Connecticut 2019 Regular Session

Connecticut Senate Bill SB00908 Compare Versions

Version 1 (Old)

Version 2 (New)

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7	5		General Assembly Raised Bill No. 908
8	6		January Session, 2019
9	7		LCO No. 4519
10	8
11	9
12		-	Referred to Committee on INSURANCE AND REAL
13		-	ESTATE
	10	+	Referred to Committee on INSURANCE AND REAL ESTATE
14	11
15	12
16	13		Introduced by:
17	14		(INS)
	15	+
18	16
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21	19		AN ACT AUTHORIZING FOREIGN BRANCH CAPTIVE INSURANCE
22	20		COMPANIES.
23	21		Be it enacted by the Senate and House of Representatives in General
24	22		Assembly convened:
25	23
26	24		Section 1. Section 38a-91aa of the general statutes is repealed and 1
27	25		the following is substituted in lieu thereof (Effective July 1, 2019): 2
28	26		As used in sections 38a-91aa to 38a-91tt, inclusive, as amended by 3
29	27		this act, and sections 38a-91ww and 38a-91xx: 4
30	28		(1) "Affiliated company" means any company in the same corporate 5
31	29		system as a parent, an industrial insured or a member organization by 6
32	30		virtue of common ownership, control, operation or management. 7
33	31		(2) "Agency captive insurance company" means a captive insurance 8
34	32		company that: 9
35	33		(A) Is owned or directly or indirectly controlled by one or more 10
36	34		insurance agents or insurance producers licensed in accordance with 11
37	35		sections 38a-702a to 38a-702r, inclusive; 12 Raised Bill No. 908
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44	41		(B) Only insures against risks covered by insurance policies sold, 13
45	42		solicited or negotiated through the insurance agents or insurance 14
46	43		producers that own or control such captive insurance company; and 15
47	44		(C) Does not insure against risks covered by any health insurance 16
48	45		policy or plan. 17
49	46		(3) "Alien captive insurance company" means any insurance 18
50	47		company formed to write insurance business for its parent and 19
51	48		affiliated companies and licensed pursuant to the laws of an alien 20
52	49		jurisdiction that imposes statutory or regulatory standards on 21
53	50		companies transacting the business of insurance in such jurisdiction 22
54	51		that the commissioner deems to be acceptable. 23
55	52		(4) "Association" means any legal association of individuals, 24
56	53		corporations, limited liability companies, partnerships, associations or 25
57	54		other entities that has been in continuous existence for at least one 26
58	55		year, where the association itself or some or all of the member 27
59	56		organizations: 28
60	57		(A) Directly or indirectly own, control or hold with power to vote all 29
61	58		of the outstanding voting securities or other voting interests of an 30
62	59		association captive insurance company incorporated as a stock insurer; 31
63	60		(B) Have complete voting control over an association captive 32
64	61		insurance company incorporated as a mutual corporation or formed as 33
65	62		a limited liability company; or 34
66	63		(C) Constitute all of the subscribers of an association captive 35
67	64		insurance company formed as a reciprocal insurer. 36
68	65		(5) "Association captive insurance company" means any company 37
69	66		that insures risks of the member organizations of an association, and 38
70	67		includes a company that also insures risks of such member 39
71	68		organizations' affiliated companies or of the association. 40
72		-	(6) "Branch business" means any insurance business transacted in 41 Raised Bill No. 908
	69	+	(6) "Branch business" means any insurance business transacted in 41
	70	+	this state by a branch captive insurance company. 42 Raised Bill No. 908
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79		-	this state by a branch captive insurance company. 42
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80	76		(7) "Branch captive insurance company" means any alien captive 43
81	77		insurance company licensed by the commissioner to transact the 44
82	78		business of insurance in this state through a business unit with a 45
83	79		principal place of business in this state. 46
84	80		(8) "Branch operations" means any business operations in this state 47
85	81		of a branch captive insurance company. 48
86	82		(9) "Captive insurance company" means any (A) pure captive 49
87	83		insurance company, agency captive insurance company, association 50
88	84		captive insurance company, industrial insured captive insurance 51
89	85		company, risk retention group, sponsored captive insurance company 52
90	86		or special purpose financial captive insurance company that is 53
91	87		domiciled in this state and formed or licensed under the provisions of 54
92	88		sections 38a-91aa to 38a-91tt, inclusive, [or] as amended by this act, (B) 55
93	89		branch captive insurance company, or (C) foreign branch captive 56
94	90		insurance company. 57
95	91		(10) "Ceding insurer" means an insurance company, approved by 58
