(1) A person may not reinsure the risks of a ceding insurer unless the person has a certificate of authority under this chapter as a special purpose financial captive insurance company.
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Terms Used In Utah Code 31A-37a-201

  • Affidavit: A written statement of facts confirmed by the oath of the party making it, before a notary or officer having authority to administer oaths.
  • Application: means a document:
         (10)(a)
              (10)(a)(i) completed by an applicant to provide information about the risk to be insured; and
              (10)(a)(ii) that contains information that is used by the insurer to evaluate risk and decide whether to:
                   (10)(a)(ii)(A) insure the risk under:
                        (10)(a)(ii)(A)(I) the coverage as originally offered; or
                        (10)(a)(ii)(A)(II) a modification of the coverage as originally offered; or
                   (10)(a)(ii)(B) decline to insure the risk; or
         (10)(b) used by the insurer to gather information from the applicant before issuance of an annuity contract. See Utah Code 31A-1-301
  • Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
  • Captive insurance company: means :
         (21)(a) an insurer:
              (21)(a)(i) owned by a parent organization; and
              (21)(a)(ii) whose purpose is to insure risks of the parent organization and other risks as authorized under:
                   (21)(a)(ii)(A) Chapter 37, Captive Insurance Companies Act; and
                   (21)(a)(ii)(B) Chapter 37a, Special Purpose Financial Captive Insurance Company Act; or
         (21)(b) in the case of a group or association, an insurer:
              (21)(b)(i) owned by the insureds; and
              (21)(b)(ii) whose purpose is to insure risks of:
                   (21)(b)(ii)(A) a member organization;
                   (21)(b)(ii)(B) a group member; or
                   (21)(b)(ii)(C) an affiliate of:
                        (21)(b)(ii)(C)(I) a member organization; or
                        (21)(b)(ii)(C)(II) a group member. See Utah Code 31A-1-301
  • Certificate: means evidence of insurance given to:
         (23)(a) an insured under a group insurance policy; or
         (23)(b) a third party. See Utah Code 31A-1-301
  • Contract: A legal written agreement that becomes binding when signed.
  • Form: means one of the following prepared for general use:
              (74)(a)(i) a policy;
              (74)(a)(ii) a certificate;
              (74)(a)(iii) an application;
              (74)(a)(iv) an outline of coverage; or
              (74)(a)(v) an endorsement. See Utah Code 31A-1-301
  • Insurance: includes :
              (96)(b)(i) a risk distributing arrangement providing for compensation or replacement for damages or loss through the provision of a service or a benefit in kind;
              (96)(b)(ii) a contract of guaranty or suretyship entered into by the guarantor or surety as a business and not as merely incidental to a business transaction; and
              (96)(b)(iii) a plan in which the risk does not rest upon the person who makes an arrangement, but with a class of persons who have agreed to share the risk. See Utah Code 31A-1-301
  • insurance company: means a person doing an insurance business as a principal including:
              (104)(a)(i) a fraternal benefit society;
              (104)(a)(ii) an issuer of a gift annuity other than an annuity specified in Subsections 31A-22-1305(2) and (3);
              (104)(a)(iii) a motor club;
              (104)(a)(iv) an employee welfare plan;
              (104)(a)(v) a person purporting or intending to do an insurance business as a principal on that person's own account; and
              (104)(a)(vi) a health maintenance organization. See Utah Code 31A-1-301
  • 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.
  • Order: means an order of the commissioner. See Utah Code 31A-1-301
  • Person: includes :
         (146)(a) an individual;
         (146)(b) a partnership;
         (146)(c) a corporation;
         (146)(d) an incorporated or unincorporated association;
         (146)(e) a joint stock company;
         (146)(f) a trust;
         (146)(g) a limited liability company;
         (146)(h) a reciprocal;
         (146)(i) a syndicate; or
         (146)(j) another similar entity or combination of entities acting in concert. See Utah Code 31A-1-301
  • Policy: includes a service contract issued by:
              (150)(b)(i) a motor club under Chapter 11, Motor Clubs;
              (150)(b)(ii) a service contract provided under Chapter 6a, Service Contracts; and
              (150)(b)(iii) a corporation licensed under:
                   (150)(b)(iii)(A) Chapter 7, Nonprofit Health Service Insurance Corporations; or
                   (150)(b)(iii)(B) Chapter 8, Health Maintenance Organizations and Limited Health Plans. See Utah Code 31A-1-301
  • Rate: means :
              (163)(a)(i) the cost of a given unit of insurance; or
              (163)(a)(ii) for property or casualty insurance, that cost of insurance per exposure unit either expressed as:
                   (163)(a)(ii)(A) a single number; or
                   (163)(a)(ii)(B) a pure premium rate, adjusted before the application of individual risk variations based on loss or expense considerations to account for the treatment of:
                        (163)(a)(ii)(B)(I) expenses;
                        (163)(a)(ii)(B)(II) profit; and
                        (163)(a)(ii)(B)(III) individual insurer variation in loss experience. See Utah Code 31A-1-301
  • Reinsurance: means an insurance transaction where an insurer, for consideration, transfers any portion of the risk it has assumed to another insurer. See Utah Code 31A-1-301
  • Security: means a:
              (176)(a)(i) note;
              (176)(a)(ii) stock;
              (176)(a)(iii) bond;
              (176)(a)(iv) debenture;
              (176)(a)(v) evidence of indebtedness;
              (176)(a)(vi) certificate of interest or participation in a profit-sharing agreement;
              (176)(a)(vii) collateral-trust certificate;
              (176)(a)(viii) preorganization certificate or subscription;
              (176)(a)(ix) transferable share;
              (176)(a)(x) investment contract;
              (176)(a)(xi) voting trust certificate;
              (176)(a)(xii) certificate of deposit for a security;
              (176)(a)(xiii) certificate of interest of participation in an oil, gas, or mining title or lease or in payments out of production under such a title or lease;
              (176)(a)(xiv) commodity contract or commodity option;
              (176)(a)(xv) certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase any of the items listed in Subsections (176)(a)(i) through (xiv); or
              (176)(a)(xvi) another interest or instrument commonly known as a security. See Utah Code 31A-1-301
  • State: when applied to the different parts of the United States, includes a state, district, or territory of the United States. See Utah Code 68-3-12.5
  • Surplus: means the excess of assets over the sum of paid-in capital and liabilities. See Utah Code 31A-1-301
  • Writing: includes :
         (48)(a) printing;
         (48)(b) handwriting; and
         (48)(c) information stored in an electronic or other medium if the information is retrievable in a perceivable format. See Utah Code 68-3-12.5
(2) To apply for a certificate of authority under this chapter as a special purpose financial captive insurance company, a special purpose financial captive insurance company shall submit an application for the certificate of authority that, in addition to complying with Chapter 37, Captive Insurance Companies Act, complies with the following:

