A sponsored captive insurance company formed and licensed under this article may establish and maintain one or more protected cells to insure risks of one or more participants, subject to the following:

(1) The shareholders or members of a sponsored captive insurance company shall be limited to its participants and sponsors; provided that a sponsored captive insurance company may issue nonvoting securities to other persons on terms approved by the commissioner;

Terms Used In Hawaii Revised Statutes 431:19-303

  • Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
  • Association: means two or more members who are engaged in business or activities similar or related to the liability to which these members are exposed by virtue of any related, similar, or common business trade, product, services, premises, or operations; provided that the members of the association shall be individuals, corporations, limited liability companies, partnerships, associations, or other entities, except labor organizations, the member organizations of which or which does itself, whether or not in conjunction with some or all of the member organizations:

    (1) Own, control, or hold with power to vote all of the outstanding voting securities of an association captive insurance company incorporated as a stock insurer;

    (2) Have complete voting control over an association captive insurance company incorporated as a mutual insurer;

    (3) Constitute all of the subscribers of an association captive insurance company formed as a reciprocal insurer; or

    (4) Have complete voting control over an association captive insurance company formed as a limited liability company. See Hawaii Revised Statutes 431:19-101

  • Contract: A legal written agreement that becomes binding when signed.
  • Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
  • Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
  • Participant: means an entity that meets the requirements of § 431:19-305, and any affiliated entities thereof that are insured by a sponsored captive insurance company where the losses of the participant may be limited through a participant contract to the participant's pro rata share of the assets of one or more protected cells identified in the participant contract. See Hawaii Revised Statutes 431:19-101
  • Participant contract: means a contract by which a sponsored captive insurance company insures the risks of a participant and may also limit the losses of each participant to its pro rata share of the assets of one or more protected cells identified in such participant contract. See Hawaii Revised Statutes 431:19-101
  • Partnership: A voluntary contract between two or more persons to pool some or all of their assets into a business, with the agreement that there will be a proportional sharing of profits and losses.
  • Protected cell: means a separate account established by a sponsored captive insurance company formed or licensed under this article in which assets are maintained for one or more participants in accordance with the terms of one or more participant contracts to fund the liability of the sponsored captive insurance company assumed on behalf of the participants as set forth in the participant contracts. See Hawaii Revised Statutes 431:19-101
  • Sponsor: means any entity that meets the requirements of § 431:19-304 and is approved by the commissioner to provide all or part of the minimum required capital and surplus of a sponsored captive insurance company and to organize and operate a sponsored captive insurance company. See Hawaii Revised Statutes 431:19-101
  • Sponsored captive insurance company: means a captive insurance company:

    (1) In which the minimum required capital and surplus is provided by one or more sponsors;

    (2) That is formed or licensed under this article;

    (3) That insures the risks only of its participants through separate participant contracts; and

    (4) That may fund its liability to each participant through one or more protected cells. See Hawaii Revised Statutes 431:19-101

(2) A protected cell shall be organized and operated in only those forms of business organization authorized by the commissioner, including an association, corporation, limited liability company, partnership, or trust;
(3) Each protected cell shall be accounted for separately on the books and records of the sponsored captive insurance company to reflect the financial condition and results of operations of the protected cell, net income or loss, dividends or other distributions to participants, and other factors as may be provided in the participant contract or required by the commissioner;
(4) The assets of a protected cell shall not be chargeable with liabilities arising out of any other insurance business the sponsored captive insurance company may conduct;
(5) No sale, exchange, or other transfer of assets may be made by a sponsored captive insurance company between or among any of its protected cells without the consent of the protected cells;
(6) No sale, exchange, transfer of assets, dividend, or distribution may be made from a protected cell to a sponsor or participant without the commissioner’s approval, and in no event shall the approval be given if the sale, exchange, transfer, dividend, or distribution would result in insolvency or impairment with respect to a protected cell;
(7) Each sponsored captive insurance company shall annually file with the commissioner, financial reports as the commissioner shall require, that shall include, without limitation, accounting statements detailing the financial experience of each protected cell;
(8) Each sponsored captive insurance company shall notify the commissioner in writing within ten business days of any protected cell that is insolvent or otherwise unable to meet its claim or expense obligations; and
(9) No participant contract shall take effect without the commissioner’s prior written approval, and the addition of each new protected cell and withdrawal of any participant or termination of any existing protected cell shall constitute a change in business plan requiring the commissioner’s prior written approval.

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