, No. 415, §1, eff. Jan. 1, 2009; Acts 2009, No. 503, §1; Acts 2012, No. 419, §1; Acts 2016, No. 199, §1; Acts 2020, No. 179, §1; Acts 2022, No. 185, §1.

NOTE: Former La. Rev. Stat. 22:651 redesignated as La. Rev. Stat. 22:879 by Acts 2008, No. 415, §1, eff. Jan. 1, 2009.