completed by an applicant to provide information about the risk to be insured; and
(ii)
that contains information that is used by the insurer to evaluate risk and decide whether to:
(A)
insure the risk under:
(I)
the coverage as originally offered; or
(II)
a modification of the coverage as originally offered; or
(B)
decline to insure the risk; or
(b)
used by the insurer to gather information from the applicant before issuance of an annuity contract. See Utah Code 31A-1-301
Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
Association: means a legal association of two or more persons that meets the following requirements:
(a)
the persons are exposed to similar or related liability because of related, similar, or common business trade, products, services, premises, or operations; and
(b)
(i)
the association or the association's member organizations:
(A)
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;
(B)
have complete voting control over an association captive insurance company incorporated as a mutual insurer; or
(C)
have complete voting control over an association captive insurance company formed as a limited liability company; or
(ii)
the association's member organizations collectively constitute all of the subscribers of an association captive insurance company formed as a reciprocal insurer. See Utah Code 31A-37-102
Association captive insurance company: means a business entity that insures risks of:
(a)
a member organization of the association;
(b)
an affiliate of a member organization of the association; and
Branch business: means an insurance business transacted by a branch captive insurance company in this state. See Utah Code 31A-37-102
Branch captive insurance company: means an alien captive insurance company that has a certificate of authority from the commissioner to transact the business of insurance in this state through a captive insurance company that is domiciled outside of this state. See Utah Code 31A-37-102
Business plan: means the information required to be supplied to the commissioner under Subsections 31A-5-204(2)(i) and (j), including the information required when these subsections apply by reference under:
Captive insurance company: includes any of the following formed or holding a certificate of authority under this chapter:
(i)
a branch captive insurance company;
(ii)
a pure captive insurance company;
(iii)
an association captive insurance company;
(iv)
a sponsored captive insurance company;
(v)
an industrial insured captive insurance company, including an industrial insured captive insurance company formed as a risk retention group captive in this state pursuant to the provisions of the Federal Liability Risk Retention Act of 1986;
Commissioner: means Utah's Insurance Commissioner or the commissioner's designee. See Utah Code 31A-37-102
Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.
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
Form: means one of the following prepared for general use:
a risk distributing arrangement providing for compensation or replacement for damages or loss through the provision of a service or a benefit in kind;
(ii)
a contract of guaranty or suretyship entered into by the guarantor or surety as a business and not as merely incidental to a business transaction; and
(iii)
a plan in which the risk does not rest upon the person who makes an arrangement, but with a class of persons who have agreed to share the risk. See Utah Code 31A-1-301
insurance company: means a person doing an insurance business as a principal including:
(i)
a fraternal benefit society;
(ii)
an issuer of a gift annuity other than an annuity specified in Subsections 31A-22-1305(2) and (3);
(iii)
a motor club;
(iv)
an employee welfare plan;
(v)
a person purporting or intending to do an insurance business as a principal on that person's own account; and
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.
Member: means a person having membership rights in an insurance corporation. See Utah Code 31A-1-301
Pure captive insurance company: means a business entity that insures risks of a parent or affiliate of the business entity. See Utah Code 31A-37-102
Reinsurance: means an insurance transaction where an insurer, for consideration, transfers any portion of the risk it has assumed to another insurer. See Utah Code 31A-1-301
Reinsurer: means a person licensed in this state as an insurer with the authority to assume reinsurance. See Utah Code 31A-1-301
Security: means a:
(i)
note;
(ii)
stock;
(iii)
bond;
(iv)
debenture;
(v)
evidence of indebtedness;
(vi)
certificate of interest or participation in a profit-sharing agreement;
(vii)
collateral-trust certificate;
(viii)
preorganization certificate or subscription;
(ix)
transferable share;
(x)
investment contract;
(xi)
voting trust certificate;
(xii)
certificate of deposit for a security;
(xiii)
certificate of interest of participation in an oil, gas, or mining title or lease or in payments out of production under such a title or lease;
(xiv)
commodity contract or commodity option;
(xv)
certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase any of the items listed in Subsections (171)(a)(i) through (xiv); or
(xvi)
another interest or instrument commonly known as a security. See Utah Code 31A-1-301
provide all or part of the capital and surplus required by applicable law in an amount of not less than $350,000, which amount the commissioner may increase by order if the commissioner considers it necessary; and
(ii)
organize and operate a sponsored captive insurance company. See Utah Code 31A-37-102
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 holding a certificate of authority under this chapter;
(c)
that insures the risks of a separate participant through the contract; and
(d)
that segregates each participant's liability through one or more protected cells. See Utah Code 31A-37-102
State: when applied to the different parts of the United States, includes a state, district, or territory of the United States. See Utah Code 68-3-12.5
Surplus: means the excess of assets over the sum of paid-in capital and liabilities. See Utah Code 31A-1-301
Trust account: A general term that covers all types of accounts in a trust department, such as estates, guardianships, and agencies. Source: OCC
United States: includes each state, district, and territory of the United States of America. See Utah Code 68-3-12.5
(a)
The commissioner may not issue a certificate of authority to a company described in Subsection (1)(c) unless the company possesses and thereafter maintains unimpaired paid-in capital and unimpaired paid-in surplus of:
(i)
in the case of a pure captive insurance company:
(A)
except as provided in Subsection (1)(a)(i)(B), not less than $250,000; or
(B)
if the pure captive insurance company is not acting as a pool that facilitates risk distribution for other captive insurers, an amount that is the greater of:
(I)
not less than 20% of the company’s total aggregate risk; or
(II)
$50,000;
(ii)
in the case of an association captive insurance company, not less than $750,000;
(iii)
in the case of an industrial insured captive insurance company incorporated as a stock insurer, not less than $700,000;
(iv)
in the case of a sponsored captive insurance company, not less than $500,000, of which a minimum of $200,000 is provided by the sponsor; or
(v)
in the case of a special purpose captive insurance company, an amount determined by the commissioner after giving due consideration to the company’s business plan, feasibility study, and pro-formas, including the nature of the risks to be insured.
