(a)(1) The Insurance Commissioner shall not issue a license to a captive insurance company or allow the company to retain such license unless the company has and maintains unimpaired paid-in capital and surplus of:
(A) In the case of a pure captive insurance company, not less than two hundred fifty thousand dollars;
(B) In the case of an association captive insurance company, not less than five hundred thousand dollars;
(C) In the case of an industrial insured captive insurance company, not less than five hundred thousand dollars;
(D) In the case of a risk retention group, not less than one million dollars;
(E) In the case of a sponsored captive insurance company, not less than two hundred twenty-five thousand dollars;
(F) In the case of a special purpose financial captive insurance company, not less than two hundred fifty thousand dollars;
(G) In the case of a sponsored captive insurance company licensed as a special purpose financial captive insurance company, not less than five hundred thousand dollars; and
(H) In the case of an agency captive insurance company, not less than five hundred thousand dollars.
(2) (A) The Insurance Commissioner shall not issue a license to a branch captive insurance company or allow the company to retain such license unless the company has and maintains, as security for the payment of liabilities attributable to the branch operations:
(i) Not less than two hundred fifty thousand dollars; and
(ii) Reserves on such insurance policies or such reinsurance contracts as may be issued or assumed by the branch captive insurance company through its branch operations, including reserves for losses, allocated loss adjustment expenses, incurred but not reported losses and unearned premiums with regard to business written through the branch operations. The commissioner may permit a branch captive insurance company to credit against any such reserves any security for loss reserves that the branch captive insurance company posts with a ceding insurer or is posted by a reinsurer with the branch captive insurance company, so long as such security remains posted.
(B) The amounts required under subparagraph (A) of this subdivision may be held, with the prior approval of the commissioner, in the form of (i) a trust formed under a trust agreement and funded by assets acceptable to the commissioner, (ii) an irrevocable letter of credit issued or confirmed by a bank approved by the commissioner, (iii) with respect to the amount required under subparagraph (A)(i) of this subdivision only, cash on deposit with the commissioner, or (iv) any combination thereof.
(b) The commissioner may adopt regulations, in accordance with chapter 54, to establish additional capital and surplus requirements based upon the type, volume and nature of insurance business transacted.
(c) Notwithstanding any other provision of this section, the commissioner shall have the discretion to allow a captive insurance company, other than a captive insurance company organized as a risk retention group, to maintain less than the required unimpaired paid-in capital and surplus set forth in subsection (a) of this section. The commissioner shall consider the type, volume and nature of the insurance or reinsurance business transacted by such a captive insurance company in establishing the amount of unimpaired paid-in capital and surplus the company is required to maintain.
(d) Except as specified in subdivision (2) of subsection (a) of this section, capital and surplus may be in the form of cash or an irrevocable letter of credit issued by a bank approved by the commissioner.
(P.A. 08-127, S. 4; Oct. Sp. Sess. P.A. 11-1, S. 58; P.A. 17-198, S. 2; P.A. 18-151, S. 4.)
History: P.A. 08-127 effective January 1, 2009; Oct. Sp. Sess. P.A. 11-1 redesignated existing Subsec. (a) as Subsec. (a)(1), amended Subsec. (a)(1)(B) to change association captive insurance companies' capital and surplus requirements from $750,000 to $500,000, added Subsec. (a)(1)(E) to (a)(1)(G) re capital and surplus requirements for sponsored captive insurance companies, special purpose financial captive insurance companies and sponsored captive insurance companies licensed as special purpose financial captive insurance companies, added Subsec. (a)(2) re security and reserve requirements for branch captive insurance companies, amended Subsec. (c) to delete requirement that a bank issuing an irrevocable letter of credit be chartered by the state or a member of the Federal Reserve System, and made conforming and technical changes, effective July 1, 2012; P.A. 17-198 amended Subsec. (a)(1)(E) to replace $500,000 with $225,000, added new Subsec. (c) re insurance commissioner's discretion to allow captive insurance company to maintain unimpaired paid-in capital and surplus in amounts less than the amounts required under Subsec. (a), and redesignated existing Subsec. (c) as Subsec. (d), effective July 1, 2017; P.A. 18-151 amended Subsec. (a)(1) by adding Subpara. (H) re agency captive insurance company and made a conforming change, effective July 1, 2018.