96	92		the commissioner and licensed or otherwise authorized to transact the 59
97	93		business of insurance or reinsurance in its state or country of domicile, 60
98	94		that cedes risk to a special purpose financial captive insurance 61
99	95		company pursuant to a reinsurance contract. 62
100	96		(11) "Commissioner" means the Insurance Commissioner. 63
101	97		(12) "Controlled unaffiliated business" means any person: 64
102	98		(A) Who, (i) in the case of a pure captive insurance company, is not 65
103	99		in the corporate system of a parent and the parent's affiliated 66
104	100		companies, or (ii) in the case of an industrial insured captive insurance 67
105	101		company, is not in the corporate system of an industrial insured and 68
106	102		the industrial insured's affiliated companies; 69
107		-	(B) Who, (i) in the case of a pure captive insurance company, has an 70 Raised Bill No. 908
	103	+	(B) Who, (i) in the case of a pure captive insurance company, has an 70
	104	+	existing contractual relationship with a parent or one of the parent's 71
	105	+	affiliated companies, or (ii) in the case of an industrial insured captive 72 Raised Bill No. 908
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114		-	~~existing contractual relationship with a parent or one~~ of ~~the parent's 71~~
115		-	~~affiliated companies, or (ii) in the case of an industrial insured captive 72~~
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	110	+
116	111		insurance company, has an existing contractual relationship with an 73
117	112		industrial insured or one of the industrial insured's affiliated 74
118	113		companies; and 75
119	114		(C) Whose risks are managed by a pure captive insurance company 76
120	115		or an industrial insured captive insurance company, as applicable, in 77
121	116		accordance with section 38a-91qq. 78
122	117		(13) "Excess workers' compensation insurance" means, in the case of 79
123	118		an employer that has insured or self-insured its workers' compensation 80
124	119		risks in accordance with applicable state or federal law, insurance in 81
125	120		excess of a specified per-incident or aggregate limit established by the 82
126	121		commissioner. 83
127	122		(14) "Foreign branch business" means any insurance business 84
128	123		transacted in this state by a foreign branch captive insurance company. 85
129	124		(15) "Foreign branch captive insurance company" means any alien 86
130	125		captive insurance company that is (A) licensed by the commissioner to 87
131	126		transact foreign branch business in this state through a business unit 88
132	127		with a principal place of business in this state, and (B) not otherwise 89
133	128		licensed by the commissioner to transact the business of insurance in 90
134	129		this state. 91
135	130		(16) "Foreign branch operations" means any business operations in 92
136	131		this state of a foreign branch captive insurance company. 93
137	132		[(14)] (17) "Incorporated protected cell" means a protected cell that is 94
138	133		established as a corporation or a limited liability company, separate 95
139	134		from the sponsored captive insurance company with which it has 96
140	135		entered into a participant contract. 97
141	136		[(15)] (18) "Industrial insured" means an insured: 98
142		-	(A) Who procures the insurance of any risk or risks by use of the 99 Raised Bill No. 908
	137	+	(A) Who procures the insurance of any risk or risks by use of the 99
	138	+	services of a full-time employee acting as an insurance manager or 100
	139	+	buyer; 101 Raised Bill No. 908
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149		-	~~services~~ of ~~a full-time employee acting as an insurance manager or 100~~
150		-	~~buyer; 101~~
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151	145		(B) Whose aggregate annual premiums for insurance on all risks 102
152	146		total at least twenty-five thousand dollars; and 103
153	147		(C) Who has at least twenty-five full-time employees. 104
154	148		[(16)] (19) "Industrial insured captive insurance company" means 105
155	149		any company that insures risks of the industrial insureds that comprise 106
156	150		an industrial insured group, and includes a company that also insures 107
157	151		risks of such industrial insureds' affiliated companies. 108
158	152		[(17)] (20) "Industrial insured group" means any group of industrial 109
159	153		insureds that collectively: 110
160	154		(A) Directly or indirectly own, control or hold with power to vote all 111
161	155		of the outstanding voting securities or other voting interests of an 112
162	156		industrial insured captive insurance company incorporated as a stock 113
163	157		insurer; 114
164	158		(B) Have complete voting control over an industrial insured captive 115
165	159		insurance company incorporated as a mutual corporation or formed as 116
166	160		a limited liability company; or 117
167	161		(C) Constitute all of the subscribers of an industrial insured captive 118
168	162		insurance company formed as a reciprocal insurer. 119
