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The Vermont Statutes Online



Title

08

:
Banking and Insurance






Chapter

141

:
CAPTIVE INSURANCE COMPANIES






Subchapter

003
:
BRANCH CAPTIVE INSURANCE COMPANIES








[Section 6043 shall apply to branch captive companies formed before January 1, 2009.]

[Section 6043 shall apply to branch

captive companies formed before January 1, 2009.]

§

6043. Security required

In the case of a

branch captive insurance company, as security for the payment of liabilities

attributable to the branch operations, the Commissioner shall require that

either a trust fund funded by assets acceptable to the Commissioner or an

irrevocable letter of credit be established and maintained in the United States

for the benefit of United States policyholders and United States ceding insurers

under insurance policies issued or reinsurance contracts issued or assumed by

the branch captive insurance company through its branch operations. The amount

of such security may be no less than the amount set forth in subdivision

6004(a)(1) of this title and the reserves on such insurance policies or such

reinsurance contracts, including reserves for losses, allocated loss adjustment

expenses, incurred but not reported losses, and unearned premiums with regard

to business written through the branch operations; provided, however, the

Commissioner may permit a branch captive insurance company that is required to

post security for loss reserves on branch business by its reinsurer to reduce

the funds in the trust account or the amount payable under the irrevocable

letter of credit required by this section by the same amount so long as the

security remains posted with the reinsurer. If the form of security selected is

a letter of credit, the letter of credit must be established by, or issued or

confirmed by, a bank chartered in this State or a member bank of the Federal

Reserve System. (Added 2003, No. 55, § 9; amended 2005, No. 36, § 15, eff. June

1, 2005.)




[Section 6043 shall apply only to branch captive companies formed on and after January 1, 2009.]

[Section 6043 shall apply only to branch

captive companies formed on and after January 1, 2009.]

§

6043. Security required

(a) No branch

captive insurance company shall be issued a license unless it shall possess and

thereafter maintain, as security for the payment of liabilities attributable to

the branch operations:

(1) an amount

equal to the amount set forth in subdivision 6004(a)(1) of this title as the

minimum capital requirement for a pure captive; and in addition

(2) reserves on

such insurance policies or such reinsurance contracts as may be issued or

assumed by the branch captive insurance company through its branch operations,

including reserves for losses, allocated loss adjustment expenses, incurred but

not reported losses, and unearned premiums with regard to business written

through the branch operations; provided, however, the Commissioner may permit a

branch captive insurance company to credit against any such reserve requirement

any security for loss reserves that the branch captive insurance company may

post with a ceding insurer or that may be posted by a reinsurer with the branch

captive insurance company, in either case so long as such security remains

posted.

(b) Subject to

the prior approval of the Commissioner, the amounts required in subsection (a)

of this section may be held in the form of:

(1) a trust

formed under a trust agreement and funded by assets acceptable to the

Commissioner;

(2) an

irrevocable letter of credit issued or confirmed by a bank approved by the

Commissioner;

(3) with respect

to the amounts required in subdivision (a)(1) of this section only, cash on

deposit with the Commissioner; or

(4) any

combination thereof. (Added 2003, No. 55, § 9; amended 2005, No. 36, § 15, eff.

June 1, 2005; 2009, No. 42, § 25, eff. May 27, 2009.)