                                 CODE OF VIRGINIA

REINSURANCE (§ 38.2-136)

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

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

C. Notwithstanding the provisions of subsection B, the transfer of risk under
any reinsurance agreement may be effected by entry of an order by the Commission
approving the transaction whenever (i) the Commission finds a licensed insurer
to be impaired or in hazardous financial condition, (ii) a delinquency
proceeding has been instituted against the licensed insurer for the purpose of
conserving, rehabilitating, or liquidating the insurer, or (iii) the Commission
finds, after giving the insurer notice and an opportunity to be heard, that the
transfer of the contracts is in the best interests of the policyholders. In
granting any such approval, the Commission shall ensure that policyholders do
not lose any rights or claims afforded under their original policies pursuant to
Chapter 16 (&#xA7; 38.2-1600 et seq.) or 17 (&#xA7; 38.2-1700 et seq.) of this
title. Prior to granting an approval under clause (iii), the Commission shall
consider whether there is a reasonable expectation that the ceding insurer may
not be able to meet its obligations to all policyholders; whether the ceding
insurer&#8217;s continued operation in this Commonwealth may become hazardous to
policyholders, creditors and the public in this Commonwealth; or whether the
ceding insurer may otherwise be unable to comply with the provisions of this
title.

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