§ 27-64-3. Definitions.
As used in this chapter:
(1) "Commissioner� means the director of the department of business regulation.
(2) "Domestic insurer� means an insurance or reinsurance company domiciled in the state
or a captive insurance or reinsurance company domiciled in the state.
(3) "Fair value� of an asset (or liability) means the amount at which that asset (or liability)
could be bought (or incurred) or sold (or settled) in a current transaction between
willing parties, that is, other than in a forced or liquidation sale. Quoted market
prices in active markets are the best evidence of fair value and shall be used as
the basis for the measurement, if available. If a quoted market price is available,
the fair value is the product of the number of trading units times market price. If
quoted market prices are not available, the estimate of fair value shall be based
on the best information available. The estimate of fair value shall consider prices
for similar assets and liabilities and the results of valuation techniques to the
extent available in the circumstances. Examples of valuation techniques include the
present value of estimated expected future cash flows using a discount rate commensurate
with the risks involved, option-pricing models, matrix pricing, option-adjusted spread
models, and fundamental analysis. Valuation techniques for measuring financial assets
and liabilities and servicing assets and liabilities shall be consistent with the
objective of measuring fair value. Those techniques shall incorporate assumptions
that market participants would use in their estimates of values, future revenues,
and future expenses, including assumptions about interest rates, default, prepayment,
and volatility. In measuring financial liabilities and servicing liabilities at fair
value by discounting estimated future cash flows, an objective is to use discount
rates at which those liabilities could be settled in an arm's-length transaction.
Estimates of expected future cash flows, if used to estimate fair value, shall be
the best estimate based on reasonable and supportable assumptions and projections.
All available evidence shall be considered in developing estimates of expected future
cash flows. The weight given to the evidence shall be commensurate with the extent
to which the evidence can be verified objectively. If a range is estimated for either
the amount or timing of possible cash flows, the likelihood of possible outcomes shall
be considered in determining the best estimate of future cash flows.
(4) "Fully funded� means that, with respect to any exposure attributed to a protected
cell, the fair value of the protected cell assets, on the date on which the insurance
securitization is effected, equals or exceeds the maximum possible exposure attributable
to the protected cell with respect to those exposures.
(5) "General account� means the assets and liabilities of a protected cell company other
than protected cell assets and protected cell liabilities.
(6) "Indemnity trigger� means a transaction term by which relief of the issuer's obligation
to repay investors is triggered by its incurring a specified level of losses under
its insurance or reinsurance contracts.
(7) "Non-indemnity trigger� means a transaction term by which relief of the issuer's obligation
to repay investors is triggered solely by some event or condition other than the individual
protected cell company incurring a specified level of losses under its insurance or
reinsurance contracts.
(8) "Protected cell� means an identified pool of assets and liabilities of a protected
cell company segregated and insulated by means of this Act from the remainder of the
protected cell company's assets and liabilities.
(9) "Protected cell account� means a specifically identified bank or custodial account
established by a protected cell company for the purpose of segregating the protected
cell assets of one protected cell from the protected cell assets of other protected
cells and from the assets of the protected cell company's general account.
(10) "Protected cell assets� means all assets, contract rights, and general intangibles,
identified with and attributable to a specific protected cell of a protected cell
company.
(11) "Protected cell company� means a domestic insurer that has one or more protected cells.
(12) "Protected cell company insurance securitization� means the issuance of debt instruments,
the proceeds from which support the exposures attributed to the protected cell, by
a protected cell company, where repayment of principal and/or interest to investors
pursuant to the transaction terms is contingent upon the occurrence or nonoccurrence
of an event with respect to which the protected cell company is exposed to loss under
insurance or reinsurance contracts it has issued.
(13) "Protected cell liabilities� means all liabilities and other obligations identified
with and attributable to a specific protected cell of a protected cell company.
(14) "Receiver� means the commissioner, where the commissioner is acting as a rehabilitator,
liquidator, or administrative supervisor of a company, or any person appointed to
carry out an order of rehabilitation or liquidation of a company.