(a)(1)  Protected cell assets shall only be available to the creditors of the protected cell company that are creditors in respect to that protected cell and shall be entitled, in conformity with the provisions of this chapter, to have recourse to the protected cell assets attributable to that protected cell, and shall be absolutely protected from the creditors of the protected cell company that are not creditors in respect of that protected cell and who, accordingly, shall not be entitled to have recourse to the protected cell assets attributable to that protected cell. Creditors with respect to a protected cell shall not be entitled to have recourse against the protected cell assets of other protected cells or the assets of the protected cell company’s general account.

(2)  Protected cell assets shall only be available to creditors of a protected cell company after all protected cell liabilities have been extinguished or provided for in accordance with the plan of operation relating to that protected cell.

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Terms Used In Rhode Island General Laws 27-64-6

  • Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
  • General account: means the assets and liabilities of a protected cell company other than protected cell assets and protected cell liabilities. See Rhode Island General Laws 27-64-3
  • Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
  • Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
  • person: may be construed to extend to and include co-partnerships and bodies corporate and politic. See Rhode Island General Laws 43-3-6
  • 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. See Rhode Island General Laws 27-64-3
  • 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. See Rhode Island General Laws 27-64-3
  • Protected cell company: means a domestic insurer that has one or more protected cells. See Rhode Island General Laws 27-64-3
  • Recourse: An arrangement in which a bank retains, in form or in substance, any credit risk directly or indirectly associated with an asset it has sold (in accordance with generally accepted accounting principles) that exceeds a pro rata share of the bank's claim on the asset. If a bank has no claim on an asset it has sold, then the retention of any credit risk is recourse. Source: FDIC

(b)  When an obligation of a protected cell company to a person arises from a transaction, or is imposed, in respect of a protected cell: (1) That obligation of the protected cell company shall extend only to the protected cell assets attributable to that protected cell, and the person shall, with respect to that obligation, be entitled to have recourse only to the protected cell assets attributable to that protected cell; and (2) That obligation of the company shall not extend to the protected cell assets of any other protected cell or the assets of the protected cell company’s general account, and that person shall not, with respect to that obligation, be entitled to have recourse to the protected cell assets of any other protected cell or the assets of the protected cell company’s general account.

(c)  When an obligation of a protected cell company relates solely to the general account, the obligation of the protected cell company shall extend only to, and that creditor shall, with respect to that obligation, be entitled to have recourse only to the assets of the protected cell company’s general account.

(d)  Other than with regard to the application of this section, the activities, assets, and obligations relating to a protected cell are not subject to the provisions of chapters 34, 34.1 [repealed], and 34.3 of this title and neither a protected cell nor a protected cell company shall be assessed by or be required to contribute to any guaranty fund or guaranty association in this state with respect to the activities, assets, or obligations of a protected cell. Nothing in this section shall affect the activities or obligations of an insurer’s general account.

(e)  In no event shall the establishment of one or more protected cells alone constitute or be deemed to be a fraudulent conveyance; an intent by the protected cell company to defraud creditors; or the carrying out of business by the protected cell company for any other fraudulent purpose.

History of Section.
P.L. 1999, ch. 22, § 1; P.L. 2001, ch. 156, § 1; P.L. 2008, ch. 475, § 97; P.L. 2017, ch. 389, § 2; P.L. 2017, ch. 434, § 2.