(1) To qualify for authority to transact insurance in this state, a captive insurer shall possess and thereafter maintain capital or surplus, or any combination thereof, of not less than:

(a) $250,000 for a pure captive insurer.

(b) $750,000 for an association captive insurer incorporated as a stock insurer or as a mutual insurer.

(c) $300,000,000 for a captive reinsurer.

(2) In accordance with ORS § 731.554 (6), for the protection of the public, the Director of the Department of Consumer and Business Services may require a captive insurer to possess and maintain capital or surplus, or any combination thereof, in excess of the amount otherwise required under this section.

(3) The capital and surplus required under subsections (1) and (2) of this section may be in the form of:

(a) Cash or cash equivalent; or

(b) An irrevocable letter of credit issued by an insured institution, as described in ORS § 731.510, and approved by the director.

(4)(a) Except as provided in paragraph (d) of this subsection, a branch captive insurer, as security for the payment of liabilities attributable to branch operations, must establish and maintain, through its branch operations, a trust fund funded by an irrevocable letter of credit or other asset approved by the director.

(b) The trust fund established under this subsection shall be for the benefit of United States policyholders and United States ceding insurers under insurance policies issued or reinsurance contracts issued or assumed.

(c) The amount of the security required under this subsection must be equal to or greater than:

(A) The capital and surplus required under this section applicable to the line of business written by the captive insurer; and

(B) The net reserves on the insurance policies or reinsurance contracts described in this subsection, including:

(i) Case basis loss and allocated loss adjustment expense reserves;

(ii) Losses and allocated loss adjustment expense amounts incurred but not reported; and

(iii) Unearned premiums with regard to insurance transacted by branch operations.

(d) In accordance with ORS § 731.510, the director may permit a branch captive insurer that is required to post security for loss reserves on insurance transacted by its reinsurer to reduce the funds in the trust fund established under this section by the same amount as the security posted if the security remains posted with the reinsurer.

(5) A captive insurer may pay dividends or make distributions if all the following requirements are met:

(a) Submission of a report to the director listing all dividends and distributions within five business days following the declaration, and not less than 10 business days prior to payment, of the dividends and distributions, commencing from the date of receipt of the report by the director.

(b) The report required under paragraph (a) of this subsection must demonstrate that the combined capital and surplus of the captive insurer following any dividend or distribution is reasonable in relation to the captive insurer’s outstanding liabilities and adequate to the captive insurer’s financial needs.

(c) A captive insurer may pay dividends or distributions only from earned surplus unless the director gives prior approval for payment from another source. [2012 c.84 § 8]

See note under 735.150.