Utah Code 31A-37a-402. Permitted reinsurance
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(1)
Terms Used In Utah Code 31A-37a-402
- 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
- Contract: A legal written agreement that becomes binding when signed.
- Indemnification: In general, a collateral contract or assurance under which one person agrees to secure another person against either anticipated financial losses or potential adverse legal consequences. Source: FDIC
- 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.
- 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
- Premium: includes , however designated:(156)(b)(i) an assessment;(156)(b)(ii) a membership fee;(156)(b)(iii) a required contribution; or(156)(b)(iv) monetary consideration. 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
- Retrocession: means reinsurance with another insurer of a liability assumed under a reinsurance contract. 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
(1)(a) A special purpose financial captive insurance company may reinsure only the risks of a ceding insurer, pursuant to a reinsurance contract.
(1)(b) A special purpose financial captive insurance company may not issue a contract of insurance or a contract for assumption of risk or indemnification of loss other than a reinsurance contract described in Subsection (1)(a).
(2) Unless otherwise approved in advance by the commissioner, a special purpose financial captive insurance company may not assume or retain exposure to insurance or reinsurance losses for its own account that are not funded by:
(2)(a) proceeds from a special purpose financial captive insurance company insurance securitization;
(2)(b) a letter of credit;
(2)(c) an asset described in Subsection 31A-37a-102(1)(c);
(2)(d) a premium or another amount payable by the ceding insurer to the special purpose financial captive insurance company pursuant to the reinsurance contract; or
(2)(e) a return on investment of an item described in Subsections (2)(a) through (d).
(3)
(3)(a) A reinsurance contract shall contain a provision reasonably required or approved by the commissioner.
(3)(b) A requirement described in Subsection (3)(a) shall take into account the laws applicable to the ceding insurer regarding the ceding insurer taking credit for the reinsurance provided under the reinsurance contract.
(4) Subject to the prior approval of the commissioner, a special purpose financial captive insurance company may cede risks assumed through a reinsurance contract to one or more reinsurers through the purchase of reinsurance.
(5)
(5)(a) This Subsection (5) applies to a contract or commercial activity that:
(5)(a)(i) relates to or is incidental to a reinsurance contract; and
(5)(a)(ii) is necessary to fulfill the purposes of:
(5)(a)(ii)(A) a reinsurance contract;
(5)(a)(ii)(B) insurance securitization; and
(5)(a)(ii)(C) this chapter.
(5)(b) A special purpose financial captive insurance company may engage in a contract or commercial activity described in Subsection (5)(a) if the contract or commercial activity is:
(5)(b)(i) in the special purpose financial captive insurance company’s plan of operation; or
(5)(b)(ii) approved in advance by the commissioner.
(5)(c) A contract or commercial activity described in Subsection (5)(a) includes:
(5)(c)(i) entering into a reinsurance contract;
(5)(c)(ii) issuing a special purpose financial captive insurance company security;
(5)(c)(iii) complying with a term of a contract or security described in Subsection (5)(c)(i) or (ii);
(5)(c)(iv) entering into:
(5)(c)(iv)(A) a trust;
(5)(c)(iv)(B) a guaranteed investment contract;
(5)(c)(iv)(C) a swap;
(5)(c)(iv)(D) a derivative transaction;
(5)(c)(iv)(E) a tax transaction;
(5)(c)(iv)(F) an administration transaction;
(5)(c)(iv)(G) a reimbursement transaction; or
(5)(c)(iv)(H) a fiscal agent transaction;
(5)(c)(v) complying with a trust indenture, reinsurance, or retrocession; and
(5)(c)(vi) another agreement necessary or incidental to effect an insurance securitization in compliance with:
(5)(c)(vi)(A) the special purpose financial captive insurance company’s plan of operation; and
(5)(c)(vi)(B) this chapter.
(6) Unless otherwise approved in advance by the commissioner, a reinsurance contract may not contain a provision for payment by the special purpose financial captive insurance company in discharge of its obligations under the reinsurance contract to a person other than the ceding insurer or any receiver of the ceding insurer.
(7) A special purpose financial captive insurance company shall notify the commissioner immediately of an action by a ceding insurer or another person to foreclose on or otherwise take possession of collateral provided by the special purpose financial captive insurance company to secure an obligation of the special purpose financial captive insurance company.