HF 2766

House
File
2766
-
Enrolled
House
File
2766
AN
ACT
RELATING
TO
CAPTIVE
INSURANCE
COMPANIES
AND
LIFE
CAPTIVE
REINSURANCE
COMPANIES,
AND
INCLUDING
CIVIL
PENALTIES.
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
Section
1.
Section
432.1,
Code
2026,
is
amended
by
adding
the
following
new
subsection:
NEW
SUBSECTION
.
7.
a.
A
tax
return
filed
under
this
section
shall
not
be
subject
to
inspection
under
chapter
22.
It
shall
be
unlawful
for
any
present
or
former
officer
or
employee
of
the
state
to
willfully
or
recklessly
publish
any
tax
return
filed
under
this
section.
A
person
who
violates
this
paragraph
shall
be
guilty
of
a
serious
misdemeanor
and,
in
addition
to
any
other
penalty,
shall
be
dismissed
from
state
office
or
discharged
from
state
employment.
b.
This
section
shall
not
be
construed
to
prohibit
the
department
of
revenue
from
turning
over
information
and
tax
returns
in
the
department
of
revenue’s
possession
pursuant
to
this
subsection
to
duly
authorized
officers
of
the
United
States,
or
tax
officials
of
other
states,
pursuant
to
an
agreement
between
the
commissioner
of
insurance
and
any
of
the
following:
(1)
The
secretary
of
the
treasury
of
the
United
States,
or
the
secretary’s
delegate.
(2)
The
commissioner
of
insurance
of
another
state.
Sec.
2.
Section
432.1A,
Code
2026,
is
amended
by
adding
the
following
new
subsection:
House
File
2766,
p.
2
NEW
SUBSECTION
.
9.
a.
A
tax
return
filed
under
this
section
shall
not
be
subject
to
inspection
under
chapter
22.
It
shall
be
unlawful
for
any
present
or
former
officer
or
employee
of
the
state
to
willfully
or
recklessly
publish
any
tax
return
filed
under
this
section.
A
person
who
violates
this
paragraph
shall
be
guilty
of
a
serious
misdemeanor
and,
in
addition
to
any
other
penalty,
shall
be
dismissed
from
state
office
or
discharged
from
state
employment.
b.
This
section
shall
not
be
construed
to
prohibit
the
department
of
revenue
from
turning
over
information
and
tax
returns
in
the
department’s
possession
pursuant
to
this
subsection
to
duly
authorized
officers
of
the
United
States,
or
tax
officials
of
other
states,
pursuant
to
an
agreement
between
the
commissioner
of
insurance
and
any
of
the
following:
(1)
The
secretary
of
the
treasury
of
the
United
States,
or
the
secretary’s
delegate.
(2)
The
commissioner
of
insurance
of
another
state.
Sec.
3.
Section
490.905,
subsection
1,
Code
2026,
is
amended
to
read
as
follows:
1.
The
secretary
of
state,
upon
a
corporation
complying
with
this
section
and
upon
the
filing
of
articles
of
incorporation
and
upon
receipt
of
the
fees
as
provided
in
this
chapter
,
shall
issue
an
acknowledgment
of
receipt
of
document
as
of
the
date
of
the
filing
of
the
articles
of
incorporation
with
the
secretary
of
state.
The
acknowledgment
of
receipt
of
document
shall
state
on
its
face
that
it
is
issued
in
accordance
with
this
section
.
The
secretary
of
state
shall
then
notify
the
appropriate
officer
of
the
state
or
country
of
the
corporation’s
last
domicile
that
the
corporation
is
now
a
domestic
corporation
domiciled
in
this
state.
This
section
applies
to
life
insurance
companies,
and
to
insurance
companies
doing
business
under
chapter
515
,
and
to
captive
companies
doing
business
under
chapter
521J
.
Sec.
4.
Section
521J.1,
unnumbered
paragraph
1,
Code
2026,
is
amended
to
read
as
follows:
As
used
in
this
chapter
subchapter
,
unless
the
context
otherwise
requires:
Sec.
5.
Section
521J.1,
subsections
2,
6,
7,
8,
and
9,
Code
2026,
are
amended
to
read
as
follows:
House
File
2766,
p.
3
2.
“Alien
captive
company”
means
a
captive
company
formed
under
the
laws
of
an
alien
jurisdiction
any
country
except
the
United
States
that
imposes
statutory
or
regulatory
standards
in
a
form
acceptable
to
the
commissioner
on
companies
transacting
the
business
of
insurance
in
such
jurisdiction.
