(a) Except as may be otherwise authorized by the commissioner, association captive insurance companies and risk retention groups shall comply with the investment requirements contained in §§ 56-3-401 – 56-3-409, as applicable. Notwithstanding any other provision of this title, the commissioner may approve the use of alternative reliable methods of valuation and rating.

Terms Used In Tennessee Code 56-13-111

  • Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
  • Association: means any legal association of individuals, corporations, limited liability companies, partnerships, associations, or other entities, whereby:
    (A) The member organizations of such or the association itself, whether or not in conjunction with some or all of the member organizations:
    (i) Own, control, or hold with power to vote all of the outstanding voting securities of an association captive insurance company incorporated as a stock insurer. See Tennessee Code 56-13-102
  • Association captive insurance company: means any company that insures risks of the member organizations of an association, and that also may insure the risks of affiliated companies of the member organizations and the risks of the association itself. See Tennessee Code 56-13-102
  • Captive insurance company: means any pure captive insurance company, association captive insurance company, agency captive insurance company, industrial insured captive insurance company, risk retention group, protected cell captive insurance company, incorporated cell captive insurance company, or special purpose financial captive insurance company formed or licensed under this chapter. See Tennessee Code 56-13-102
  • Commissioner: means the commissioner of the department, or the commissioner's designee. See Tennessee Code 56-13-102
  • Incorporated cell: means a protected cell of an incorporated cell captive insurance company that is organized as a corporation or other legal entity separate from the incorporated cell captive insurance company. See Tennessee Code 56-13-102
  • Industrial insured: means an insured:
    (A) Who procures the insurance of any risk or risks by use of the services of a full-time employee acting as an insurance manager or buyer. See Tennessee Code 56-13-102
  • Parent: means an individual, corporation, limited liability company, partnership, association, or other entity, or individual that directly or indirectly owns, controls, or holds with power to vote more than fifty percent (50%) of the outstanding voting:
    (A) Securities of a pure captive insurance company organized as a stock corporation. See Tennessee Code 56-13-102
  • Property: includes both personal and real property. See Tennessee Code 1-3-105
  • Pure captive insurance company: means any company that insures risks of its parent and affiliated companies or a controlled unaffiliated business or businesses. See Tennessee Code 56-13-102
  • Real property: Land, and all immovable fixtures erected on, growing on, or affixed to the land.
  • real property: include lands, tenements and hereditaments, and all rights thereto and interests therein, equitable as well as legal. See Tennessee Code 1-3-105
  • written: includes printing, typewriting, engraving, lithography, and any other mode of representing words and letters. See Tennessee Code 1-3-105
(b) No pure captive insurance company, industrial insured captive insurance company, protected cell captive insurance company, incorporated cell captive insurance company or special purpose financial captive insurance company as defined in part 4 of this chapter shall be subject to any restrictions on allowable investments; provided, that the commissioner may prohibit or limit any investment that threatens the solvency or liquidity of any such company. Companies under this subsection (b) must file with the commissioner a statement of investment policy approved by its governing body that describes the types of investments that the company may elect to undertake and may not make investments that materially deviate from the statement of investment policy that is on file with the commissioner.
(c) No pure captive insurance company shall make a loan to or an investment in its parent company or affiliates without prior written approval of the commissioner, and any such loan or investment shall be evidenced by documentation approved by the commissioner. Loans of minimum capital and surplus funds required by § 56-13-105 are prohibited.
(d)

(1) Notwithstanding this section or chapter 3, part 4 of this title, an association captive insurance company of an association described in § 56-13-102(3)(B) may hold any interest in qualified headquarters property as defined in subdivision (d)(2), and the qualified headquarters property shall be admitted assets and authorized investments of the association captive insurance company. The net book value of the qualified headquarters property deemed admitted and authorized under this subsection (d) may not exceed two million five hundred thousand dollars ($2,500,000), and an association captive insurance company holding qualified headquarters property pursuant to this subsection (d) shall at all times maintain total surplus, without regard to the qualified headquarters property, of at least the sum of:

(A) Fifty percent (50%) of the net book value of the qualified headquarters property; and
(B) The minimum capital and surplus requirements.
(2) For purposes of this subsection (d), “qualified headquarters property” includes the real property and the building in which the principal office of the association captive insurance company is located and also includes any improved and unimproved real property of the association captive insurance company that is located within one thousand five hundred feet (1,500′) of the company’s principal office.
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