(a) A domestic society may, by a reinsurance agreement, cede an individual risk or risks in whole or in part to an insurer, other than another fraternal benefit society, that has the power to make reinsurance and that is authorized to do business in this state or, if not authorized, that is approved by the director. However, a society may not reinsure substantially all of its insurance in force without the written permission of the director. A society may take credit for the reserves on the ceded risks to the extent reinsured, but a credit may not be allowed as an admitted asset or a deduction from liability to a ceding society for reinsurance made, ceded, renewed, or otherwise becoming effective after January 1, 1998, unless the reinsurance is payable by the assuming insurer on the basis of the liability of the ceding society under the contract or contracts reinsured without diminution because of the insolvency of the ceding society.
(b) Notwithstanding the limitation in (a) of this section, a society may reinsure the risks of another society in a consolidation or merger approved by the director under AS 21.84.185.