Utah Code 31A-37-404. Discounting of loss and loss adjustment expense reserves

31A-37-404. Discounting of loss and loss adjustment expense reserves.

(1)	A sponsored captive insurance company may discount its loss and loss adjustment expense reserves at treasury rates applied to the applicable payments projected through the use of the expected payment pattern associated with the reserves.

Terms Used In Utah Code 31A-37-404

Actuary: is a s defined by the commissioner by rule, made in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act. See Utah Code 31A-1-301
Affiliate: means a person who controls, is controlled by, or is under common control with, another person. See Utah Code 31A-1-301
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;

(vi)	a special purpose captive insurance company; or

(vii)

a special purpose financial captive insurance company. See Utah Code 31A-37-102

Commissioner: means Utah's Insurance Commissioner or the commissioner's designee. See Utah Code 31A-37-102

Department: means the Insurance Department. See Utah Code 31A-1-301

Employee: means :

(a)	an individual employed by an employer; or

(b)

an individual who meets the requirements of Subsection (53)(b). See Utah Code 31A-1-301

Filing: when used as a noun, means an item required to be filed with the department including:

(a)

a policy;

(b)

a rate;

(c)

a form;

(d)	a document;

(e)

a plan;

(f)

a manual;

(g)	an application;

(h)

a report;

(i)	a certificate;

(j)	an endorsement;

(k)	an actuarial certification;

(l)	a licensee annual statement;

(m)	a licensee renewal application;

(n)	an advertisement;

(o)	a binder; or

(p)

an outline of coverage. See Utah Code 31A-1-301

Insurance: includes :

(i)	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

(vi)

a health maintenance organization. See Utah Code 31A-1-301

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

Treasury rates: means the United States Treasury strip asked yield as published in the Wall Street Journal as of a balance sheet date. See Utah Code 31A-37-102

(2)

(a)	A sponsored captive insurance company shall annually file with the department an actuarial opinion provided by an independent actuary on loss and loss adjustment expense reserves.

(b)

The independent actuary described in Subsection (2)(a) may not be an employee of:

(i)	the company filing the actuarial opinion; or

(ii)	an affiliate of the company filing the actuarial opinion.

(3)	The commissioner may disallow the discounting of reserves by a sponsored captive insurance company if the sponsored captive insurance company violates this title.

Amended by Chapter 244, 2015 General Session

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