§431:19-204  Certificate of authority. 

(a)  Any special purpose financial captive insurance company, when permitted by

its organizational documents, may apply to the commissioner for a certificate

of authority to transact insurance or reinsurance business as authorized in

this part.  A special purpose financial captive insurance company may only

insure or reinsure the risks of its counterparty.  Notwithstanding any other

provision of this part, a special purpose financial captive insurance company

may purchase reinsurance to cede the risks assumed under the special purpose

financial captive insurance contracts, subject to the prior approval of the

commissioner.

     (b)  In conjunction with the issuance of a

certificate of authority to a special purpose financial captive insurance

company, the commissioner may issue an order that includes any provisions,

terms, and conditions regarding the organization, licensing, and operation of

the special purpose financial captive insurance company that are deemed appropriate

by the commissioner and that are not inconsistent with this part.  Except as

provided in sections 431:19-212 and 431:19-213, a certificate of authority

issued to a special purpose financial captive insurance company pursuant to

this part shall not be revoked, suspended, amended, or modified other than as

follows:

     (1)  The special purpose financial captive insurance

company consents to the revocation, suspension, amendment, or modification; or

     (2)  The commissioner makes a showing of clear and

convincing evidence demonstrating that the revocation, suspension, amendment,

or modification is necessary to avoid irreparable harm to the special purpose

financial captive insurance company, investors who hold special purpose

financial captive insurance company securities, the public, or a counterparty,

if applicable.

     (c)  To qualify for a certificate of authority,

a special purpose financial captive insurance company shall be subject, in

addition to the requirements of section 431:19-102, to the following:

     (1)  The special purpose financial captive insurance

company shall submit its plan of operation to the commissioner for approval. 

The plan of operation shall include:

         (A)  Draft documentation or, at the discretion

of the commissioner, a written summary, of all agreements and material

transactions, including but not limited to the name of the counterparty, the

nature of risk being assumed, and the nature and purpose of the

interrelationships between the various transactions that are entered into to

effectuate the special purpose financial captive insurance company contract and

the insurance securitization;

         (B)  The source and form of the special purpose

financial captive insurance company's initial and ongoing capital and surplus;

         (C)  The proposed strategic investment policy

of the special purpose financial captive insurance company;

         (D)  A description of the underwriting,

reporting, and claims reserving and payment methods by which losses covered by

the special purpose financial captive insurance company are reported, accounted

for, and settled; and

         (E)  Projected financial statements of the

special purpose financial captive insurance company using an expected and at

least one adverse case scenario applied to the special purpose financial

captive insurance company contract;

     (2)  The special purpose financial captive insurance

company shall submit an affidavit of or a declaration by its president, a vice

president, the treasurer, or the chief financial officer, that includes the

following statements, to the best of that person's knowledge and belief after

reasonable inquiry:

         (A)  That the proposed organization and

operation of the special purpose financial captive insurance company complies

with all applicable provisions of this part;

         (B)  That the special purpose financial captive

insurance company's strategic investment policy reflects and takes into account

the liquidity of assets and the reasonable preservation, administration, and

management of the assets with respect to the risks associated with the special

purpose financial captive insurance company contract and the insurance

securitization transaction; and

         (C)  That the special purpose financial captive

insurance company contract and any arrangement for securing the special purpose

financial captive insurance company's obligations under the special purpose

financial captive insurance company contract, including but not limited to any

agreement or other documentation to implement the arrangement, comply with the

provisions of this part;

     (3)  The special purpose financial captive insurance

company shall submit other documents or statements of the special purpose

financial captive insurance company's officer as may be required by the

commissioner to evaluate the special purpose financial captive insurance company's

application for licensure; and

     (4)  The application shall include an opinion of

qualified legal counsel, in a form acceptable to the commissioner, that the

offer and sale of any special purpose financial captive insurance company

securities comply with all applicable registration requirements, or applicable

exemptions from or exceptions to the requirements of the federal securities

laws and that the offer and sale of securities by the special purpose financial

captive insurance company itself comply with all registration requirements or

applicable exemptions from or exceptions to the requirements of the security

laws of this State.  The legal opinions shall not be required as part of the

application if the special purpose financial captive insurance company includes

a specific statement in its plan of operation that the opinions shall be

provided to the commissioner prior to the offer or sale of any special purpose

financial captive insurance company securities.

     (d)  The commissioner may issue a certificate

of authority to transact insurance and reinsurance business as a special

purpose financial captive insurance company in this State that shall be valid

through the term of the insurance securitization and automatically renewed each

April 1 following the date of initial issuance, except as provided for in

section 431:19-212, and upon the commissioner's finding that:

     (1)  The proposed plan of operation provides for a

reasonable and expected successful operation;

     (2)  The terms of the special purpose financial

captive insurance company contract and related transactions comply with this

part; and

     (3)  The insurance regulator of the home domicile of

each counterparty has notified the commissioner in writing or otherwise

provided assurance satisfactory to the commissioner that it has approved or has

not disapproved the transaction; provided that the commissioner shall not be

precluded from issuing or renewing a certificate of authority in the event that

the insurance regulator of the home domicile of a counterparty has not

responded with respect to all or any part of the transaction.

     (e)  Section 431:19-101.2 shall apply to all

information submitted pursuant to subsection (c) and to any order issued to the

special purpose financial captive insurance company pursuant to subsection (b).

[L 2008, c 190, pt of §1; am L 2009, c 11, §6]