(b)
The paid-in capital and surplus required under this Subsection (1) may be in the form of:
(i)
(A)
cash; or
(B)
cash equivalent;
(ii)
an irrevocable letter of credit:
(A)
issued by:
(I)
a bank chartered by this state;
(II)
a member bank of the Federal Reserve System; or
(III)
a member bank of the Federal Deposit InsuranceCorporation;
(B)
approved by the commissioner;
(iii)
marketable securities as determined by Subsection (5); or
(iv)
some other thing of value approved by the commissioner, for a period not to exceed 45 days, to facilitate the formation of a captive insurance company in this state pursuant to an approved plan of liquidation and reorganization of another captive insurance company or alien captive insurance company in another jurisdiction.
(c)
This Subsection (1) applies to:
(i)
a pure captive insurance company;
(ii)
a sponsored captive insurance company;
(iii)
a special purpose captive insurance company;
(iv)
an association captive insurance company; or
(v)
an industrial insured captive insurance company.
(2)
(a)
The commissioner may, under Section 31A-37-106, prescribe additional capital based on the type, volume, and nature of insurance business transacted.
(b)
The capital prescribed by the commissioner under this Subsection (2) may be in the form of:
(i)
cash;
(ii)
an irrevocable letter of credit issued by:
(A)
a bank chartered by this state; or
(B)
a member bank of the Federal Reserve System; or
(iii)
marketable securities as determined by Subsection (5).
(3)
(a)
Except as provided in Subsection (3)(c), a branch captive insurance company, as security for the payment of liabilities attributable to branch operations, shall, through its branch operations, establish and maintain a trust fund:
(i)
funded by an irrevocable letter of credit or other acceptable asset; and
(ii)
in the United States for the benefit of:
(A)
United States policyholders; and
(B)
United States ceding insurers under:
(I)
insurance policies issued; or
(II)
reinsurance contracts issued or assumed.
(b)
The amount of the security required under this Subsection (3) shall be no less than:
(i)
the capital and surplus required by this chapter; and
(ii)
the reserves on the insurance policies or reinsurance contracts, including:
(A)
reserves for losses;
(B)
allocated loss adjustment expenses;
(C)
incurred but not reported losses; and
(D)
unearned premiums with regard to business written through branch operations.
(c)
Notwithstanding the other provisions of this Subsection (3):
(i)
the commissioner may permit a branch captive insurance company that is required to post security for loss reserves on branch business by its reinsurer to reduce the funds in the trust account required by this section by the same amount as the security posted if the security remains posted with the reinsurer; and
(ii)
a branch captive insurance company that is the result of the licensure of an alien captive insurance company that is not formed in an alien jurisdiction is not subject to the requirements of this Subsection (3).
(4)
(a)
A captive insurance company may not pay the following without the prior approval of the commissioner:
(i)
a dividend out of capital or surplus in excess of the limits under Section 16-10a-640; or
(ii)
a distribution with respect to capital or surplus in excess of the limits under Section 16-10a-640.
(b)
The commissioner shall condition approval of an ongoing plan for the payment of dividends or other distributions on the retention, at the time of each payment, of capital or surplus in excess of:
(i)
amounts specified by the commissioner under Section 31A-37-106; or
(ii)
determined in accordance with formulas approved by the commissioner under Section 31A-37-106.
(5)
For purposes of this section, marketable securities means:
(a)
a bond or other evidence of indebtedness of a governmental unit in the United States or Canada or any instrumentality of the United States or Canada; or
(b)
securities:
(i)
traded on one or more of the following exchanges in the United States:
(A)
New York;
(B)
American; or
(C)
NASDAQ;
(ii)
when no particular security, or a substantially related security, applied toward the required minimum capital and surplus requirement of Subsection (1) represents more than 50% of the minimum capital and surplus requirement; and
(iii)
when no group of up to four particular securities, consolidating substantially related securities, applied toward the required minimum capital and surplus requirement of Subsection (1) represents more than 90% of the minimum capital and surplus requirement.
(6)
Notwithstanding Subsection (5), to protect the solvency and liquidity of a captive insurance company, the commissioner may reject the application of specific assets or amounts of specific assets to satisfying the requirement of Subsection (1).