169	163		[(18)] (21) "Insurance securitization" or "securitization" means a 120
170	164		transaction or a group of related transactions, which may include 121
171	165		capital market offerings, that are effected through related risk transfer 122
172	166		instruments and facilitating administrative agreements, in which all or 123
173	167		part of the result of such transaction is used to fund a special purpose 124
174	168		financial captive insurance company's obligations under a reinsurance 125
175	169		contract with a ceding insurer and by which: 126
176		-	(A) A special purpose financial captive insurance company directly 127 Raised Bill No. 908
	170	+	(A) A special purpose financial captive insurance company directly 127
	171	+	or indirectly obtains proceeds through the issuance of securities by 128
	172	+	such company or any other person; or 129
	173	+	(B) A person provides, for the benefit of a special purpose financial 130 Raised Bill No. 908
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183		-	or indirectly obtains proceeds through the issuance of securities by 128
184		-	such company or any other person; or 129
185		-	(B) A person provides, for the benefit of a special purpose financial 130
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	178	+
186	179		captive insurance company, one or more letters of credit or other assets 131
187	180		that the commissioner has authorized such company to treat as 132
188	181		admitted assets for purposes of its annual report. "Insurance 133
189	182		securitization" or "securitization" does not include the issuance of a 134
190	183		letter of credit for the benefit of the commissioner to satisfy all or part 135
191	184		of a special purpose financial captive insurance company's capital and 136
192	185		surplus requirements under section 38a-91dd, as amended by this act. 137
193	186		[(19)] (22) "Member organization" means any individual, 138
194	187		corporation, limited liability company, partnership, association or 139
195	188		other entity that belongs to an association. 140
196	189		[(20)] (23) "Mutual corporation" means a corporation organized 141
197	190		without stockholders and includes a nonprofit corporation with 142
198	191		members. 143
199	192		[(21)] (24) "Parent" means any individual, corporation, limited 144
200	193		liability company, partnership or other entity that directly or indirectly 145
201	194		owns, controls or holds with power to vote more than fifty per cent of 146
202	195		the outstanding voting: 147
203	196		(A) Securities of a pure captive insurance company organized as a 148
204	197		stock insurer; or 149
205	198		(B) Membership interests of a pure captive insurance company 150
206	199		organized as a nonprofit corporation or as a limited liability company. 151
207	200		[(22)] (25) "Participant" means any association, corporation, limited 152
208	201		liability company, partnership, trust or other entity, and any affiliated 153
209	202		company thereof, that is insured by a sponsored captive insurance 154
210	203		company pursuant to a participant contract. 155
211		-	[(23)] (26) "Participant contract" means a contract entered into by a 156 Raised Bill No. 908
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	204	+	[(23)] (26) "Participant contract" means a contract entered into by a 156
218	205		sponsored captive insurance company and a participant by which the 157
219	206		sponsored captive insurance company insures the risks of the 158
220	207		participant and limits the losses of each such participant to its pro rata 159
221		-	share of the assets of one or more protected cells identified in such 160
	208	+	share of the assets of one or more protected cells identified in such 160 Raised Bill No. 908
	209	+
	210	+
	211	+
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222	214		participant contract. 161
223	215		[(24)] (27) "Protected cell" means a separate account established by a 162
224	216		sponsored captive insurance company, in which assets are maintained 163
225	217		for one or more participants in accordance with the terms of one or 164
226	218		more participant contracts to fund the liability of the sponsored 165
227	219		captive insurance company assumed on behalf of such participants as 166
228	220		set forth in such participant contracts. 167
229	221		[(25)] (28) "Pure captive insurance company" means any company 168
230	222		that insures risks of its parent and affiliated companies or controlled 169
231	223		unaffiliated business. 170
232	224		[(26)] (29) "Reinsurance contract" means a contract entered into by a 171
233	225		special purpose financial captive insurance company and a ceding 172
234	226		insurer by which the special purpose financial captive insurance 173
235	227		company agrees to provide reinsurance to the ceding insurer for risks 174
236	228		associated with the ceding insurer's insurance or reinsurance business. 175
237	229		[(27)] (30) "Risk retention group" means a captive insurance 176
