P.R. Laws tit. 26, § 412
(1) An insurer may reinsure the total or part of the risks in Puerto Rico with other insurers only as follows:
(a) In any insurer authorized to transact the same kind of insurance in Puerto Rico, or
(b) with the prior written approval of the Commissioner, when with any foreign insurer not authorized to transact insurance in Puerto Rico. This provision prohibits an insurer from unauthorized insurers in the following cases:
(i) The laws of the foreign insurer’s state of domicile would not permit the reinsuring of the risks of said state in such unauthorized insurer.
(ii) When directly or indirectly reinsuring its risks in Puerto Rico with an unauthorized insurer in which a substantial part of said unauthorized insurer’s outstanding shares are directly or indirectly owned or controlled by an institution engaged in the money-lending business in Puerto Rico, or when said unauthorized insurer has, directly or indirectly, a substantial financial interest in, or a relationship as owner, subsidiary or affiliate of, or when directly or indirectly owned or controlled by any entity to which an institution engaged in the money-lending business in Puerto Rico, directly or indirectly, has a substantial financial interest or relationship as owner, subsidiary or affiliate.
None of the provisions of this subparagraph shall prevent reinsurance with said unauthorized insurer because the latter has a direct or indirect relationship as owner, subsidiary or affiliate with a depository institution doing business in Puerto Rico or with a financial holding company doing business directly or indirectly in Puerto Rico through one of its subsidiaries or affiliates, provided the relationship described above complies with the applicable provisions of the Gramm-Leach-Bliley Act.
(iii) Directly or indirectly reinsures its risks in Puerto Rico in an unauthorized insurer in which a substantial part of the unauthorized insurer’s outstanding shares are directly or indirectly owned or controlled by a domestic insurer, or said unauthorized insurer has a relationship as an owner, subsidiary or affiliate of a domestic insurer.
(c) In addition to what is provided in paragraph (b), above, reinsurance in foreign unauthorized insurers may only be contracted when the following conditions are met:
(i) The Commissioner has received satisfactory evidence that the unauthorized insurer’s present financial standing and its claims-handling practices for the past five (5) years are sufficient to ensure that the public interest will be adequately protected.
(ii) The Commissioner has been shown that the unauthorized insurer is an authorized insurer in the state or country of his domicile for the class of reinsurance it thus proposes to accept, and it has been for a term of not less than five (5) years immediately prior to the date the contracting is proposed.
(iii) The Commissioner has been shown that the unauthorized insurer has a good reputation in the performance of his activities as such and that his business has been managed competently and capably.
(iv) The Commissioner has been shown that the unauthorized insurer meets such other conditions that the Commissioner has established by regulations.
The Commissioner shall publish and keep updated and available to the public a list of all the insurers who are eligible to accept reinsurance, and shall send a copy of said list to the Secretary of the Treasury, to all the heads of the public authorities who have the authority to contract for their insurance directly and to the insurers and brokers who transact and contract for insurance for such government entities. Said list shall be revised by the Commissioner at least once a year.
(2) Reinsurance in a foreign insurer not authorized to transact insurance in Puerto Rico shall also be subject to § 5.110 as to credit upon reserves.
(3) No domestic insurer shall reinsure seventy-five percent (75%) or more of all its direct risks in any kind of insurance without first securing the Commissioner’s written authorization.
(4) This section shall not apply to insurance of ocean marine risks or marine protection and indemnity risks.
History —Ins. Code § 4.120; May 31, 1973, No. 73, p. 328, § 7; May 6, 1983, No. 34, p. 57, § 1; July 12, 1986, No. 119, p. 385; Sept. 6, 2000, No. 382, § 4.