38.2-136 - Reinsurance. - Virginia Statutes

§ 38.2-136. Reinsurance.

A. Except as otherwise provided in this title, any insurer licensed totransact the business of insurance in this Commonwealth may, by policy,treaty or other agreement, cede to or accept from any insurer reinsuranceupon the whole or any part of any risk, with or without contingent liabilityor participation, and, if a mutual insurer, with or without membershiptherein.

B. No insurer licensed in this Commonwealth shall cede or assume policyobligations on risks located in this Commonwealth whereby the assuminginsurer assumes the policy obligations of the ceding insurer as directobligations of the assuming insurer to the payees under the policies and insubstitution for the obligations of the ceding insurer to the payees, unless:(i) the policyholder has consented to the assumption and (ii) the assuminginsurer is licensed in this Commonwealth to write the class or classes ofinsurance applicable to the policy obligations assumed.

C. Notwithstanding the provisions of subsection B, the transfer of risk underany reinsurance agreement may be effected by entry of an order by theCommission approving the transaction whenever (i) the Commission finds alicensed insurer to be impaired or in hazardous financial condition, (ii) adelinquency proceeding has been instituted against the licensed insurer forthe purpose of conserving, rehabilitating, or liquidating the insurer, or(iii) the Commission finds, after giving the insurer notice and anopportunity to be heard, that the transfer of the contracts is in the bestinterests of the policyholders. In granting any such approval, theCommission shall ensure that policyholders do not lose any rights or claimsafforded under their original policies pursuant to Chapter 16 (§ 38.2-1600 etseq.) or 17 (§ 38.2-1700 et seq.) of this title. Prior to granting anapproval under clause (iii), the Commission shall consider whether there is areasonable expectation that the ceding insurer may not be able to meet itsobligations to all policyholders; whether the ceding insurer's continuedoperation in this Commonwealth may become hazardous to policyholders,creditors and the public in this Commonwealth; or whether the ceding insurermay otherwise be unable to comply with the provisions of this title.

(Code 1950, §§ 38-160, 38-519; 1952, c. 317, § 38.1-26; 1986, c. 562; 1993,c. 158.)