     (2)(a) A special purpose financial captive insurance company shall submit to the commissioner a plan of operation that includes:

          (2)(a)(i) a complete description of:

               (2)(a)(i)(A) a significant transaction including:

                    (2)(a)(i)(A)(I) reinsurance;
                    (2)(a)(i)(A)(II) a reinsurance security arrangement;
                    (2)(a)(i)(A)(III) an insurance securitization; or
                    (2)(a)(i)(A)(IV) a transaction or arrangement related to a transaction described in Subsections (2)(a)(i)(A)(I) through (III);
               (2)(a)(i)(B) to the extent not included in Subsection (2)(a)(i)(A), a party other than the special purpose financial captive insurance company and the ceding insurer that is involved in the issuance of a special purpose financial captive insurance company security; and
               (2)(a)(i)(C) a pledge, hypothecation, or grant of a security interest in:

                    (2)(a)(i)(C)(I) an asset of the special purpose financial captive insurance company; or
                    (2)(a)(i)(C)(II) stock or a limited liability company interest in the special purpose financial captive insurance company;
          (2)(a)(ii) the source and form of the special purpose financial captive insurance company’s capital and surplus;
          (2)(a)(iii) the proposed investment policy of the special purpose financial captive insurance company;
          (2)(a)(iv) a description of an underwriting, reporting, and claims payment method by which losses covered by a reinsurance contract are reported, accounted for, and settled;
          (2)(a)(v) pro forma balance sheets and income statements illustrating one or more adverse case scenarios, as determined under criteria required by the commissioner, for the performance of the special purpose financial captive insurance company under a reinsurance contract; and
          (2)(a)(vi) the proposed rate and method for discounting reserves, if the special purpose financial captive insurance company is requesting authority to discount its reserves.
     (2)(b) The special purpose financial captive insurance company shall submit an affidavit:

          (2)(b)(i) of the following of the special purpose financial captive insurance company:

               (2)(b)(i)(A) president;
               (2)(b)(i)(B) vice president;
               (2)(b)(i)(C) treasurer; or
               (2)(b)(i)(D) chief financial officer; and
          (2)(b)(ii) that includes the following statements, to the best of knowledge and belief of the person submitting the affidavit after reasonable inquiry:

