This excerpt taken from the ZNT 8-K filed Jun 1, 2009.
Section 15.1 Reinsurance Credit
(a) This clause is applicable to those Reinsurers who cannot qualify for credit by the states having jurisdiction over the Companys loss reserves.
(b) As regards Policies or bonds issued by the Company coming within the scope of this Contract, the Company agrees that when it shall file with the insurance regulatory authorities having jurisdiction over the Companys reserves or set up on its books reserves for losses covered hereunder which it shall be required to set up by law it will forward to the Reinsurer a statement showing the proportion of such loss reserves which is applicable to it.
(c) The Reinsurer hereby agrees that it will provide to the Company via funds withheld, cash advances, Trust Agreement, or a clean, irrevocable and unconditional Letter of Credit, an amount equal to the Reinsurers proportion of the loss reserves in respect of known outstanding losses that have been reported to the Reinsurer, allocated loss expenses relating thereto, losses and loss expenses paid by the Company but not recovered from the Reinsurer and Incurred But Not Reported loss and loss expense as shown in the statement prepared by the Company (collectively, the Statutory Reserves).