238	230		company organized under the laws of this state pursuant to the federal 177
239	231		Liability Risk Retention Act of 1986, 15 USC 3901 et seq., as amended 178
240	232		from time to time, as a stock insurer or mutual corporation, a 179
241	233		reciprocal or other limited liability entity. 180
242	234		[(28)] (31) "Security" has the same meaning as provided in section 181
243	235		36b-3 and includes any form of debt obligation, equity, surplus 182
244	236		certificate, surplus note, funding agreement, derivative or other 183
245	237		financial instrument that the commissioner designates as a security for 184
246	238		purposes of sections 38a-91aa to 38a-91tt, inclusive, as amended by this 185
247	239		act. 186
248		-	[(29)] (32) "Special purpose financial captive insurance company" 187 Raised Bill No. 908
	240	+	[(29)] (32) "Special purpose financial captive insurance company" 187
	241	+	means a company that is licensed by the commissioner in accordance 188
	242	+	with section 38a-91bb, as amended by this act. 189
	243	+	[(30)] (33) "Special purpose financial captive insurance company 190 Raised Bill No. 908
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255		-	means a company that is licensed by the commissioner in accordance 188
256		-	with section 38a-91bb, as amended by this act. 189
257		-	[(30)] (33) "Special purpose financial captive insurance company 190
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	248	+
258	249		security" means a security issued by (A) a special purpose financial 191
259	250		captive insurance company, or (B) a third party, the proceeds of which 192
260	251		are obtained directly or indirectly by a special purpose financial 193
261	252		captive insurance company. 194
262	253		[(31)] (34) "Sponsor" means any association, corporation, limited 195
263	254		liability company, partnership, trust or other entity that is approved by 196
264	255		the commissioner to organize and operate a sponsored captive 197
265	256		insurance company and to provide all or part of the required 198
266	257		unimpaired paid-in capital and surplus. 199
267	258		[(32)] (35) "Sponsored captive insurance company" means a captive 200
268	259		insurance company: 201
269	260		(A) In which the minimum required unimpaired paid-in capital and 202
270	261		surplus are provided by one or more sponsors; 203
271	262		(B) That insures risks of its participants only through separate 204
272	263		participant contracts; and 205
273	264		(C) That funds its liability to each participant through one or more 206
274	265		protected cells and segregates the assets of each protected cell from the 207
275	266		assets of other protected cells and from the assets of the sponsored 208
276	267		captive insurance company's general account. 209
277	268		[(33)] (36) "Surplus note" means an unsecured subordinated debt 210
278	269		obligation possessing characteristics consistent with the National 211
279	270		Association of Insurance Commissioners Statement of Statutory 212
280	271		Accounting Principles No. 41, as amended from time to time, and as 213
281	272		modified or supplemented by the commissioner. 214
282	273		Sec. 2. Subsection (e) of section 38a-91bb of the general statutes is 215
283		-	repealed and the following is substituted in lieu thereof (Effective July 216 Raised Bill No. 908
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	274	+	repealed and the following is substituted in lieu thereof (Effective July 216
290	275		1, 2019): 217
291	276		(e) (1) If the commissioner finds that the documents and statements 218
292	277		that a captive insurance company, other than a special purpose 219
293		-	financial captive insurance company, has filed comply with the 220
	278	+	financial captive insurance company, has filed comply with the 220 Raised Bill No. 908
	279	+
	280	+
	281	+
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	283	+
294	284		provisions of sections 38a-91aa to 38a-91tt, inclusive, as amended by 221
295	285		this act, the commissioner may grant a license authorizing the 222
296	286		company to do insurance business in this state until April first 223
297	287		thereafter. The captive insurance company may apply to renew such 224
298	288		license on such forms as the commissioner prescribes. 225
299	289		(2) (A) The commissioner may grant a license authorizing a special 226
300	290		purpose financial captive insurance company to do reinsurance 227
301	291		business in this state until April first thereafter upon the 228
302	292		commissioner's finding that (i) the proposed plan of operation 229
303	293		provides for a reasonable and expected successful operation, (ii) the 230
304	294		terms of the reinsurance contract and related transactions comply with 231
305	295		sections 38a-91aa to 38a-91tt, inclusive, as amended by this act, (iii) the 232
306	296		proposed plan of operation is not hazardous to any ceding insurer, and 233
307	297		(iv) the insurance regulator of the state of domicile of each ceding 234
308	298		insurer has notified the commissioner in writing or has otherwise 235
