§ 27-64-5. Use and operation of protected cells.
(a) The protected cell assets of any protected cell may not be charged with liabilities
arising out of any other business the protected cell company may conduct. All contracts
or other documentation reflecting protected cell liabilities shall clearly indicate
that only the protected cell assets are available for the satisfaction of those protected
cell liabilities.
(b) Unless otherwise approved by the commissioner, assets attributed to a protected cell
shall be valued at their fair value on the date of valuation.
(c) The income, gains, and losses, realized or unrealized, from protected cell assets
and protected cell liabilities shall be credited to or charged against the protected
cell without regard to other income, gains, or losses of the protected cell company,
including income, gains, or losses of other protected cells. Amounts attributed to
any protected cell and accumulations on the attributed amounts may be invested and
reinvested without regard to any requirements or limitations imposed on investments
of insurance companies domiciled in this state and the investments in any protected
cell or cells may not be taken into account in applying the investment limitations
otherwise applicable to the investments of the protected cell company, subject to
any restrictions that may be imposed by the commissioner in accordance with § 27-64-12.
(d) As permitted by the commissioner, a protected cell company may, in respect of any
of its protected cells, engage in fully funded indemnity triggered and/or fully funded
non-indemnity triggered insurance securitization to support in full the protected
cell exposures attributable to that protected cell. A protected cell company insurance
securitization that is non-indemnity triggered shall qualify as an insurance securitization
under the terms of this chapter only after the commissioner, in accordance with the
authority granted under § 27-64-12, adopts regulations addressing the methods of funding of the portion of the risk
that is not indemnity based, accounting, disclosure, risk-based capital treatment,
and assessing risks associated with those securitizations. A protected cell company
insurance securitization that is not fully funded, whether indemnity triggered or
nonindemnity triggered, is prohibited. Protected cell assets may be used to pay interest
or other consideration on any outstanding debt or other obligation attributable to
that protected cell, and nothing in this section shall be construed or interpreted
to prevent a protected cell company from entering into a swap agreement or other transaction
for the account of the protected cell that has the effect of guaranteeing that interest
or other consideration.
(e) In all protected cell company insurance securitizations, the contracts or other documentation
effecting the transaction shall contain provisions identifying the protected cell
to which the transaction will be attributed. In addition, the contracts or other documentation
shall clearly disclose that the assets of that protected cell, and only those assets,
are available to pay the obligations of that protected cell. Notwithstanding the foregoing,
and subject to the provisions of this chapter and any other applicable law, rule,
or regulation, the failure to include that language in the contracts or other documentation
shall not be used as the sole basis by creditors, reinsurers, or other claimants to
circumvent the provisions of this chapter.
(f) At the cessation of business of a protected cell, and in absence of any placement
under administrative supervision or order of conservation, rehabilitation or liquidation
attributable to that protected cell or the protected cell company, the protected cell
company shall voluntarily close out the protected cell account in accordance with
a plan approved by the commissioner.
(g) A protected cell company shall only be authorized to attribute to a protected cell
account the insurance obligations relating to the protected cell company's general
account. Under no circumstances shall a protected cell be authorized to issue insurance
or reinsurance contracts directly to policyholders or reinsureds or have any obligation
to the policyholders or reinsureds of the protected cell company's general account.