N.Y. Comp. Codes R. & Regs. tit. 11, § 127.0 – Preamble.

(a) The Department of Financial Services recognizes that authorized insurers routinely enter into reinsurance agreements that yield legitimate relief to ceding insurers from strain to surplus.
(b) However, it is improper for an authorized insurer, in the capacity of ceding insurer, to enter into reinsurance agreements for the principal purpose of producing significant surplus aid for the ceding insurer, while not transferring all the significant risks inherent in the insurance policies 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 in the reinsurance agreement, such as catastrophic mortality or extraordinary survival.
(c) It is the department's position that, except as provided in section 127.3 of this Part, if an authorized ceding insurer takes reserve credit by reducing liabilities or establishing assets for reinsurance ceded under the type of reinsurance agreements referred to in subdivision (b) of this section and described in section 127.2 of this Part, that ceding insurer would:
1. (1) violate section 1308(c) of the Insurance Law;
2. (2) violate section 307(a) of the Insurance Law by distorting its financial statements and not properly reflecting its financial condition in accordance with sections 4217, 4218, 4221 and 4223 of the Insurance Law; and
3. (3) create a situation that may be hazardous to policyholders and the people of this State.