HAR §16-20-1. Purpose

The commissioner recognizes that life and health insurers routinely enter into reinsurance agreements that yield legitimate relief to the ceding insurer from strain to surplus. The commissioner has, however, become aware that some reinsurance agreements have been created for the principal purpose of producing significant surplus aid for the ceding insurer and that these agreements do not transfer all of the significant risks associated with the business being reinsured and provide little or no indemnification of policy benefits by the reinsurer. Taking reserve credit under these types of agreements would create a situation that may be hazardous to policyholders, creditors, or the public or would violate: (1) Section 431:4-121, HRS, regarding false documents relating to the affairs of an insurer; (2) Section 431:3-301, HRS, requiring insurers to file a true statement of their financial condition; and (3) Sections 431:4A-101 and 431:4A-102, HRS, relating to reinsurance reserve credits and permitting ceding insurers to reduce liabilities or establish assets for reinsurance ceded, provided that they do so in a proper manner. [Eff 3/19/94] (Auth: HRS §§431:2-201, 431:4A-104) (Imp: HRS §431:4A-101)