Vermont § 6048i - Permitted reinsurance

§ 6048i. Permitted reinsurance

• (a) A special purpose financial insurance company may reinsure only the risks of a ceding
  insurer, pursuant to a reinsurance contract. A special purpose financial insurance
  company may not issue a contract of insurance or a contract for assumption of risk
  or indemnification of loss other than such reinsurance contract. (b) Unless otherwise approved in advance by the Commissioner, a special purpose financial
  insurance company may not assume or retain exposure to insurance or reinsurance losses
  for its own account that are not funded by: (1) proceeds from a special purpose financial insurance company securitization or letters
  of credit or other assets described in subdivision 6048c(3) of this chapter; (2) premium and other amounts payable by the ceding insurer to the special purpose financial
  insurance company pursuant to the reinsurance contract; and (3) any return on investment of the items in subdivisions (1) and (2) of this subsection. (c) The reinsurance contract shall contain all provisions reasonably required or approved
  by the Commissioner, which requirements shall take into account the laws applicable
  to the ceding insurer regarding the ceding insurer taking credit for the reinsurance
  provided under such reinsurance contract. (d) A special purpose financial insurance company may cede risks assumed through a reinsurance
  contract to one or more reinsurers through the purchase of reinsurance, subject to
  the prior approval of the Commissioner. (e) A special purpose financial insurance company may enter into contracts and conduct
  other commercial activities related or incidental to and necessary to fulfill the
  purposes of the reinsurance contract, the insurance securitization, and this subchapter,
  provided such contracts and activities are included in the special purpose financial
  insurance company’s plan of operation or are otherwise approved in advance by the
  Commissioner. Such contracts and activities may include: entering into reinsurance
  contracts; issuing special purpose financial insurance company securities; complying
  with the terms of these contracts or securities; entering into trust, guaranteed investment
  contract, swap, or other derivative, tax, administration, reimbursement, or fiscal
  agent transactions; complying with trust indenture, reinsurance, or retrocession;
  and other agreements necessary or incidental to effect an insurance securitization
  in compliance with this subchapter and the special purpose financial insurance company’s
  plan of operation. (f) Unless otherwise approved in advance by the Commissioner, a reinsurance contract shall
  not contain any provision for payment by the special purpose financial insurance company
  in discharge of its obligations under the reinsurance contract to any person other
  than the ceding insurer or any receiver of the ceding insurer. (g) A special purpose financial insurance company shall notify the Commissioner immediately
  of any action by a ceding insurer or any other person to foreclose on or otherwise
  take possession of collateral provided by the special purpose financial insurance
  company to secure any obligation of the special purpose financial insurance company. (Added 2007, No. 49, § 17; amended 2013, No. 29, § 60, eff. May 13, 2013.)