309	299		provided assurance satisfactory to the commissioner that such 236
310	300		regulator has approved or has not disapproved the transaction, 237
311	301		provided the commissioner shall not be precluded from issuing a 238
312	302		license to a special purpose financial captive insurance company if 239
313	303		such regulator has not responded with respect to all or any part of the 240
314	304		transaction. 241
315	305		(B) In conjunction with granting such license, the commissioner may 242
316	306		issue an order to the special purpose financial captive insurance 243
317	307		company of any additional provisions, terms or conditions regarding 244
318	308		the organization, licensing or operation of such company that are not 245
319	309		inconsistent with the provisions of this chapter and are deemed 246
320	310		appropriate by the commissioner. 247
321		-	(3) The commissioner shall not grant a license to a branch captive 248 Raised Bill No. 908
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	311	+	(3) The commissioner shall not grant a license to a branch captive 248
328	312		insurance company unless the alien captive insurance company grants 249
329	313		the commissioner authority to examine the alien captive insurance 250
330	314		company in the jurisdiction in which the alien captive insurance 251
331		-	company is formed. 252
	315	+	company is formed. 252 Raised Bill No. 908
	316	+
	317	+
	318	+
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	320	+
332	321		(4) The commissioner shall not grant a license to a foreign branch 253
333	322		captive insurance company unless the foreign branch captive 254
334	323		insurance company or alien captive insurance company grants the 255
335	324		commissioner authority to examine the affairs of such foreign branch 256
336	325		captive insurance company or alien captive insurance company in the 257
337	326		jurisdiction in which such foreign branch captive insurance company 258
338	327		or alien captive insurance company was formed, operates or maintains 259
339	328		books and records. 260
340	329		Sec. 3. Section 38a-91dd of the general statutes is repealed and the 261
341	330		following is substituted in lieu thereof (Effective July 1, 2019): 262
342	331		(a) (1) The [Insurance Commissioner] commissioner shall not issue a 263
343	332		license to a captive insurance company or allow the company to retain 264
344	333		such license unless the company has and maintains unimpaired paid-265
345	334		in capital and surplus of: 266
346	335		(A) In the case of a pure captive insurance company, not less than 267
347	336		two hundred fifty thousand dollars; 268
348	337		(B) In the case of an association captive insurance company, not less 269
349	338		than five hundred thousand dollars; 270
350	339		(C) In the case of an industrial insured captive insurance company, 271
351	340		not less than five hundred thousand dollars; 272
352	341		(D) In the case of a risk retention group, not less than one million 273
353	342		dollars; 274
354	343		(E) In the case of a sponsored captive insurance company, not less 275
355		-	than two hundred twenty-five thousand dollars; 276 Raised Bill No. 908
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	344	+	than two hundred twenty-five thousand dollars; 276
362	345		(F) In the case of a special purpose financial captive insurance 277
363	346		company, not less than two hundred fifty thousand dollars; 278
364	347		(G) In the case of a sponsored captive insurance company licensed 279
365	348		as a special purpose financial captive insurance company, not less than 280
366		-	five hundred thousand dollars; and 281
	349	+	five hundred thousand dollars; and 281 Raised Bill No. 908
	350	+
	351	+
	352	+
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	354	+
367	355		(H) In the case of an agency captive insurance company, not less 282
368	356		than five hundred thousand dollars. 283
369	357		(2) (A) The [Insurance Commissioner] commissioner shall not issue 284
370	358		a license to a branch captive insurance company or allow the company 285
371	359		to retain such license unless the company has and maintains, as 286
372	360		security for the payment of liabilities attributable to the branch 287
373	361		operations: 288
374	362		(i) Not less than two hundred fifty thousand dollars; and 289
375	363		(ii) Reserves on such insurance policies or such reinsurance 290
376	364		contracts as may be issued or assumed by the branch captive insurance 291
377	365		company through its branch operations, including reserves for losses, 292
378	366		allocated loss adjustment expenses, incurred but not reported losses 293
379	367		and unearned premiums with regard to business written through the 294
380	368		branch operations. The commissioner may permit a branch captive 295
381	369		insurance company to credit against any such reserves any security for 296
382	370		loss reserves that the branch captive insurance company posts with a 297