6.
“Business
entity”
means
a
corporation,
a
limited
liability
company,
or
other
legal
entity
formed
by
an
organizational
document
legal
entity
permitted
under
Iowa
law
.
“Business
entity”
does
not
include
a
sole
proprietorship.
7.
“Captive
company”
means
any
pure
captive
company,
protected
cell
captive
company,
special
purpose
captive
company,
or
industrial
insured
captive
company
formed
or
authorized
under
this
chapter
subchapter
.
“Captive
company”
does
not
include
a
life
captive
reinsurance
company
as
defined
under
section
521J.101.
8.
“Captive
reinsurance
company”
means
a
captive
insurance
company
in
this
state,
as
authorized
by
the
commissioner
by
rule
under
this
subchapter
,
that
reinsures
the
risk
ceded
by
any
other
insurer.
“Captive
reinsurance
company”
does
not
include
a
life
captive
reinsurance
company
as
defined
under
section
521J.101.
9.
“Captive
risk
retention
group”
means
a
captive
insurance
risk
retention
group
formed
under
this
chapter
subchapter
and
that
is
subject
to
chapter
515E
.
Sec.
6.
Section
521J.1,
Code
2026,
is
amended
by
adding
the
following
new
subsection:
NEW
SUBSECTION
.
13A.
“Foreign
captive
company”
means
a
captive
company
formed
and
licensed
under
the
laws
of
any
jurisdiction
within
the
United
States
except
this
state.
Sec.
7.
Section
521J.1,
subsection
22,
Code
2026,
is
amended
to
read
as
follows:
22.
“Protected
cell”
means
a
separate
account
established
by
a
protected
cell
captive
company
formed
or
authorized
under
this
chapter
subchapter
in
which
an
identified
pool
of
assets
and
liabilities
are
segregated
and
insulated,
as
provided
in
section
521J.17
,
from
the
remainder
of
the
protected
cell
captive
company’s
assets
and
liabilities
in
accordance
with
the
terms
of
one
or
more
participant
contracts
to
fund
the
liability
of
the
protected
cell
captive
company
with
respect
to
House
File
2766,
p.
4
the
participants.
Sec.
8.
Section
521J.1,
subsection
24,
paragraph
b,
Code
2026,
is
amended
to
read
as
follows:
b.
The
company
is
formed
or
authorized
under
this
chapter
subchapter
.
Sec.
9.
Section
521J.1,
subsection
31,
Code
2026,
is
amended
to
read
as
follows:
31.
“Special
purpose
captive
company”
means
a
captive
company
that
is
formed
or
authorized
under
this
chapter
subchapter
that
does
not
meet
the
definition
of
any
other
type
of
captive
company
as
defined
in
this
section
subchapter
,
or
that
is
formed
by,
on
behalf
of,
or
for
the
benefit
of
a
political
subdivision
of
this
state
.
“Special
purpose
captive
company”
may
include
a
reciprocal
insurer.
“Special
purpose
captive
company”
does
not
include
a
life
captive
reinsurance
company
as
defined
under
section
521J.101.
Sec.
10.
Section
521J.2,
subsection
1,
unnumbered
paragraph
1,
Code
2026,
is
amended
to
read
as
follows:
If
permitted
by
its
organizational
document,
a
captive
company
may
apply
to
the
commissioner
for
a
certificate
of
authority
to
provide
property
insurance,
casualty
insurance,
life
insurance,
disability
income
insurance,
surety
insurance,
marine
insurance,
health
insurance,
or
a
group
health
plan,
or
the
ability
to
accept
or
transfer
risk
by
means
of
a
parametric
contract,
with
the
following
exceptions:
Sec.
11.
Section
521J.2,
subsection
2,
Code
2026,
is
amended
by
adding
the
following
new
paragraph:
NEW
PARAGRAPH
.
e.
The
captive
company’s
organizational
documents,
and
any
subsequent
amendments,
have
been
filed
and
approved
by
the
commissioner
prior
to
being
filed
with
the
secretary
of
state.
Sec.
12.
Section
521J.2,
subsections
3,
4,
and
5,
Code
2026,
are
amended
to
read
as
follows:
3.
a.
Prior
to
receiving
a
certificate
of
authority,
a
captive
company
applicant
shall
do
all
of
the
following:
(1)
File
with
the
commissioner
all
of
the
following:
(a)
A
certified
copy
of
the
business
entity’s
organizational
document.
