1. (a) The New Hampshire insurance department recognizes that licensed insurers routinely enter into reinsurance agreements. These agreements can yield legitimate relief to the ceding insurer. A “ceding insurer” is an insurance company that passes a part or all of its risks from its insurance policy portfolio to another insurer (reinsurer).

2. (b) However, it is improper for a licensed insurer, in the capacity of a ceding insurer, to enter into reinsurance agreements for the principal purpose of producing significant surplus for the ceding insurer, typically on a temporary basis, while not transferring all of the significant risks inherent in the business being reinsured. In substance or effect, the expected potential liability to the ceding insurer remains basically unchanged by the reinsurance transaction, notwithstanding certain risk elements contained in the reinsurance agreement, such as catastrophic mortality or extraordinary survival. The terms of such agreements referred to herein and described in Ins 308.05 violate:

   1. (1) RSA 400-A:36 and RSA 405:47 relating to financial statements which do not properly reflect the financial condition of the ceding insurer;
   2. (2) RSA 405:47 relating to reinsurance reserve credits, thus resulting in a ceding insurer improperly reducing liabilities or establishing assets for reinsurance ceded; and
   3. (3) RSA 400-A:36, RSA 405:45, RSA 405:47 and Ins 1500 relating to creating a situation that may be hazardous to policyholders and the people of this state.

Source. #5480, eff 10-1-92; ss by #6522, eff 6-6-97; ss by #8239, eff 1-3-05; ss by #10196, eff 1-3-13; ss by #13494, eff 11-22-22