KRS 304.24-420: Bulk reinsurance.

(1) A domestic insurer may reinsure all or substantially all of its business in force, or all

or substantially all of a major class thereof, with another insurer, stock or mutual, by

an agreement of bulk reinsurance after compliance with this section. No such

agreement shall become effective unless filed with the commissioner and approved

by him or her in writing.

(2) The commissioner shall approve such agreements within a reasonable time after

filing if he or she finds:

(a) That the plan and agreement are fair and equitable to each insurer and to the

policyholders involved;

(b) That the reinsurance, if effectuated, would not substantially reduce the

protection or service to the policyholders of any domestic insurer involved;

(c) That the agreement embodies adeq uate provisions by which the reinsuring

insurer becomes liable to the original insureds for any loss or damage

occurring under the policies reinsured in accordance with the original terms of

such policies, and that the reinsuring insurer shall duly furnish each such

insured with a certificate evidencing such assumption of liability;

(d) That the assuming reinsurer is authorized to transact such insurance in this

state, or is qualified as for such authorization and will appoint the

commissioner and his or he r successors as its irrevocable attorney for service

of process, so long as any policy so reinsured or claim thereunder remains in

force or outstanding;

(e) That such reinsurance would not materially tend to lessen competition in the

insurance business in this state or elsewhere as to the kinds of insurance

involved, and would not materially tend to create a monopoly as to such

business; and

(f) That the proposed bulk reinsurance is free of other reasonable objections.

(3) If the commissioner does not so ap prove he or she shall forthwith notify each

insurer involved in writing, specifying his or her reasons therefor.

(4) If for reinsurance of all or substantially all of the business in force of a mutual

insurer at a time when the insurer's surplus is not imp aired, the plan and agreement

for such reinsurance must be approved by vote of not less than two -thirds (2/3) of

the mutual insurer's members voting thereon at a meeting of members called for the

purpose, pursuant to such reasonable notice and procedure as is provided for in the

agreement. If a life insurer, right to vote may be limited to members whose policies

are other than term or group policies, and have been in effect for more than one (1)

year.

(5) No director, officer, agent or employee of any insurer party to such reinsurance, nor

any other person shall receive any compensation for arranging such bulk

reinsurance other than as provided in the agreement submitted to and approved by

the commissioner.