(b)
A
statement
under
oath
of
an
officer
of
the
business
House
File
2766,
p.
5
entity
showing
the
business
entity’s
financial
condition.
(c)
Any
other
statement
or
document
required
by
the
commissioner
as
established
by
rule
.
(2)
Submit
a
description
of
coverages,
deductibles,
coverage
limits,
rates,
and
any
additional
information
requested
by
the
commissioner
to
the
commissioner
for
approval.
(3)
Provide
a
statement
to
the
commissioner
that
describes
all
of
the
following:
(a)
The
character,
reputation,
and
financial
standing
of
the
organizers
of
the
business
entity.
(b)
The
character,
reputation,
financial
responsibility,
insurance
experience,
and
business
qualifications
of
all
officers,
directors,
and
managing
members
of
the
business
entity.
(4)
Provide
any
other
information
required
by
the
commissioner
as
established
by
rule
.
b.
If
there
is
a
subsequent
material
change
in
the
information
provided
to
the
commissioner
under
paragraph
“a”
,
the
captive
company
shall
submit
appropriate
supporting
documentation
to
the
commissioner
for
approval.
The
captive
company
shall
not
offer
any
additional
lines
of
insurance
until
on
or
after
the
date
on
which
the
commissioner
approves
the
supporting
documentation.
The
captive
company
shall
inform
the
commissioner
of
any
change
in
rates
within
thirty
calendar
days
of
the
captive
company’s
adoption
of
a
change
in
rate.
c.
In
addition
to
the
information
required
under
paragraphs
“a”
and
“b”
,
each
applicant
captive
company
shall
file
with
the
commissioner
evidence
of
all
of
the
following:
(1)
The
amount
and
liquidity
of
the
captive
company’s
assets
relative
to
the
risks
to
be
assumed
by
the
captive
company.
(2)
The
adequacy
of
the
expertise,
experience,
and
character
of
the
persons
who
will
manage
the
captive
company.
(3)
The
overall
soundness
of
the
captive
company’s
plan
of
operation.
(4)
The
adequacy
of
the
loss
prevention
program
of
the
captive
company’s
parent,
members,
or
industrial
insureds,
as
applicable.
(5)
Any
other
factors
deemed
relevant
by
the
commissioner
to
ascertain
if
the
proposed
captive
company
will
be
able
to
meet
House
File
2766,
p.
6
the
company’s
policy
obligations.
d.
In
addition
to
the
information
required
under
paragraph
“a”
,
each
applicant
that
is
a
protected
cell
captive
company
shall
file
with
the
commissioner
all
of
the
following:
(1)
A
business
plan
that
demonstrates,
at
a
level
of
detail
deemed
sufficient
by
the
commissioner,
how
the
applicant
will
account
for
the
loss
and
expense
experience
of
each
protected
cell,
and
how
the
applicant
will
report
the
loss
and
expense
experience
of
each
protected
cell
to
the
commissioner.
(2)
A
statement
that
acknowledges
that
all
financial
records
of
the
protected
cell
captive
company,
including
records
pertaining
to
any
protected
cells,
shall
be
made
available
upon
request
for
inspection
or
examination
by
the
commissioner
or
the
commissioner’s
designated
agent.
(3)
A
copy
of
each
participant
contract.
(4)
Evidence
that
expenses
will
be
allocated
to
each
protected
cell
in
a
fair
and
equitable
manner.
e.
In
addition
to
the
requirements
of
paragraph
“a”
,
a
captive
company
formed
as
a
reciprocal
insurer
shall
file
with
the
commissioner
a
certified
copy
of
the
power
of
attorney
of
the
reciprocal
insurer’s
attorney-in-fact,
a
certified
copy
of
the
reciprocal
insurer’s
subscribers’
agreement,
a
statement
under
oath
of
the
reciprocal
insurer’s
attorney-in-fact
that
shows
the
reciprocal
insurer’s
financial
condition,
and
any
other
statements
or
documents
required
by
the
commissioner
as
established
by
rule
.
f.
4.
All
documents
,
reports,
and
information
submitted
pursuant
to
this
subsection
subchapter
shall
be
confidential
and
shall
not
be
made
public
without
the
advance
written
consent
of
the
submitting
company,
with
the
following
exceptions:
(1)
a.
