17:51B-3. Reduction in liability for reinsurance ceded

3. A reduction in liability for the reinsurance ceded by an insurer which is domiciled in New Jersey, or which is either licensed in New Jersey or eligible to write surplus lines insurance in New Jersey and which in either case is domiciled in a state or country which does not employ standards regarding credit for reinsurance substantially similar, as determined by the commissioner, to those applicable under this act, shall be allowed in an amount not exceeding the liabilities carried by the ceding insurer and such reduction shall be in the amount of funds held by or on behalf of the ceding insurer, including funds held in trust for the ceding insurer, under a reinsurance contract with such assuming insurer as security for the payment of obligations thereunder, if such security is held in the United States subject to withdrawal solely by, and under the exclusive control of, the ceding insurer; or, in the case of a trust, held in a qualified United States financial institution subject to withdrawal solely by, and under the exclusive control of, the ceding insurer. This security shall be in the form of:

a. Cash;

b. Securities listed by the Securities Valuation Office of the NAIC and qualifying as admitted assets;

c. Clean, irrevocable, evergreen, unconditional letters of credit issued or confirmed by a qualified United States financial institution no later than December 31st of the year for which the filing is being made, and in the possession of the ceding company on or before the filing date of its annual statement. Letters of credit meeting applicable standards of issuer acceptability as of the dates of their issuance or confirmation shall, notwithstanding the issuing or confirming qualified United States financial institution's subsequent failure to meet applicable standards of issuer acceptability, continue to be acceptable as security until their expiration, extension, renewal, modification or amendment, whichever occurs first, unless the issuer has been declared insolvent under applicable statutory or regulatory provisions; or

d. Any other form of security acceptable to the commissioner.

L.1993,c.243,s.3.