26-6-104. Disallowance of "wash" transactions.

(a) The commissioner, after a hearing thereon, shall disallow as an asset or as a credit against liabilities any reinsurance he finds to have been arranged principally for the purpose of deception as to the ceding insurer's financial condition on the date of an insurer's financial statement. Without limiting the general purport of this provision, reinsurance of any substantial part of the insurer's outstanding risks contracted for in fact within four (4) months prior to the date of a financial statement and cancelled after the date of that statement, or reinsurance under which the reinsurer bears no substantial insurance risk or chance of net loss to itself, is prima facie evidence of an arrangement principally for the purpose of deception.

(b) The commissioner, after a hearing thereon, shall disallow as an insurer's asset any deposit, funds or other assets he finds:

(i) Not to be in good faith the insurer's property;

(ii) Not freely subject to the insurer's withdrawal or liquidation at any time for the payment or discharge of claims or other obligations arising under its policies; and

(iii) To be resulting from arrangements made principally for the purpose of deception as to the insurer's financial condition on the date of any financial statement of the insurer.

(c) The commissioner may suspend or revoke the certificate of authority of any insurer which has knowingly been a party to any actual or attempted deception.