383	371		ceding insurer or is posted by a reinsurer with the branch captive 298
384	372		insurance company, so long as such security remains posted. 299
385	373		(B) The amounts required under subparagraph (A) of this 300
386	374		subdivision may be held, with the prior approval of the commissioner, 301
387	375		in the form of (i) a trust formed under a trust agreement and funded 302
388	376		by assets acceptable to the commissioner, (ii) an irrevocable letter of 303
389	377		credit issued or confirmed by a bank approved by the commissioner, 304
390	378		(iii) with respect to the amount required under subparagraph (A)(i) of 305
391	379		this subdivision only, cash on deposit with the commissioner, or (iv) 306
392		-	any combination thereof. 307 Raised Bill No. 908
393		-
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398		-
	380	+	any combination thereof. 307
399	381		(3) (A) The commissioner shall not issue a license to a foreign 308
400	382		branch captive insurance company or allow the company to retain 309
401	383		such license unless the company has and maintains, as security for the 310
402	384		payment of liabilities attributable to the foreign branch operations: 311
403		-	(i) Not less than two hundred fifty thousand dollars; and 312
	385	+	(i) Not less than two hundred fifty thousand dollars; and 312 Raised Bill No. 908
	386	+
	387	+
	388	+
	389	+	LCO No. 4519 12 of 17
	390	+
404	391		(ii) Reserves on such insurance policies or such reinsurance 313
405	392		contracts as may be issued or assumed by the foreign branch captive 314
406	393		insurance company through its foreign branch operations, including 315
407	394		reserves for losses, allocated loss adjustment expenses, incurred but 316
408	395		not reported losses and unearned premiums with regard to business 317
409	396		written through the foreign branch operations. The commissioner may 318
410	397		permit a foreign branch captive insurance company to credit against 319
411	398		any such reserves any assets belonging to (I) the company that are held 320
412	399		in trust for, or otherwise segregated or controlled by, a ceding insurer 321
413	400		that secure the reinsurance obligations of such company to the ceding 322
414	401		insurer, or (II) a reinsurer that are held in trust for, or otherwise under 323
415	402		the control of, the company and secure the reinsurance obligations of 324
416	403		the reinsurer to such company. 325
417	404		(B) The amounts required under subparagraph (A) of this 326
418	405		subdivision may be held, with the prior approval of the commissioner, 327
419	406		in the form of (i) a trust formed under a trust agreement and funded 328
420	407		by assets acceptable to the commissioner, (ii) an irrevocable letter of 329
421	408		credit issued or confirmed by a bank approved by the commissioner, 330
422	409		or (iii) any combination thereof. 331
423	410		(C) The commissioner may exempt a foreign branch captive 332
424	411		insurance company from the requirements established in this 333
425	412		subdivision, provided the commissioner determines, in the 334
426	413		commissioner's discretion, that the company is financially stable. 335
427	414		(b) The commissioner may adopt regulations, in accordance with 336
428	415		chapter 54, to establish additional capital and surplus requirements 337
429		-	based upon the type, volume and nature of insurance business 338 Raised Bill No. 908
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435		-
	416	+	based upon the type, volume and nature of insurance business 338
436	417		transacted. 339
437	418		(c) Notwithstanding any other provision of this section, the 340
438	419		commissioner shall have the discretion to allow a captive insurance 341
439	420		company, other than a captive insurance company organized as a risk 342
440	421		retention group, to maintain less than the required unimpaired paid-in 343
441		-	capital and surplus set forth in subsection (a) of this section. The 344
	422	+	capital and surplus set forth in subsection (a) of this section. The 344 Raised Bill No. 908
	423	+
	424	+
	425	+
	426	+	LCO No. 4519 13 of 17
	427	+
442	428		commissioner shall consider the type, volume and nature of the 345
443	429		insurance or reinsurance business transacted by such a captive 346
444	430		insurance company in establishing the amount of unimpaired paid-in 347
445	431		capital and surplus the company is required to maintain. 348
446	432		(d) Except as specified in [subdivision (2)] subdivisions (2) and (3) of 349
447	433		subsection (a) of this section, capital and surplus may be in the form of 350
448	434		cash or an irrevocable letter of credit issued by a bank approved by the 351
449	435		commissioner. 352
450	436		Sec. 4. Subsection (e) of section 38a-91ff of the general statutes is 353
451	437		repealed and the following is substituted in lieu thereof (Effective July 354
452	438		1, 2019): 355
453	439		(e) (1) No branch captive insurance company shall do any insurance 356
454	440		business in this state unless it maintains a principal place of business 357
