§6048c. Definitions

Link to law: http://legislature.vermont.gov/statutes/section/08/141/06048c
Published: 2015

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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.)
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