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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
§
6048c. Definitions
As used in this
subchapter:
(1) "Ceding
insurer" means an insurance company approved by the Commissioner and
licensed or otherwise authorized to transact the business of insurance or
reinsurance in its state or country of domicile, which cedes risk to a special
purpose financial insurance company pursuant to a reinsurance contract.
(2)
"Insolvency" and "insolvent" for purpose of applying the
provisions of chapter 145 of this title to a special purpose financial
insurance company, mean:
(A) That the
special purpose financial insurance company is unable to pay its obligations
when they are due, unless those obligations are the subject of a bona fide
dispute; or
(B) The special
purpose financial insurance company has failed to meet all criteria and
conditions for solvency of the special purpose financial insurance company
established by the Commissioner by rule or order.
(3)
"Insurance securitization" and "securitization" mean a
transaction or a group of related transactions, which may include capital
market offerings, that are effected through related risk transfer instruments
and facilitating administrative agreements where all or part of the result of
such transactions is used to fund the special purpose financial insurance
company's obligations under a reinsurance contract with a ceding insurer and by
which:
(A) proceeds are
obtained by a special purpose financial insurance company, directly or
indirectly, through the issuance of securities by the special purpose financial
insurance company or any other person; or
(B) a person
provides one or more letters of credit or other assets for the benefit of the
special purpose financial insurance company, which the Commissioner authorizes
the special purpose financial insurance company to treat as admitted assets for
purposes of the special purpose financial insurance company's annual report;
where all or any part of such proceeds, letters of credit, or assets, as
applicable, are used to fund the special purpose financial insurance company's
obligations under a reinsurance contract with a ceding insurer. The terms
"insurance securitization" and "securitization" do not
include the issuance of a letter of credit for the benefit of the Commissioner
to satisfy all or part of the special purpose financial insurance company's
capital and surplus requirements under section 6048g of this chapter.
(4)
"Management" means the board of directors, managing board, or other
individual or individuals vested with overall responsibility for the management
of the affairs of the special purpose financial insurance company, including
officers or other agents elected or appointed to act on behalf of the special
purpose financial insurance company.
(5)
"Organizational document" means:
(A) in the case
of a special purpose financial insurance company formed as a stock corporation,
the special purpose financial insurance company's articles of incorporation and
bylaws; and
(B) in the case
of a special purpose financial insurance company formed as a limited liability
company, the special purpose financial insurance company's articles of
organization and operating agreement.
(6)
"Reinsurance contract" means a contract between a special purpose
financial insurance company and a ceding insurer pursuant to which the special
purpose financial insurance company agrees to provide reinsurance to the ceding
insurer for risks associated with the ceding insurer's insurance or reinsurance
business.
(7)
"Security" shall have the same meaning as defined in 9 V.S.A. §
5102(28) and shall also include any form of debt obligation, equity, surplus
certificate, surplus note, funding agreement, derivative, or other financial
instrument that the Commissioner designates, by rule or order, as a
"security" for purposes of this subchapter.
(8)
"Special purpose financial insurance company" means a captive
insurance company that has received a license from the Commissioner to operate
as a special purpose financial insurance company pursuant to this subchapter.
(9)
"Special purpose financial insurance company security" means:
(A) a security
issued by a special purpose financial insurance company; or
(B) a security
issued by a third party, the proceeds of which are obtained directly or
indirectly by a special purpose financial insurance company.
(10)
"Surplus note" means an unsecured subordinated debt obligation
possessing characteristics consistent with paragraph 3 of the National
Association of Insurance Commissioners Statement of Statutory Accounting
Principles No. 41, as amended from time to time and as modified or supplemented
by rule or order of the Commissioner. (Added 2007, No. 49, § 17; amended 2013,
No. 29, § 54, eff. May 13, 2013.)
