South Carolina Code 38-90-210. Formation of sponsored captive insurance company; establishing protected cells
(B) A sponsored captive insurance company formed or licensed under this chapter may establish and maintain one or more protected cells to insure risks of one or more participants, subject to the following conditions:
Terms Used In South Carolina Code 38-90-210
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Captive insurance company: means a pure captive insurance company, association captive insurance company, sponsored captive insurance company, special purpose captive insurance company, risk retention group, or industrial insured captive insurance company formed or licensed under this chapter. See South Carolina Code 38-90-10
- Contract: A legal written agreement that becomes binding when signed.
- Director: means the Director of the South Carolina Department of Insurance or the director's designee. See South Carolina Code 38-90-10
- General account: means the assets and liabilities of a sponsored captive insurance company other than protected cell assets and protected cell liabilities. See South Carolina Code 38-90-10
- insurance: includes annuities. See South Carolina Code 38-1-20
- Insurance company: means an "insurer". See South Carolina Code 38-1-20
- Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
- Participant: means an entity as defined in § 38-90-240, and any affiliates of that entity, that are insured by a sponsored captive insurance company, where the losses of the participant are limited through a participant contract to the assets of a protected cell. See South Carolina Code 38-90-10
- Participant contract: means a contract by which a sponsored captive insurance company insures the risks of a participant and limits the losses of the participant to the assets of a protected cell. See South Carolina Code 38-90-10
- Protected cell: means an identified pool of assets and liabilities of a sponsored captive insurance company for one or more participants that is segregated and insulated from the remainder of the sponsored captive insurance company's assets and liabilities as set forth in this chapter. See South Carolina Code 38-90-10
- Protected cell assets: means all assets, contract rights, and general intangibles, identified with and attributable to a specific protected cell of a sponsored captive insurance company. See South Carolina Code 38-90-10
- Protected cell liabilities: means all liabilities and other obligations identified with and attributable to a specific protected cell of a sponsored captive insurance company. See South Carolina Code 38-90-10
- Sponsor: means an entity that is approved by the director to provide all or part of the capital and surplus required by applicable law and to organize and operate a sponsored captive insurance company. See South Carolina Code 38-90-10
- Sponsored captive insurance company: means a captive insurance company:
(a) in which the minimum capital and surplus required by applicable law is provided by one or more sponsors;
(b) that is formed or licensed under this chapter;
(c) that segregates liability through one or more protected cells; and
(d) that insures the risks of participants through participant contracts. See South Carolina Code 38-90-10
(1) the shareholders of a sponsored captive insurance company must be limited to its participants and sponsors;
(2) each protected cell must be accounted for separately on the books and records of the sponsored captive insurance company to reflect the participants of the protected cell, the financial condition and results of operations of the protected cell, net income or loss, dividends or other distributions to participants, and other factors may be provided in the participant contract or required by the director;
(3) the assets of a protected cell must not be chargeable with liabilities arising out of any other insurance business the sponsored captive insurance company may conduct;
(4) no sale, exchange, or other transfer of assets may be made by the sponsored captive insurance company between or among any of its protected cells without the consent of the protected cells;
(5) no sale, exchange, transfer of assets, dividend, or distribution may be made from a protected cell to a sponsor or participant without the director’s approval and in no event may the approval be given if the sale, exchange, transfer, dividend, or distribution would result in insolvency or impairment with respect to a protected cell;
(6) a sponsored captive insurance company annually shall file with the director financial reports the director requires, which shall include, but are not limited to, accounting statements detailing the financial experience of each protected cell;
(7) a sponsored captive insurance company shall notify the director in writing within ten business days of a protected cell that is insolvent or otherwise unable to meet its claim or expense obligations;
(8) no participant contract shall take effect without the director’s approval, and the addition of each new protected cell and withdrawal of any participant of any existing protected cell constitutes a change in the business plan requiring the director’s approval.
(C) The name of a sponsored captive insurance company shall include the words "Sponsored Captive" or the abbreviation "SC". Any captive insurance company or protected cell formed prior to July 31, 2013, may not be required to change its name to comply with the provisions of this subsection.
(D) A sponsored captive insurance company may establish one or more protected cells with the prior approval of the director of a plan of operation or amendments submitted by the sponsored captive insurance company with respect to each protected cell. Upon the approval of the director of the plan of operation, which shall include, but is not limited to, the specific business objectives and investment guidelines of the protected cell, the sponsored captive insurance company, in accordance with the approved plan of operation, may attribute to the protected cell insurance obligations with respect to its insurance business and assets to fund the obligations. The sponsored captive insurance company shall transfer all assets attributable to a protected cell to one or more separately established and identified protected cell accounts bearing the name or designation of that protected cell. Protected cell assets must be held in the protected cell accounts for the purpose of satisfying the obligations of that protected cell.
(E) All attributions of assets and liabilities between a protected cell and the general account must be in accordance with the plan of operation approved by the director. No other attribution of assets or liabilities may be made by a sponsored captive insurance company between the sponsored captive insurance company’s general account and its protected cells.
(F) A sponsored captive insurance company shall establish administrative and accounting procedures necessary to properly identify the one or more protected cells of the sponsored captive insurance company and the protected cell assets and protected cell liabilities attributable to the protected cells. The directors of a sponsored captive insurance company shall keep protected cell assets and protected cell liabilities:
(1) separate and separately identifiable from the assets and liabilities of the sponsored captive insurance company’s general account; and
(2) attributable to one protected cell separate and separately identifiable from protected cell assets and protected cell liabilities attributable to other protected cells.
(G) When establishing a protected cell, the sponsored captive insurance company shall attribute to the protected cell assets with a value at least equal to the reserves and other insurance liabilities attributed to that protected cell.