455	441		for its branch operations in this state. 358
456	442		(2) No foreign branch captive insurance company shall do any 359
457	443		insurance business in this state unless it operates through a business 360
458	444		unit that maintains a principal place of business for such company's 361
459	445		foreign branch operations in this state. 362
460	446		Sec. 5. Subdivision (1) of subsection (b) of section 38a-91gg of the 363
461	447		general statutes is repealed and the following is substituted in lieu 364
462	448		thereof (Effective July 1, 2019): 365
463	449		(b) (1) (A) Prior to March first of each year and, in the case of pure 366
464	450		captive insurance companies and industrial insured captive insurance 367
465		-	companies, prior to March fifteenth of each year, each captive 368 Raised Bill No. 908
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471		-
	451	+	companies, prior to March fifteenth of each year, each captive 368
472	452		insurance company, other than a branch captive insurance company or 369
473	453		a foreign branch captive insurance company that is required to submit 370
474	454		reports or statements in the foreign branch captive insurance 371
475	455		company's domiciliary jurisdiction, shall submit to the [Insurance 372
476	456		Commissioner] commissioner a report of its financial condition 373
477	457		verified by oath of two of its executive officers. The commissioner shall 374
478		-	establish the form and content of the annual report to be filed by 375
	458	+	establish the form and content of the annual report to be filed by 375 Raised Bill No. 908
	459	+
	460	+
	461	+
	462	+	LCO No. 4519 14 of 17
	463	+
479	464		special purpose captive insurance companies. 376
480	465		(B) In the case of branch captive insurance companies, prior to 377
481	466		March first of each year, each such company shall submit to the 378
482	467		commissioner a copy of all reports and statements required to be filed 379
483	468		under the laws of the jurisdiction in which the alien captive insurance 380
484	469		company is formed. Such reports and statements shall be verified by 381
485	470		oath of two of its executive officers. If the commissioner is satisfied 382
486	471		that the annual report filed by the alien captive insurance company in 383
487	472		its domiciliary jurisdiction provides adequate information concerning 384
488	473		the financial condition of the alien captive insurance company, the 385
489	474		commissioner may waive the requirement for completion of the 386
490	475		captive annual statement for business written in the alien jurisdiction. 387
491	476		(C) In the case of a foreign branch captive insurance company that is 388
492	477		required to submit reports and statements in its domiciliary 389
493	478		jurisdiction, the company shall submit to the commissioner a copy of 390
494	479		all reports and statements required to be filed under the laws of its 391
495	480		domiciliary jurisdiction or the domiciliary jurisdiction of the alien 392
496	481		captive insurance company. Such reports and statements shall be 393
497	482		verified by oath of two of the executive officers of such foreign branch 394
498	483		captive insurance company, and be submitted to the commissioner on 395
499	484		the same day that such reports and statements are filed with the 396
500	485		domiciliary jurisdiction of such foreign branch captive insurance 397
501	486		company or alien captive insurance company. If the commissioner is 398
502	487		not satisfied that the annual report filed by the foreign branch captive 399
503	488		insurance company or alien captive insurance company in the 400
504		-	domiciliary jurisdiction of such foreign branch captive insurance 401 Raised Bill No. 908
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510		-
	489	+	domiciliary jurisdiction of such foreign branch captive insurance 401
511	490		company or alien captive insurance company provides adequate 402
512	491		information concerning the financial condition of such foreign branch 403
513	492		captive insurance company, such foreign branch captive insurance 404
514	493		company shall, at a time prescribed by the commissioner, submit to the 405
515	494		commissioner a report, in a form and manner prescribed by the 406
516	495		commissioner, that provides the commissioner with adequate 407
517	496		information concerning the financial condition of such foreign branch 408
518		-	captive insurance company. 409
	497	+	captive insurance company. 409 Raised Bill No. 908
	498	+
	499	+
	500	+
	501	+	LCO No. 4519 15 of 17
	502	+
519	503		Sec. 6. Subsection (a) of section 38a-91hh of the general statutes is 410
520	504		repealed and the following is substituted in lieu thereof (Effective July 411
521	505		1, 2019): 412
522	506		(a) (1) At least once every three years, and additionally whenever 413
523	507		the Insurance Commissioner determines it to be prudent, the 414
524	508		commissioner or the commissioner's designee shall visit each captive 415