               (2)(b)(ii)(A) the proposed organization and operation of the special purpose financial captive insurance company complies with this chapter and the applicable provisions of Chapter 37, Captive Insurance Companies Act;
               (2)(b)(ii)(B) the special purpose financial captive insurance company’s investment policy reflects and takes into account:

                    (2)(b)(ii)(B)(I) the liquidity of assets; and
                    (2)(b)(ii)(B)(II) the reasonable preservation, administration, and management of those assets with respect to the risks associated with:

                         (2)(b)(ii)(B)(II)(Aa) a reinsurance contract; and
                         (2)(b)(ii)(B)(II)(Bb) an insurance securitization transaction; and
               (2)(b)(ii)(C) the following comply with this chapter:

                    (2)(b)(ii)(C)(I) a reinsurance contract; and
                    (2)(b)(ii)(C)(II) an arrangement for securing an obligation of the special purpose financial captive insurance company under the reinsurance contract, including an agreement or other documentation to implement the arrangement.
     (2)(c) A special purpose financial captive insurance company shall submit to the commissioner:

          (2)(c)(i) a copy of an agreement or documentation described in Subsection (2)(b), unless otherwise approved by the commissioner; and
          (2)(c)(ii) a statement or document required by the commissioner to evaluate the special purpose financial captive insurance company’s application for a certificate of authority.
     (2)(d)

          (2)(d)(i) Subject to Subsection (2)(d)(ii), a special purpose financial captive insurance company shall submit with the application an opinion of a licensed attorney, in a form acceptable to the commissioner, that:

               (2)(d)(i)(A) the offer and sale of a special purpose financial captive insurance company security complies with:

                    (2)(d)(i)(A)(I) the registration requirements of federal securities laws; or
                    (2)(d)(i)(A)(II) the exemptions from or exceptions to a requirement of the federal securities laws; and
               (2)(d)(i)(B) the offer and sale of a security by the special purpose financial captive insurance company complies with:

                    (2)(d)(i)(B)(I) the registration requirements of this state‘s securities laws; or
                    (2)(d)(i)(B)(II) the exemptions from or exceptions to a requirement of this state’s securities laws.
          (2)(d)(ii) A special purpose financial captive insurance company is not required to submit an opinion described in Subsection (2)(d)(i) with an application if the special purpose financial captive insurance company includes a specific statement in its plan of operation that the opinion described in Subsection (2)(d)(i) will be provided to the commissioner before the offer or sale of a special purpose financial captive insurance company security.
(3)

     (3)(a) The commissioner may issue a certificate of authority to a special purpose financial captive insurance company that complies with Subsection (2) authorizing the special purpose financial captive insurance company to transact reinsurance business as a special purpose financial captive insurance company in this state if the commissioner finds that:

          (3)(a)(i) the proposed plan of operation provides for a reasonable and expected successful operation;
          (3)(a)(ii) the terms of the reinsurance contract or related transaction comply with this chapter;
          (3)(a)(iii) the proposed plan of operation is not hazardous to a ceding insurer; and
          (3)(a)(iv) subject to Subsection (3)(b), the insurance regulator of the state of domicile of a ceding insurer has notified the commissioner in writing or otherwise provided assurance satisfactory to the commissioner that the regulator of the state has approved or has not disapproved the transaction.
     (3)(b) Notwithstanding Subsection (3)(a)(iv), the commissioner may issue a certificate of authority to a special purpose financial captive insurance company if the insurance regulator of the state of domicile of a ceding insurer does not respond with respect to all or a part of the transaction.
     (3)(c)

          (3)(c)(i) A certificate of authority issued under this section is valid through the June 30 after the day on which the certificate of authority is issued.
          (3)(c)(ii) A special purpose financial captive insurance company may renew its certificate of authority annually by, before the certificate of authority expires:

               (3)(c)(ii)(A) submitting the affidavit required by Subsection (2); and
               (3)(c)(ii)(B) paying a renewal fee.
(4) In conjunction with issuing a certificate of authority to a special purpose financial captive insurance company, the commissioner may issue an order that includes a provision, term, or condition regarding the organization, issuance of a certificate of authority, and operation of the special purpose financial captive insurance company that:

     (4)(a) the commissioner considers appropriate; and
     (4)(b) is not inconsistent with this chapter and Chapter 37, Captive Insurance Companies Act.
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