Michigan Laws 500.4717 – Issuance of SPFC securities
Current as of: 2023 | Check for updates
|
Other versions
Terms Used In Michigan Laws 500.4717
- Affiliated company: means a company in the same corporate system as a parent, by virtue of common ownership, control, operation, or management. See Michigan Laws 500.4701
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Commissioner: means the director. See Michigan Laws 500.102
- Contract: A legal written agreement that becomes binding when signed.
- Counterparty: means an SPFC's parent or affiliated company, or, subject to the prior approval of the director, a nonaffiliated company as ceding insurer to the SPFC contract. See Michigan Laws 500.4701
- Insurance securitization: means a package of related risk transfer instruments, capital market offerings, and facilitating administrative agreements by which all of the following apply:
(i) The proceeds of the sale of SPFC securities are obtained, in a transaction that complies with applicable securities laws, by an SPFC directly through the issuance of the SPFC securities by the SPFC or indirectly through the issuance of preferred securities by the SPFC in exchange for some or all of the proceeds of the sale of SPFC securities by the SPFC's parent, an affiliated company of the SPFC, a counterparty, or a captive LLC. See Michigan Laws 500.4701Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period. Parent: means a corporation, limited liability company, partnership, or individual that directly or indirectly owns, controls, or holds with power to vote more than 50% of the outstanding voting securities of an SPFC. See Michigan Laws 500.4701 Preferred securities: means securities, whether stock or debt, issued by an SPFC to the issuer of the SPFC securities in exchange for some or all of the proceeds of the issuance of the SPFC securities. See Michigan Laws 500.4701 Protected cell: means a segregated account established and maintained by an SPFC for 1 or more SPFC contracts that are part of a single securitization transaction as further provided for in chapter 48. See Michigan Laws 500.4701 Securities: means those different types of debt obligations, equity, surplus certificates, surplus notes, funding agreements, derivatives, and other legal forms of financial instruments. See Michigan Laws 500.4701 SPFC securities: means the securities issued pursuant to an insurance securitization, the proceeds of which are used in the manner described in subdivision (i). See Michigan Laws 500.4701
(1) An SPFC may issue securities, including SPFC securities and preferred securities, surplus notes, and other forms of financial instruments, subject to and in accordance with applicable law, the SPFC’s approved plan of operation, and its organizational documents.
(2) An SPFC, its parent or an affiliated company, its counterparty, or a captive LLC may issue SPFC securities and any other securities necessary to implement the insurance securitization.
(3) Preferred securities may be issued by the SPFC to the issuer of the SPFC securities in connection with the insurance securitization in order to facilitate distributions to service SPFC securities and these preferred securities shall identify the associated protected cell. The SPFC may lawfully account for preferred securities as surplus and not as debt for purposes of statutory accounting.
(4) An SPFC, in connection with the issuance of securities, may enter into and perform all of its obligations under any required contracts to facilitate the issuance of these securities.
(5) Subject to the commissioner‘s approval, the issuer of the SPFC securities or, if the issuer is a captive LLC, the party controlling the captive LLC, may lawfully account for the SPFC securities as surplus and not as debt for purposes of statutory accounting and submit for the commissioner’s prior approval periodic written requests for payments of interest on and repayments of principal of surplus notes.
(6) Surplus notes issued pursuant to this section constitute surplus or contribution notes of the type described in section 8142(1)(h).
(7) The commissioner, without otherwise prejudicing the commissioner’s authority, may approve formulas for an ongoing plan of interest payments, principal repayments, or both interest payments and principal repayments, to provide guidance in connection with his or her ongoing reviews of requests to approve the payments on and principal repayments of the surplus notes.
(8) The obligation to repay principal or interest, or both, on the SPFC securities shall reflect, in whole or in part, the risk associated with the obligations of the SPFC to the counterparty under the SPFC contract, either directly or by being secured by assets, including the preferred securities, obtained with the proceeds of the sale of the SPFC securities.