New York Codes, Rules and Regulations
Title 11 - INSURANCE
Chapter IV - Financial Condition Of Insurer and Reports to Superintendent
Subchapter D - Reinsurance
Part 125 - Credit For Reinsurance
Section 125.3 - Principles of prudent reinsurance credit risk management

(1) compliance with all applicable legal and regulatory requirements;

(2) the net risk to be retained;

(3) concentration of risk on a net and gross basis;

(4) projections as to reasonable future availability and affordability of adequate levels of reinsurance support for the ceding insurer's ongoing operations;

(5) the degree to which future reinsurance proceeds for existing and future ceded reserves are likely to be recoverable based upon best available current information;

(6) the way an assuming insurer will be selected, including how to assess its security;

(7) how the reinsurance program will be monitored (i.e., the reporting and internal control systems); and

(8) that the terms of agreements with any affiliated assuming insurer are fair and equitable.

(1) A ceding insurer shall take steps to manage its reinsurance recoverable proportionate to its own book of business. A ceding insurer shall notify the superintendent within 30 days after a reinsurance recoverable from any single assuming insurer, or group of affiliated assuming insurers, exceeds 50 percent of the ceding insurer's last reported surplus to policyholders, or after it is determined that a reinsurance recoverable from any single assuming insurer, any group described in section 125.4(d)(1) of this Part, or group of affiliated assuming insurers, is likely to exceed this limit. The notification shall demonstrate that the exposure is safely managed by the ceding insurer including consideration of the financial strength of the assuming insurer.

(2) A ceding insurer shall take steps to diversify its reinsurance program. Within 30 days after ceding an amount more than 20 percent of its total gross written premium in the prior calendar year to any single assuming insurer, or group of affiliated assuming insurers, or after it has determined that the reinsurance ceded to any single assuming insurer, any group described in section 125.4(d)(1) of this Part, or group of affiliated assuming insurers, is likely to exceed this limit a ceding insurer shall notify the superintendent. The notification shall demonstrate that the exposure is safely managed by the ceding insurer.