(a) A pure captive insurance company or agency captive insurance company may be incorporated as a stock insurer with its capital divided into shares and held by the stockholders, as a nonprofit corporation with one (1) or more members, or as a limited liability company.
Terms Used In Tennessee Code 56-13-107
Agency captive insurance company: means a company or protected cell formed under this chapter that is owned by an insurance agency or brokerage and that only reinsures risks of policies that are placed by or through the agency or brokerage. See Tennessee Code 56-13-102
Alien: means a company formed according to the legal requirements of a foreign country. See Tennessee Code 56-13-102
Association: means any legal association of individuals, corporations, limited liability companies, partnerships, associations, or other entities, whereby: (A) The member organizations of such or the association itself, whether or not in conjunction with some or all of the member organizations:(i) 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. See Tennessee Code 56-13-102
Captive insurance company: means any pure captive insurance company, association captive insurance company, agency captive insurance company, industrial insured captive insurance company, risk retention group, protected cell captive insurance company, incorporated cell captive insurance company, or special purpose financial captive insurance company formed or licensed under this chapter. See Tennessee Code 56-13-102
Commissioner: means the commissioner of the department, or the commissioner's designee. See Tennessee Code 56-13-102
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.
Foreign: when used without limitation, includes all companies formed by authority of any other state or government. See Tennessee Code 56-1-102
Industrial insured: means an insured: (A) Who procures the insurance of any risk or risks by use of the services of a full-time employee acting as an insurance manager or buyer. See Tennessee Code 56-13-102
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.
Mutual corporation: means a corporation organized without stockholders and includes a nonprofit corporation with members. See Tennessee Code 56-13-102
Quorum: The number of legislators that must be present to do business.
Reciprocal: means the aggregation of subscribers under a common name. See Tennessee Code 56-16-102
Reciprocal insurance: means insurance resulting from the mutual exchange of insurance contracts among persons in an unincorporated association under a common name through an attorney-in-fact having authority to obligate each person both as insured and insurer. See Tennessee Code 56-16-102
Risk retention group: means a captive insurance company organized under the laws of this state pursuant to the Liability Risk Retention Act of 1986, as amended, (15 U. See Tennessee Code 56-13-102
State: when applied to the different parts of the United States, includes the District of Columbia and the several territories of the United States. See Tennessee Code 1-3-105
(b) An association captive insurance company, an industrial insured captive insurance company, or a risk retention group may be:
(1) Incorporated as a stock insurer with its capital divided into shares and held by the stockholders;(2) Incorporated as a mutual corporation;(3) Organized as a reciprocal insurer in accordance with chapter 16 of this title; or(4) Organized as a limited liability company.(c) A captive insurance company incorporated or organized in this state must have not less than one (1) incorporator or one (1) organizer.(d) The capital stock of a captive insurance company incorporated as a stock insurer may be authorized with no par value.(e) In the case of a captive insurance company formed as a:
(1)Corporation, at least one (1) of the members of the board of directors shall be a resident of this state;(2)Reciprocal insurer, at least one (1) of the members of the subscribers’ advisory committee shall be a resident of this state; and(3) Limited liability company, at least one (1) of the members or managers shall be a resident of this state.(f) Captive insurance companies formed as corporations, limited liability companies or as nonprofit corporations under this chapter shall have the privileges provided in and be subject to title 48 and this chapter, as applicable; provided, that this chapter shall control in the event of a conflict. Captive insurance companies formed as partnerships under this chapter shall have the privileges provided in and be subject to title 61 and this chapter, as applicable; provided, that this chapter shall control in the event of a conflict.(g) Mergers, consolidations, conversions, mutualizations, acquisitions, redomestications, or other similar transactions of captive insurance companies shall be subject to the same provisions of this title applicable to traditional insurance companies, except that:
(1) The commissioner may, upon request of an insurer party to a merger authorized under this subsection (g), waive such applicable requirements;(2) The commissioner may waive or modify the requirements for public notice and hearing in accordance with rules which the commissioner may adopt addressing categories of transactions. If a notice of public hearing is required, but no one requests a hearing ten (10) days before the day set for the hearing, then the commissioner may cancel the hearing; and(3) An alien insurer may be a party to a merger authorized under this subsection (g); provided, that the requirements for a merger between a captive insurance company and a foreign insurer under this title shall apply to a merger between a captive insurance company and an alien insurer under this subsection (g). For the purposes of this subdivision (g)(3), an alien insurer shall be treated as a foreign insurer under this title and the jurisdiction of the alien shall be the equivalent of a state.(h) Captive insurance companies formed as reciprocal insurers under this chapter shall have the privileges provided in and be subject to chapter 16 of this title in addition to this chapter; provided, that this chapter shall control in the event of a conflict. To the extent a reciprocal insurer is made subject to other provisions of this title pursuant to chapter 16, such provisions shall not be applicable to a reciprocal insurer formed under this chapter unless such provisions are expressly made applicable to captive insurance companies under this chapter.(i) The articles of incorporation or bylaws of a captive insurance company formed as a corporation may authorize a quorum of its board of directors to consist of no fewer than one-third (1/3) of the fixed or prescribed number of directors.(j) The subscribers’ agreement or other organizing document of a captive insurance company formed as a reciprocal insurer may authorize a quorum of its subscribers’ advisory committee to consist of no fewer than one-third (1/3) of the number of its members.(k) With the commissioner’s approval, a captive insurance company organized as a stock insurer may convert to a nonprofit corporation with one (1) or more members by filing with the secretary of state an election for such conversion; provided, that:
(1) The election shall certify that, at the time of the company’s original organization and at all times thereafter, the company has conducted its business in a manner not inconsistent with a nonprofit purpose as permitted by title 48, chapter 53; and(2) At the time of the filing of its election, the company shall file with both the commissioner and the secretary of state amended and restated articles of incorporation consistent with this chapter and with title 48, duly authorized by the corporation.(l) Title 48, chapter 61 shall not apply to a captive insurance company that is a nonprofit corporation in the case of any merger in which a captive insurance company merges with and into a captive insurance company organized as a nonprofit corporation under title 48 where the latter is the surviving corporation.(m) In the case of a captive insurance company formed as a limited liability company, a reciprocal insurance company or mutual insurance company, any proxy executed by the members, subscribers, and policyholders of each shall be valid if executed and transmitted in compliance with title 48.
