Connecticut Administrative Code
Title 38a - Insurance Department
72a - Life Reinsurance Agreements
Section 38a-72a-1 - Preamble

The State of Connecticut Insurance Department recognizes that licensed insurers routinely enter into reinsurance agreements that yield legitimate relief to the ceding insurer from strain to surplus. However, it is improper for a licensed 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, typically on a temporary basis, while not transferring all of the significant risks inherent in the business being reinsured. In substance and 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. The terms of such agreements referred to herein and described in Section 38a-72a-3 of these regulations would violate Sections 38a-53 and 38a-56 of the General Statutes relating to financial statements which do not properly reflect the financial condition of the ceding insurer, and Sections 38a-85 and 38a-86 of the General Statutes relating to reinsurance reserve credits (thus resulting in a ceding insurer improperly reducing liabilities or establishing assets for reinsurance ceded), and may create a situation that may render the insurer financially hazardous to policyholders and the people of this State.