§ 38a-91dd — Capital and surplus requirements.

Connecticut § 38a-91dd

• Jurisdiction: Connecticut
• Title 38a: Insurance
• Ch. 698: Insurers

Text

(a)(1) Except as provided in subdivision (3) of this subsection, the commissioner shall not issue a license to a captive insurance company or allow the company to retain such license unless the company has and maintains unimpaired paid-in capital and surplus of: (A) In the case of a pure captive insurance company, not less than the greater of: (i) Fifty thousand dollars; or (ii) An amount that the commissioner determines is necessary for the pure captive insurance company to meet such pure captive insurance company's policy obligations; (B) In the case of an association captive insurance company, not less than the greater of: (i) Two hundred fifty thousand dollars; or (ii) An amount that the commissioner determines is necessary for the association captive insurance company to meet such association captive insurance company's policy obligations; (C) In the case of an industrial insured captive insurance company, not less than the greater of: (i) Two hundred fifty thousand dollars; or (ii) An amount that the commissioner determines is necessary for the industrial insured captive insurance company to meet such industrial insured captive insurance company's policy obligations; (D) In the case of a risk retention group, not less than one million dollars; (E) In the case of a sponsored captive insurance company, not less than the greater of: (i) Seventy-five thousand dollars; or (ii) An amount that the commissioner determines is necessary for the sponsored captive insurance company to meet such sponsored captive insurance company's policy obligations; (F) In the case of a special purpose financial captive insurance company, not less than the greater of: (i) Two hundred fifty thousand dollars; or (ii) An amount that the commissioner determines is necessary for the special purpose financial captive insurance company to meet such special purpose financial captive insurance company's policy obligations; (G) In the case of a sponsored captive insurance company licensed as a special purpose financial captive insurance company, not less than the greater of: (i) Two hundred fifty thousand dollars; or (ii) An amount that the commissioner determines is necessary for such captive insurance company to meet such captive insurance company's policy obligations; and (H) In the case of an agency captive insurance company, not less than the greater of: (i) Two hundred fifty thousand dollars; or (ii) An amount that the commissioner determines is necessary for the agency captive insurance company to meet such agency captive insurance company's policy obligations. (2) (A) The commissioner shall not issue a license to a branch captive insurance company or allow the branch captive insurance company to retain such license unless the branch captive insurance company has and maintains, as security for the payment of liabilities attributable to the branch operations: (i) Not less than the greater of: (I) Fifty thousand dollars; or (II) An amount that the commissioner determines is necessary to secure the payment of liabilities attributable to the branch captive insurance company's operations; and (ii) Reserves on such insurance policies or such reinsurance contracts as may be issued or assumed by the branch captive insurance company through its branch operations, including reserves for losses, allocated loss adjustment expenses, incurred but not reported losses and unearned premiums with regard to business written through the branch operations. The commissioner may permit a branch captive insurance company to credit against any such reserves any assets belonging to: (I) The branch captive insurance company that are held in trust for, or otherwise segregated or controlled by, a ceding insurer, that secure the branch captive insurance company's reinsurance obligations to the ceding insurer; or (II) A reinsurer that are held in trust for, or otherwise under the control of, the branch captive insurance company, that secure the reinsurer's reinsurance obligations to the branch captive insurance company. (B) The amounts required under subparagraph (A) of this subdivision may be held, with the prior approval of the commissioner, in the form of: (i) A trust formed under a trust agreement and funded by assets acceptable to the commissioner; (ii) An irrevocable letter of credit issued or confirmed by a bank approved by the commissioner; (iii) With respect to the amount required under subparagraph (A)(i) of this subdivision only, cash on deposit with the commissioner; or (iv) Any combination of the forms described in subparagraphs (B)(i) to (B)(iii), inclusive, of this subdivision. (3) The commissioner may exempt a branch captive insurance company from the provisions of subdivisions (1) and (2) of this subsection if the branch captive insurance company is a foreign captive insurance company and the commissioner, in the commissioner's discretion, determines that the branch captive insurance company is financially stable. (b) Notwithstanding any other provision of this section, the commissioner shall have the discretion to allow a captive insurance company, other than a captive insurance company organized as a risk retention group, to maintain less than the required unimpaired paid-in capital and surplus set forth in subsection (a) of this section. The commissioner shall consider the type, volume and nature of the insurance or reinsurance business transacted by such a captive insurance company in establishing the amount of unimpaired paid-in capital and surplus the company is required to maintain. (c) Except as specified in subdivision (2) of subsection (a) of this section, capital and surplus may be in the form of cash or an irrevocable letter of credit issued by a bank approved by the commissioner. (d) The commissioner may adopt regulations, in accordance with chapter 54, to establish additional capital and surplus requirements based upon the type, volume and nature of insurance business transacted.

Legislative History

(P.A. 08-127, S. 4; Oct. Sp. Sess. P.A. 11-1, S. 58; P.A. 17-198, S. 2; P.A. 18-151, S. 4; P.A. 22-118, S. 440.) History: P.A. 08-127 effective January 1, 2009; Oct. Sp. Sess. P.A. 11-1 redesignated existing Subsec. (a) as Subsec. (a)(1), amended Subsec. (a)(1)(B) to change association captive insurance companies' capital and surplus requirements from $750,000 to $500,000, added Subsec. (a)(1)(E) to (a)(1)(G) re capital and surplus requirements for sponsored captive insurance companies, special purpose financial captive insurance companies and sponsored captive insurance companies licensed as special purpose financial captive insurance companies, added Subsec. (a)(2) re security and reserve requirements for branch captive insurance companies, amended Subsec. (c) to delete requirement that a bank issuing an irrevocable letter of credit be chartered by the state or a member of the Federal Reserve System, and made conforming and technical changes, effective July 1, 2012; P.A. 17-198 amended Subsec. (a)(1)(E) to replace $500,000 with $225,000, added new Subsec. (c) re insurance commissioner's discretion to allow captive insurance company to maintain unimpaired paid-in capital and surplus in amounts less than the amounts required under Subsec. (a), and redesignated existing Subsec. (c) as Subsec. (d), effective July 1, 2017; P.A. 18-151 amended Subsec. (a)(1) by adding Subpara. (H) re agency captive insurance company and made a conforming change, effective July 1, 2018; P.A. 22-118 substantially revised Subsec. (a) re requirements for minimum amounts of unimpaired paid-in capital and surplus and security for payment of liabilities attributable to branch operations, deleted former Subsec. (b) allowing commissioner to adopt regulations re additional capital and surplus requirements and added same as new Subsec. (d), and redesignated existing Subsecs. (c) and (d) as Subsecs. (b) and (c), effective July 1, 2022.