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The Vermont Statutes Online



Title

08

:
Banking and Insurance






Chapter

141

:
CAPTIVE INSURANCE COMPANIES






Subchapter

004
:
SPECIAL PURPOSE FINANCIAL INSURANCE COMPANIES










 

§

6048i. Permitted reinsurance

(a) A special

purpose financial insurance company may reinsure only the risks of a ceding

insurer, pursuant to a reinsurance contract. A special purpose financial

insurance company may not issue a contract of insurance or a contract for

assumption of risk or indemnification of loss other than such reinsurance

contract.

(b) Unless

otherwise approved in advance by the Commissioner, a special purpose financial

insurance company may not assume or retain exposure to insurance or reinsurance

losses for its own account that are not funded by:

(1) proceeds

from a special purpose financial insurance company securitization or letters of

credit or other assets described in subdivision 6048c(3) of this chapter;

(2) premium and

other amounts payable by the ceding insurer to the special purpose financial

insurance company pursuant to the reinsurance contract; and

(3) any return

on investment of the items in subdivisions (1) and (2) of this subsection.

(c) The

reinsurance contract shall contain all provisions reasonably required or

approved by the Commissioner, which requirements shall take into account the

laws applicable to the ceding insurer regarding the ceding insurer taking

credit for the reinsurance provided under such reinsurance contract.

(d) A special

purpose financial insurance company may cede risks assumed through a

reinsurance contract to one or more reinsurers through the purchase of

reinsurance, subject to the prior approval of the Commissioner.

(e) A special

purpose financial insurance company may enter into contracts and conduct other

commercial activities related or incidental to and necessary to fulfill the

purposes of the reinsurance contract, the insurance securitization, and this

subchapter, provided such contracts and activities are included in the special

purpose financial insurance company's plan of operation or are otherwise

approved in advance by the Commissioner. Such contracts and activities may

include: entering into reinsurance contracts; issuing special purpose financial

insurance company securities; complying with the terms of these contracts or

securities; entering into trust, guaranteed investment contract, swap, or other

derivative, tax, administration, reimbursement, or fiscal agent transactions;

complying with trust indenture, reinsurance, or retrocession; and other

agreements necessary or incidental to effect an insurance securitization in

compliance with this subchapter and the special purpose financial insurance

company's plan of operation.

(f) Unless otherwise

approved in advance by the Commissioner, a reinsurance contract shall not

contain any provision for payment by the special purpose financial insurance

company in discharge of its obligations under the reinsurance contract to any

person other than the ceding insurer or any receiver of the ceding insurer.

(g) A special

purpose financial insurance company shall notify the Commissioner immediately

of any action by a ceding insurer or any other person to foreclose on or

otherwise take possession of collateral provided by the special purpose

financial insurance company to secure any obligation of the special purpose

financial insurance company. (Added 2007, No. 49, § 17; amended 2013, No. 29, §

60, eff. May 13, 2013.)