31A-37-205. Free surplus.
(1) (a) Except as provided in Subsection (2), the commissioner may not issue a certificate
of authority to a captive insurance company unless the company possesses and maintains free
surplus of:
(i) in the case of a pure captive insurance company, not less that $150,000;
(ii) in the case of an association captive insurance company incorporated as a stock
insurer, not less than $350,000;
(iii) in the case of an industrial insured captive insurance company incorporated as a
stock insurer, not less than $300,000;
(iv) in the case of an association captive insurance company incorporated as a mutual
insurer, not less $750,000;
(v) in the case of an industrial insured captive insurance company incorporated as a
mutual insurer, not less than $500,000;
(vi) in the case of a sponsored captive insurance company, not less than $500,000; and
(vii) in the case of a special purpose captive insurance company, an amount determined
by the commissioner after giving due consideration to the company's business plan, feasibility
study, and pro-formas, including the nature of the risks to be insured.
(b) The surplus required under this Subsection (1) may be in the form of:
(i) cash; or
(ii) an irrevocable letter of credit issued by:
(A) a bank chartered by this state; or
(B) a member bank of the Federal Reserve System that is approved by the commissioner.
(2) Notwithstanding the requirements of Subsection (1), a captive insurance company
organized as a reciprocal insurer under this chapter may not be issued a certificate of authority
unless the captive insurance company possesses and maintains free surplus of $1,000,000.
(3) (a) The commissioner may prescribe additional surplus based upon the type, volume,
and nature of insurance business transacted.
(b) The capital required under this Subsection (3) may be in the form of an irrevocable
letter of credit issued by:
(i) a bank chartered by this state; or
(ii) a member bank of the Federal Reserve System.
(4) (a) Without the prior approval of the commissioner, a captive insurance company
may not pay:
(i) a dividend out of capital or surplus in excess of the limits under Section 16-10a-640;
or
(ii) a distribution with respect to capital or surplus in excess of the limits under Section
16-10a-640.
(b) The commissioner shall condition approval of an ongoing plan for the payment of
dividends or other distribution on the retention, at the time of each payment, of capital or surplus
in excess of amounts:
(i) specified by the commissioner; or
(ii) determined in accordance with formulas approved by the commissioner.
Amended by Chapter 312, 2004 General Session
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Last revised: Thursday, May 28, 2009