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Article 19


Published: 2015

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ARTICLE 19

CAPTIVE

INSURANCE COMPANIES

 

PART I. 

GENERAL PROVISIONS

 

Note

 

  Part I designation added by L 2008, c 190, §2.

 

     §431:19-101  Definitions.  As used in

this article:

     "Administrator" means the captive

insurance administrator established in section 431:19-101.5.

     "Affiliated entity" means any

company, person, or other entity in the same corporate system as a parent or a

member organization by virtue of common ownership, control, operation, or

management.

     "Association" means two or more

members who are engaged in business or activities similar or related to the

liability to which these members are exposed by virtue of any related, similar,

or common business trade, product, services, premises, or operations; provided

that the members of the association shall be individuals, corporations, limited

liability companies, partnerships, associations, or other entities, except

labor organizations, the member organizations of which or which does itself,

whether or not in conjunction with some or all of the member organizations:

     (1)  Own, control, or hold with power to vote all of

the outstanding voting securities of an association captive insurance company

incorporated as a stock insurer;

     (2)  Have complete voting control over an association

captive insurance company incorporated as a mutual insurer;

     (3)  Constitute all of the subscribers of an

association captive insurance company formed as a reciprocal insurer; or

     (4)  Have complete voting control over an association

captive insurance company formed as a limited liability company.

     "Association captive insurance

company" means a captive insurance company that insures risks of the

member organizations of the association, and that may insure the risks of

affiliated entities of the member organizations and the risks of the

association itself.

     "Branch captive insurance company"

means an outside captive insurance company licensed under this article by the

commissioner to transact the business of insurance in this State through a

business unit that has its principal place of business in this State.

     "Captive insurance company" or

"captive insurer" means a class 1 company, class 2 company, class 3

company, class 4 company, or class 5 company formed or authorized under this

article.

     "Class 1 company" means a pure captive

insurance company that is designated and licensed in this State to write

business only as a reinsurer.

     "Class 2 company" means a pure

captive insurance company that is designated and licensed in this State to

write business as a direct insurer or as a direct insurer and reinsurer.

     "Class 3 company" means an

association captive insurance company or risk retention captive insurance

company that is designated and licensed in this State.

     "Class 4 company" means a sponsored

captive insurance company that is designated and licensed in this State.

     "Class 5 company" means a reinsurance

or excess insurance company that is a captive insurance company designated and

licensed in this State pursuant to section 431:19-111.5.

     "Controlled unaffiliated business" means,

in the case of a pure captive insurance company, any person:

     (1)  That is not in the corporate system of a parent

and its affiliated entities;

     (2)  That has an existing contractual relationship

with a parent or one of its affiliated entities; and

     (3)  Whose risks are managed by the pure captive

insurance company.

     "Governing body" means the board of

directors, subscriber's advisory committee, membership, or other entity

responsible for the governance of a captive insurance company.

     "Leased capital facility".  DELETED.

     "Member organization" means any

individual, corporation, limited liability company, partnership, association,

or other entity that belongs to an association.

     "Organizational document" means a

captive insurance company's articles of association, articles

of incorporation, articles of organization, subscribers' agreement, bylaws, operating agreement, or any other

document that establishes the captive insurance company as a legal entity or

prescribes its existence.

     "Outside captive insurance company"

means an insurance company licensed under the laws of a jurisdiction other than

this State and not otherwise admitted to do business as an insurance company in

this State, that insures the risks of its parent or any affiliated entities.

     "Parent" means a corporation, limited

liability company, partnership, other entity, or individual, that directly or

indirectly owns, controls, or holds with power to vote more than fifty per cent

of the outstanding voting interests of a pure captive insurance company

organized as a stock corporation, nonprofit corporation, or limited liability

company.

     "Participant" means an entity that

meets the requirements of section 431:19-305, and any affiliated entities thereof

that are insured by a sponsored captive insurance company where the losses of

the participant may be limited through a participant contract to the

participant's pro rata share of the assets of one or more protected cells

identified in the participant contract.

     "Participant contract" means a

contract by which a sponsored captive insurance company insures the risks of a

participant and may also limit the losses of each participant to its pro rata

share of the assets of one or more protected cells identified in such

participant contract.

     "Protected cell" means a separate

account established by a sponsored captive insurance company formed or licensed

under this article in which assets are maintained for one or more participants

in accordance with the terms of one or more participant contracts to fund the

liability of the sponsored captive insurance company assumed on behalf of the

participants as set forth in the participant contracts.

     "Pure captive insurance company"

means a captive insurance company that only insures or reinsures risks of its

parent and affiliated entities or of a controlled unaffiliated business.   "Pure

nonprofit captive insurance company" means a pure captive insurance

company formed without capital stock as a nonprofit corporation under chapter

414D, whose voting of membership interest is held by a parent organization

formed under a nonprofit law or by such nonprofit parent and its affiliated

entities.

     "Risk retention captive insurance

company" means a captive insurance company that is formed as a "risk

retention group" as defined in chapter 431K.

     "Sponsor" means any entity that meets

the requirements of section 431:19-304 and is approved by the commissioner to

provide all or part of the minimum required capital and surplus of a sponsored

captive insurance company and to organize and operate a sponsored captive

insurance company.

     "Sponsored captive insurance company"

means a captive insurance company:

     (1)  In which the minimum required capital and surplus

is provided by one or more sponsors;

     (2)  That is formed or licensed under this article;

     (3)  That insures the risks only of its participants

through separate participant contracts; and

     (4)  That may fund its liability to each participant

through one or more protected cells.  A sponsored captive insurance company

segregates the assets of each protected cell from the assets of other protected

cells and from the assets of the sponsored captive insurance company's general

account. [L 1987, c 347, pt of §2; am L 1988, c 187, §8; am L 1989, c 207, §15;

am L 1992, c 108, §2; am L 1996, c 248, §1; am L 1998, c 150, §2; am L 1999, c

302, §2; am L 2000, c 36, §2 and c 133, §1; am L 2001, c 194, §3; am L 2002, c

40, §71; am L 2003, c 209, §1; am L 2005, c 31, §1; am L 2007, c 232, §1; am L

2008, c 190, §3; am L 2012, c 253, §2; am L 2014, c 186, §9]