525	509		insurance company and thoroughly inspect and examine its affairs to 416
526	510		ascertain its financial condition, its ability to fulfill its obligations and 417
527	511		whether it has complied with the provisions of sections 38a-91aa to 418
528	512		38a-91tt, inclusive, as amended by this act, and any applicable 419
529	513		provisions of this title. The commissioner may extend the three-year 420
530	514		period to five years, provided a captive insurance company is subject 421
531	515		to a comprehensive annual audit during such period by independent 422
532	516		auditors approved by the commissioner and of a scope satisfactory to 423
533	517		the commissioner. 424
534	518		(2) The examination of a branch captive insurance company 425
535	519		pursuant to this section shall be of branch business and branch 426
536	520		operations only, as long as the branch captive insurance company 427
537	521		provides annually to the commissioner a certificate of compliance or its 428
538	522		equivalent, issued by or filed with the licensing authority of the 429
539	523		jurisdiction in which the branch captive insurance company is formed, 430
540	524		and demonstrates to the commissioner's satisfaction that it is operating 431
541	525		in sound financial condition in accordance with all applicable laws and 432
542		-	regulations of such jurisdiction. 433 Raised Bill No. 908
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548		-
	526	+	regulations of such jurisdiction. 433
549	527		(3) The examination of a foreign branch captive insurance company 434
550	528		pursuant to this section shall be of foreign branch business and foreign 435
551	529		branch operations only, as long as the foreign branch captive insurance 436
552	530		company provides annually to the commissioner a certificate of 437
553	531		compliance or its equivalent, issued by or filed with the domiciliary 438
554	532		jurisdiction of the foreign branch captive insurance company or alien 439
555	533		captive insurance company, and demonstrates to the commissioner's 440
556	534		satisfaction that such foreign branch captive insurance company is 441
557		-	operating in sound financial condition in accordance with all 442
	535	+	operating in sound financial condition in accordance with all 442 Raised Bill No. 908
	536	+
	537	+
	538	+
	539	+	LCO No. 4519 16 of 17
	540	+
558	541		applicable laws and regulations of such jurisdiction. 443
559	542		Sec. 7. Subdivision (1) of subsection (c) of section 38a-91nn of the 444
560	543		general statutes is repealed and the following is substituted in lieu 445
561	544		thereof (Effective July 1, 2019): 446
562	545		(c) (1) The annual minimum aggregate tax to be paid by a captive 447
563	546		insurance company, other than a sponsored captive insurance 448
564	547		company, calculated under subsection (a) of this section shall be seven 449
565	548		thousand five hundred dollars, and the annual maximum aggregate 450
566	549		tax calculated under subsections (a) and (b) of this section shall be two 451
567	550		hundred thousand dollars. In the case of a branch captive insurance 452
568	551		company, the annual aggregate tax to be paid by such company shall 453
569	552		apply only to the branch business of such company. In the case of a 454
570	553		foreign branch captive insurance company, the annual aggregate tax to 455
571	554		be paid by such company shall apply only to the foreign branch 456
572	555		business of such company. 457
573	556		Sec. 8. Subparagraph (A) of subdivision (2) of subsection (g) of 458
574	557		section 38a-91ss of the general statutes is repealed and the following is 459
575	558		substituted in lieu thereof (Effective July 1, 2019): 460
576	559		(A) Proceeds from a special purpose financial captive insurance 461
577	560		company securitization or letters of credit or other assets described in 462
578		-	subdivision [(18)] (21) of section 38a-91aa, as amended by this act; 463 Raised Bill No. 908
579		-
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584		-
	561	+	subdivision [(18)] (21) of section 38a-91aa, as amended by this act; 463
585	562		This act shall take effect as follows and shall amend the following
586	563		sections:
587	564
588	565		Section 1 July 1, 2019 38a-91aa
589	566		Sec. 2 July 1, 2019 38a-91bb(e)
590	567		Sec. 3 July 1, 2019 38a-91dd
591	568		Sec. 4 July 1, 2019 38a-91ff(e)
592	569		Sec. 5 July 1, 2019 38a-91gg(b)(1)
593	570		Sec. 6 July 1, 2019 38a-91hh(a)
594	571		Sec. 7 July 1, 2019 38a-91nn(c)(1)
595	572		Sec. 8 July 1, 2019 38a-91ss(g)(2)(A)
	573	+	Raised Bill No. 908
596	574
597		-	INS Joint Favorable
	575	+
	576	+
	577	+	LCO No. 4519 17 of 17
	578	+
	579	+	Statement of Purpose:
	580	+	To authorize foreign branch captive insurance companies.
	581	+	[Proposed deletions are enclosed in brackets. Proposed additions are indicated by underline,
	582	+	except that when the entire text of a bill or resolution or a section of a bill or resolution is new, it is
	583	+	not underlined.]
598	584