Reinsurance.

(1) For financial guaranty insurance which takes effect on or after July 1, 1988, an insurer transacting financial guaranty insurance shall receive credit for reinsurance in accordance with the provisions of this code applicable to property and casualty insurers, as an asset or as a reduction from liabilities only if the reinsurance is subject to an agreement that, for its stated term and with respect to any financial guaranty insurance in force, the reinsurance agreement may only be terminated or amended at the option of the reinsurer or the ceding insurer; if the reinsurance agreement provides that the liability of the reinsurer with respect to policies in effect at the date of termination continues until the expiration or cancellation of each such policy with the consent of the ceding insurer; if the reinsurance agreement provides for a cutoff of the reinsurance in force at the date of termination or at the request of the ceding company or at the discretion of the department, acting as rehabilitator, liquidator, or receiver of the ceding or assuming company; and if such reinsurance either:

(a) Is placed with another insurer licensed under this part or an insurer writing financial guaranty insurance as permitted under this part;

(b) Is placed with another type of insurer licensed to write surety insurance, if such insurer:

1. Has and maintains surplus to policyholders of at least $35 million;

2. Establishes and maintains the reserves required in s. 627.972, except that if the reinsurance agreement is not pro rata, the contribution to the contingency reserve must be equal to 50 percent of the quarterly earned reinsurance premium;

3. Complies with s. 627.973(4), (5), and (6); and

4. If it is a parent, subsidiary, or affiliate of the insurer transacting financial guaranty insurance, the provisions of s. 627.973(4) and (5) shall be applied against the combined policyholders’ surplus and contingency reserves of such parent, subsidiary, or affiliate reinsurers after elimination of equity investments of the insurer and such reinsurers in each other; or

(c) Is placed with an unauthorized or unaccredited reinsurer which otherwise complies with the provisions of paragraph (a) or subparagraphs (b)1. and 4., in an amount not to exceed the liabilities carried by the ceding insurer for amounts withheld under a reinsurance treaty with the reinsurer or amounts deposited by the reinsurer as security for the payment of obligations under the treaty, if the funds or deposit are held subject to withdrawal by, and under the control of the ceding insurer.

(2) In determining whether the insurer meets the limitations imposed by s. 627.973(4), in addition to credit for other types of qualifying reinsurance, the insurer’s aggregate risk may be reduced to the extent of the limit for aggregate excess reinsurance, but in no event, in an amount greater than the amount of the aggregate risk which will become due during the unexpired term of the reinsurance agreement in excess of the insurer’s retention pursuant to the reinsurance agreement.