(a) An SPFC, when permitted by its organizational documents, may apply to the SAM for a license to transact insurance or reinsurance business as authorized by this subchapter. An SPFC may insure or reinsure only the risks of its counterparty. An SPFC may purchase reinsurance to cede the risks assumed under the SPFC contract as approved by the SAM.
(b) To transact business in this Territory an SPFC shall:
(1) obtain from the SAM a license authorizing it to conduct insurance or reinsurance business, or both, in this Territory;
(2) hold at least one management meeting each year in this Territory;
(3) maintain its principal place of business in this Territory, either directly or through the Qualified Manager;
(4) authorize the Qualified Manager to serve as the SPFC's resident registered agent to accept service of process and to otherwise act on its behalf in this Territory. If the registered agent, with reasonable diligence, is not found at the registered office of the SPFC, the SAM must be an agent of the SPFC upon whom any process, notice, or demand may be served;
(5) provide such documentation of the insurance securitization as requested by the SAM immediately upon closing of the transaction, including:
(A) an opinion of legal counsel with respect to compliance with this subchapter and any other applicable laws as of the effective date of the transaction; and
(B) a statement under oath of its president and secretary, or manager, showing its financial condition; and
(6) provide a complete set of the documentation of the insurance securitization to the SAM shortly following closing of the transaction.
(c) A complete SPFC application must include the following:
(1) a certified copy of its organizational documents;
(2) evidence of:
(A) the amount and liquidity of its assets relative to the risks to be assumed;
(B) the adequacy of the expertise, experience, and character of the person or persons who manages it;
(C) the overall soundness of its plan of operation;
(D) other factors considered relevant by the SAM in ascertaining whether the proposed SPFC is able to meet its policy obligations; and
(E) the applicant SPFC's financial condition, including the source and form of the minimum capitalization to be contributed to the SPFC;
(3) A plan of operation, consisting of a description of or statement of intent with respect to the contemplated insurance securitization, the SPFC contract, and related transactions, which must include:
(A) draft documentation or, at the discretion of the SAM, a written summary of all material agreements that are entered into to effectuate the SPFC contract and, before effecting such, the insurance securitization, to include the names of the counterparty, the nature of the risks being assumed, the proposed use of protected cells, if any, and the maximum amounts, purpose, and nature and the interrelationships of the various transactions required to effectuate the insurance securitization;
(B) the source and form of additional capitalization to be contributed to the SPFC;
(C) the proposed investment strategy of the SPFC;
(D) a description of the underwriting, reporting, and claims payment methods by which losses covered by the SPFC contract are reported, accounted for, and settled; and
(E) a pro forma balance sheet and income statement illustrating various stress case scenarios for the performance of the SPFC under the SPFC contract;
(4) Biographical affidavits in NAIC format of all of the prospective SPFC's officers and directors and managers, providing their legal names, any names under which they have or are conducting their affairs, and any affiliations with other persons, together with other biographical information as the SAM may request;
(5) An affidavit from the applicant SPFC verifying:
(A) the applicant SPFC meets the provisions of this subchapter;
(B) the applicant SPFC operates only pursuant to the provisions in this subchapter;
(C) the applicant SPFC's investment strategy reflects and takes into account the liquidity of assets and the reasonable preservation, administration, and asset management of such assets relative to the risks associated with the SPFC contract and the insurance securitization transaction;
(D) the securities proposed to be issued are valid legal obligations that are either properly registered with the Office of the Lieutenant Governor, Division of Banking, Insurance and Financial Regulation or constitute an exempt security or form part of an exempt transaction under Virgin Islands law; and
(E) unless otherwise exempted by the SAM, the trust agreement, the trusts holding assets that secure the obligations of the SPFC under the SPFC contract, and the SPFC contract with the counterparty in connection with the contemplated insurance securitization are structured pursuant to the provisions in this subchapter; and
(6) Any other statements or documents required by the SAM to evaluate and complete the licensing of the SPFC.
(d) In addition to the information required by subsection (c), and to the provisions of section 6658 of this subchapter, if a protected cell is used, an applicant SPFC shall file with the SAM:
(1) a business plan demonstrating how the applicant accounts for the loss and expense experience of each protected cell at a level of detail found to be sufficient by the SAM, and how it reports the experience to the SAM;
(2) a statement acknowledging that all financial records of the SPFC, including records pertaining to any protected cells, must be made available for inspection or examination by the SAM;
(3) all contracts or sample contracts between the SPFC and any counterparty, related to each protected cell; and
(4) a description of the expenses allocated to each protected cell.
(e) Information submitted pursuant to this subsection is confidential and is subject to section X 2 [sic].
(f) Sections Y and Z [sic] apply to examinations, investigations, and processing conducted pursuant to the authority of this subchapter.
(g) To transact insurance or reinsurance business in this Territory, an SPFC shall pay to the SAM:
(1) a nonrefundable fee of $200 for processing its application for license. In addition, the SAM may retain legal, financial, and examination services from outside the Government to examine and investigate the application, the reasonable cost of which may be charged against the applicant, or the SAM may use internal resources to examine and investigate the application for a fee of $3,000, half of which is payable upon filing of the application and the remainder upon licensure, or both;
(2) a license fee for the year of registration of $300 and an annual renewal fee of $300;
(3) an annual review fee of $2,400 or, if higher, the actual cost as determined by the SAM; and
(4) premium taxes as required by this subchapter.
(h) The SAM may grant a license authorizing the SPFC to transact insurance or reinsurance business as an SPFC in this Territory until March first, at which time the license may be renewed, upon finding that the:
(1) proposed plan of operation provides a reasonable and expected successful operation;
(2) terms of the SPFC contract and related transactions comply with this subchapter;
(3) proposed plan of operation is not hazardous to any counterparty;
(4) commissioner of the state of domicile of each counterparty has notified the SAM in writing or otherwise provided assurance satisfactory to the SAM that it has approved or not disapproved the transaction; and
(5) the license authorizing the SPFC to transact business is limited only to the insurance or reinsurance activities that the SPFC is allowed to conduct pursuant to this subchapter.
(i) In evaluating the expectation of a successful operation, the SAM shall consider, among other factors, whether the proposed SPFC, and its management are of known good character and reasonably believed not to be affiliated, directly or indirectly, through ownership, control, management, reinsurance transactions, or other insurance or business relations, with a person known to have been involved in the improper manipulation of assets, accounts, or reinsurance.
(j) A foreign or alien corporation or limited liability company, upon approval of the SAM, may become a domestic SPFC by complying with all of the provisions of this subchapter and by filing with the Office of the Lieutenant Governor its organizational documents, together with appropriate amendments to it, as may be adopted pursuant to the provisions of this subchapter to bring these organizational documents into compliance with this subchapter. After this is accomplished, the foreign or alien corporation or limited liability company is entitled to the necessary or appropriate certificates or licenses to transact business as an SPFC in this Territory and is subject to the authority and jurisdiction of this Territory. In connection with this redomestication, the SAM may waive any requirements for public hearings. It is not necessary for a corporation or limited liability company redomesticating into this Territory to merge, consolidate, transfer assets, or otherwise engage in another reorganization, other than as specified in this section.