This subchapter provides for the creation of Special Purpose Financial Captives (SPFCs) exclusively to facilitate the securitization of one or more risks, as a means of accessing alternative sources of capital and achieving the benefits of securitization. SPFCs are created for the limited purpose of entering into an SPFC contract and insurance securitization transactions and […]
For purposes of this subchapter, the following definitions apply in addition to the definitions set out in Subchapter I of this chapter: (a) “Contested case” means a proceeding in which the legal rights, duties, obligations, or privileges of a party are required by law to be determined by the Court after an opportunity for hearing. […]
(a) No provisions of title 22 other than those specifically referenced in this subchapter apply to an SPFC, and those provisions apply only as modified by this subchapter. If a conflict occurs between a provision of title 22 and a provision of this subchapter, the latter controls. (b) The SAM, by rule, regulation, or order, […]
(a) An SPFC, when permitted by its organizational documents, may apply to the SAM for a license to transact insurance or reinsurance business as authorized by this subchapter. An SPFC may insure or reinsure only the risks of its counterparty. An SPFC may purchase reinsurance to cede the risks assumed under the SPFC contract as […]
(a) An SPFC may be established as a stock corporation, limited liability company, mutual, partnership, trust or other form of organization approved by the SAM. (b) The SPFC’s organizational documents must limit the SPFC’s authority to transact the business of insurance or reinsurance to those activities the SPFC conducts to accomplish its purpose as expressed […]
(a) An SPFC initially shall possess and after that maintain minimum capitalization of not less than $250,000. All of the minimum initial capitalization must be in cash. All other funds of the SPFC in excess of its minimum initial capitalization must be in the form of cash, cash equivalent, or securities invested as provided in […]
(a) An SPFC may insure only the risks of a counter party. (b) An SPFC may not issue a contract for assumption of risk or indemnification of loss other than an SPFC contract. However, the SPFC may cede risks assumed through an SPFC contract to third party international reinsurers through the purchase of reinsurance or […]
(a) This section and section 6659 of this subchapter provide a basis for the creation and use of protected cells by an SPFC as a means of accessing alternative sources of capital, lowering formation and administrative expenses, and generally making insurance securitizations more efficient. (b) An SPFC may establish and maintain one or more protected […]
(a) (1) The creation of a protected cell does not create, with respect to that protected cell, a legal person separate from the SPFC. (2) Notwithstanding paragraph (1), a protected cell must have its own distinct name or designation that includes the words “protected cell”. The SPFC shall transfer all assets attributable to the protected […]
(a) An SPFC may issue securities, including surplus notes and other forms of financial instruments, subject to and in accordance with applicable law, its approved plan of operation, and its organizational documents. (b) An SPFC, in connection with the issuance of securities, may enter into and perform all of its obligations under any required contracts […]
An SPFC may enter into swap agreements, or other forms of asset management agreements, including guaranteed investment contracts, or other transactions that have the objective of leveling timing differences in funding of up-front or ongoing transaction expenses or managing asset, credit, or interest rate risk of the investments in the trust to ensure that the […]
(a) An SPFC, at any given time, may enter into and effectuate an SPFC contract with a counterparty, if the SPFC contract obligates the SPFC to indemnify the counterparty for losses and that contingent obligations of the SPFC under the SPFC contract are securitized through an SPFC insurance securitization and are funded and secured with […]
Securities issued by an SPFC pursuant to an insurance securitization may not be considered to be insurance or reinsurance contracts. An investor in these securities or a holder of these securities, by sole means of this investment or holding, may not be considered to be transacting the business of insurance in this Territory. The underwriter’s […]
In fulfilling its function, the SPFC must adhere to the following requirements and, to the extent of its powers, must ensure that contracts obligating other parties to perform certain functions incident to its operations are substantively and materially consistent with the following requirements and guidelines: (a) The assets of an SPFC must be preserved and […]
(a) Assets of the SPFC held in trust to secure obligations under the SPFC contract must at all times be held in: (1) cash and cash equivalents; (2) securities listed by the Securities Valuation Office of the NAIC and qualifying as admitted assets under statutory accounting convention in its state, territory of domicile; or (3) […]
(a) An SPFC may not declare or pay dividends in any form to its owners other than in accordance with the insurance securitization transaction agreements, and in no extent may the dividends decrease the capital of the SPFC below two hundred fifty thousand dollars, and, after giving effect to the dividends, the assets of the […]
(a) Any material change of the SPFC’s plan of operation pursuant to the section 6654 of this suchapter, whether or not through an SPFC protected cell, requires prior approval of the SAM, provided however: (1) if initially approved in the plan of operation, securities subsequently issued to continue the securitization activities of the SPFC either […]
(a) At least once every three years, and if the SAM determines it to be prudent, the SAM, or his designee, shall visit each SPFC and thoroughly inspect and examine its affairs to ascertain its financial condition, its ability to fulfill its obligations, and whether it has complied with this subchapter. The SAM upon application, […]
(a) At the cessation of business of an SPFC following termination or cancellation of an SPFC contract and the redemption of any related securities issued in connection with them, the authority granted by the SAM expires or, in the case of retiring and surviving protected cells, be modified, and the SPFC is no longer authorized […]
(a) An SPFC shall pay to the SAM by April 15 of each year, a tax at the rate of four tenths of one percent on the first $20,000,000 and three tenths of one percent on each dollar after the first $20,000,000, subject to a minimum annual tax of $5,000 and a maximum annual tax […]
