(a)(1) The commissioner may not issue a license to an Alabama Coastal Captive Insurance Company unless the company possesses and maintains unimpaired paid-in capital of not less than one million dollars ($1,000,000); however, in the case of an Alabama Coastal Captive Insurance Company formed as a sponsored captive insurance company that does not assume any risk, where the risks insured by the protected cells are homogenous, the commissioner may reduce this amount to an amount not less than five hundred thousand dollars ($500,000).
(2)a. Except for an Alabama Coastal Captive Insurance Company formed as a sponsored captive insurance company that does not assume any risk, the capital must be in the form of cash, cash equivalent, or an irrevocable letter of credit issued by a bank chartered b
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(a)(1) The commissioner may not issue a license to an Alabama Coastal Captive Insurance Company unless the company possesses and maintains unimpaired paid-in capital of not less than one million dollars ($1,000,000); however, in the case of an Alabama Coastal Captive Insurance Company formed as a sponsored captive insurance company that does not assume any risk, where the risks insured by the protected cells are homogenous, the commissioner may reduce this amount to an amount not less than five hundred thousand dollars ($500,000).
(2) a. Except for an Alabama Coastal Captive Insurance Company formed as a sponsored captive insurance company that does not assume any risk, the capital must be in the form of cash, cash equivalent, or an irrevocable letter of credit issued by a bank chartered by this state or a member bank of the Federal Reserve System with a branch office in this state or as approved by the commissioner.
b. For an Alabama Coastal Captive Insurance Company formed as a sponsored captive insurance company that does not assume any risk, the capital also may be in the form of other high quality securities as approved by the commissioner.
(b) For the purposes of subsection (a), the commissioner may issue a license expressly conditioned upon the Alabama Coastal Captive Insurance Company providing to the commissioner satisfactory evidence of possession of the minimum required unimpaired paid-in capital. Until this evidence is provided, the captive insurance company may not issue a policy, assume any liability, or otherwise provide coverage. The commissioner summarily may revoke the conditional license without legal recourse by the company if satisfactory evidence of the required capital is not provided within a maximum period of time, not to exceed one year, to be established by the commissioner at the time the conditioned license is issued.
(c) The commissioner may prescribe additional capital or net assets based upon the type, volume, and nature of insurance business transacted. Contributions in connection with these prescribed additional net assets or capital must be in the form of:
(1) Cash;
(2) Cash equivalent;
(3) An irrevocable letter of credit issued by a bank chartered in this state or a member bank of the Federal Reserve System with a branch office in this state or as approved by the commissioner.
(d) Section 27-31B-12(c) does not apply and loans to its parent company and affiliates are prohibited.
(e)(1) An Alabama Coastal Captive Insurance Company may not pay a dividend out of, or other distribution with respect to, capital or surplus, in excess of the limitations set forth in Section 27-31B-7, without the prior approval of the commissioner. Approval of an ongoing plan for the payment of dividends or other distributions must be conditioned upon retention, at the time of each payment, of capital or surplus in excess of amounts specified by, or determined in accordance with formulas approved by the commissioner.
(2) A captive insurance company incorporated as a nonprofit corporation may not make any distributions without the prior approval of the commissioner.
(f) An irrevocable letter of credit, which is issued by a financial institution other than a bank chartered by this state or a member bank of the Federal Reserve System, shall meet the same standards as an irrevocable letter of credit which has been issued by either entity.