South Carolina Code 38-90-215. Protected cells
(B) With regard to unincorporated protected cells:
Terms Used In South Carolina Code 38-90-215
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Captive insurance company: means a pure captive insurance company, association captive insurance company, sponsored captive insurance company, special purpose captive insurance company, risk retention group, or industrial insured captive insurance company formed or licensed under this chapter. See South Carolina Code 38-90-10
- Director: means the Director of the South Carolina Department of Insurance or the director's designee. See South Carolina Code 38-90-10
- Federal Reserve System: The central bank of the United States. The Fed, as it is commonly called, regulates the U.S. monetary and financial system. The Federal Reserve System is composed of a central governmental agency in Washington, D.C. (the Board of Governors) and twelve regional Federal Reserve Banks in major cities throughout the United States. Source: OCC
- General account: means the assets and liabilities of a sponsored captive insurance company other than protected cell assets and protected cell liabilities. See South Carolina Code 38-90-10
- insurance: includes annuities. See South Carolina Code 38-1-20
- Insurance company: means an "insurer". See South Carolina Code 38-1-20
- Jurisdiction: (1) The legal authority of a court to hear and decide a case. Concurrent jurisdiction exists when two courts have simultaneous responsibility for the same case. (2) The geographic area over which the court has authority to decide cases.
- Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
- Participant: means an entity as defined in § 38-90-240, and any affiliates of that entity, that are insured by a sponsored captive insurance company, where the losses of the participant are limited through a participant contract to the assets of a protected cell. See South Carolina Code 38-90-10
- Person: means an individual, corporation, partnership, association, joint stock company, trust, unincorporated organization, or any similar entity or combination thereof. See South Carolina Code 38-90-10
- Protected cell: means an identified pool of assets and liabilities of a sponsored captive insurance company for one or more participants that is segregated and insulated from the remainder of the sponsored captive insurance company's assets and liabilities as set forth in this chapter. See South Carolina Code 38-90-10
- Protected cell account: means a specifically identified bank or custodial account established by a sponsored captive insurance company for the purpose of segregating the protected cell assets of one protected cell from the protected cell assets of other protected cells and from the assets of the sponsored captive insurance company's general account. See South Carolina Code 38-90-10
- Protected cell assets: means all assets, contract rights, and general intangibles, identified with and attributable to a specific protected cell of a sponsored captive insurance company. See South Carolina Code 38-90-10
- Special purpose captive insurance company: means a captive insurance company that is formed or licensed under this chapter that does not meet the definition of any other type of captive insurance company defined in this section. See South Carolina Code 38-90-10
- Sponsored captive insurance company: means a captive insurance company:
(a) in which the minimum capital and surplus required by applicable law is provided by one or more sponsors;
(b) that is formed or licensed under this chapter;
(c) that segregates liability through one or more protected cells; and
(d) that insures the risks of participants through participant contracts. See South Carolina Code 38-90-10 - Trustee: A person or institution holding and administering property in trust.
(1) The unincorporated protected cell shall have its own distinct name or designation, which shall include the words "Protected Cell" or the abbreviation "PC". Any captive insurance company or protected cell formed prior to the effective date of this section may not be required to change its name to comply with the provisions of this paragraph.
(2) An unincorporated protected cell must meet the free and unimpaired paid-in capital and surplus requirements applicable to a special purpose captive insurance company and either:
(a) establish loss and loss expense reserves for business written through the unincorporated protected cell; or
(b) the business written through the unincorporated protected cell must be:
(i) fronted by an insurance company licensed pursuant to the laws of:
(A) any state; or
(B) any jurisdiction if the insurance company is a wholly owned subsidiary of an insurance company licensed pursuant to the laws of any state;
(ii) reinsured by a reinsurer authorized or approved by this State; or
(iii) secured by a trust fund in the United States for the benefit of policyholders and claimants funded by an irrevocable letter of credit or other asset acceptable to the director. The amount of security provided by the trust fund may not be less than the reserves associated with those liabilities, including reserves for losses, allocated loss adjustment expenses, incurred but unreported losses, and unearned premiums for business written through the participant‘s protected cell. The director may require the sponsored captive to increase the funding of a trust established pursuant to this item. If the form of security in the trust is a letter of credit, the letter of credit must be established, issued, or confirmed by a bank chartered in this State, a member of the federal reserve system, or a bank chartered by another state if that state-chartered bank is acceptable to the director. A trust and trust instrument maintained pursuant to this item must be in a form and upon terms approved by the director.
(3) The creation of an unincorporated protected cell does not create, with respect to that protected cell, a legal person separate from the sponsored captive insurance company. Amounts attributed to a protected cell, including assets transferred to a protected cell account, are owned by the sponsored captive insurance company of which the protected cell is a part, and the sponsored captive insurance company may not be, or may not hold itself out to be, a trustee with respect to those protected cell assets of that protected cell account. Notwithstanding the provisions of this subsection, the sponsored captive insurance company may allow for a security interest to attach to protected cell assets or a protected cell account when in favor of a creditor of the protected cell and otherwise allowed under applicable law.
(4) This subsection may not be construed to prohibit the sponsored captive insurance company from:
(a) entering into contracts of insurance on behalf of the protected cell; or
(b) contracting with or arranging for third-party managers or advisors to manage the protected cell to manage the assets of a protected cell, if all remuneration, expenses, and other compensation of the third-party manager or advisor is payable from the protected cell assets of that protected cell and not from the protected cell assets of other protected cells or the assets of the sponsored captive insurance company’s general account.
(C) Incorporated protected cells shall be subject to all of the following:
(1) An incorporated protected cell may be organized and operated in any form of business organization set forth in § 38-90-60(A).
(2) Except as specifically set forth in this chapter, each incorporated protected cell of a sponsored captive insurance company shall be licensed and treated as a special purpose captive insurance company.
(3) A participant in an incorporated protected cell need not be a shareholder of the protected cell or of the sponsored captive insurance company or any affiliate thereof.
(D) The name of an incorporated protected cell must include the words "Incorporated Cell" or the abbreviation "IC".
(E) Any captive insurance company or protected cell formed prior to July 31, 2013, shall not be required to change its name to comply with the provisions of subsection (D).