(a) A ceding insurer may not be given credit for reinsurance ceded, as an asset or as a deduction from liability, in an accounting or financial statement unless the reinsurance is payable by the assuming insurer:
(1) on the liability of the ceding insurer under the contracts reinsured, without diminution because of the ceding insurer’s insolvency; and
(2) directly to the ceding insurer or to the ceding insurer’s domiciliary liquidator or receiver.
(b) Subsection (a)(2) does not apply if:
(1) the reinsurance contract specifically provides that, if the ceding insurer is insolvent, the reinsurance is payable to a payee other than one described by Subsection (a)(2); or
(2) the assuming insurer, with the direct insured’s consent, has assumed the ceding insurer’s policy obligations to the payee as the assuming insurer’s direct obligations to the payee under the policy as a substitute for the ceding insurer’s obligations.