The
documents
and
information
shall
be
discoverable
by
a
party
in
a
civil
action
or
in
a
contested
case
to
which
the
captive
company
that
submitted
the
information
is
a
party
upon
a
showing
by
the
party
seeking
to
discover
the
information
that
the
information
sought
is
relevant
to,
and
necessary
for,
the
furtherance
of
the
action
or
case;
the
information
sought
is
unavailable
from
other
nonconfidential
sources;
and
that
a
subpoena
issued
by
a
judicial
or
an
administrative
officer
has
House
File
2766,
p.
7
been
submitted
to
the
commissioner.
(2)
b.
The
commissioner
may,
in
the
commissioner’s
discretion,
disclose
the
documents
and
information
to
a
public
official
having
jurisdiction
over
the
regulation
of
insurance
in
another
state,
or
to
a
public
official
of
the
federal
government,
provided
that
the
public
official
agrees
in
writing
to
maintain
the
confidentiality
of
the
information,
and
that
the
laws
of
the
state
in
which
the
public
official
serves
require
that
the
information
remain
confidential.
4.
5.
a.
Each
captive
company,
each
individual
series
of
members
of
a
limited
liability
company,
and
each
protected
cell
shall
pay
a
nonrefundable
fee
to
the
commissioner
of
two
hundred
dollars
for
the
examination,
investigation,
and
processing
of
its
application
for
a
certificate
of
authority.
The
commissioner
shall
be
authorized
to
retain
legal,
financial,
and
examination
services
from
outside
experts
as
necessary
for
review
of
the
application,
the
reasonable
cost
of
which
may
be
charged
to
the
applicant.
b.
Each
captive
insurance
company,
each
individual
series
of
members
of
a
limited
liability
company,
and
each
protected
cell
shall
pay
an
initial
registration
fee,
and
an
annual
renewal
registration
fee
,
of
three
hundred
dollars.
5.
6.
If
the
commissioner
is
satisfied
with
the
documents
and
statements
that
an
applicant
captive
company
has
filed
in
compliance
with
this
chapter
subchapter
,
and
the
applicable
provisions
of
Title
XIII,
subtitle
1
,
the
commissioner
may
grant
a
certificate
of
authority
to
the
captive
company
that
permits
the
company
to
do
the
business
of
insurance
in
this
state.
The
certificate
of
authority
must
be
renewed
annually
and
may
be
renewed
if
the
applicant
is
in
compliance
with
this
chapter
subchapter
.
Sec.
13.
Section
521J.4,
subsection
1,
paragraphs
d
and
e,
Code
2026,
are
amended
to
read
as
follows:
d.
Is
not
less
than
five
one
hundred
thousand
dollars
for
a
protected
cell
captive
company.
If,
however,
the
protected
cell
captive
company
does
not
assume
any
risks,
the
risks
insured
by
the
protected
cells
are
homogenous,
and
there
are
not
more
than
ten
cells,
the
commissioner
may
reduce
the
amount
to
an
amount
not
less
than
two
hundred
fifty
thousand
dollars.
House
File
2766,
p.
8
e.
Is
not
less
than
the
applicable
amount
of
capital
and
surplus
required
in
paragraphs
“a”
through
“d”
,
as
determined
based
upon
the
organizational
form
of
the
alien
captive
company,
for
a
branch
captive
company.
The
minimum
capital
and
surplus
shall
be
jointly
held
by
the
commissioner
and
the
branch
captive
company
in
a
bank
of
the
federal
reserve
system
as
approved
by
the
commissioner
by
rule
.
Sec.
14.
Section
521J.4,
subsection
3,
Code
2026,
is
amended
to
read
as
follows:
3.
a.
The
capital
and
surplus
required
under
subsection
1
and
subsection
2
,
if
applicable,
shall
be
in
the
form
of
cash,
cash
equivalent,
marketable
securities
as
approved
by
the
commissioner,
or
an
irrevocable
letter
of
credit
on
a
form
as
prescribed
by
the
commissioner
by
rule
and
as
issued
by
a
bank
chartered
by
the
state
of
Iowa,
a
member
bank
of
the
federal
reserve
system,
or
a
bank
chartered
by
another
state
if
approved
by
the
commissioner.
b.
If
a
captive
company
elects
to
satisfy
any
portion
of
the
captive
company’s
minimum
capital
and
surplus
requirements
with
marketable
securities,
the
commissioner
may
require
the
captive
company
to
file
financial
statements
or
other
reports
on
a
more
frequent
basis
than
otherwise
required
under
this
subchapter.
The
increased
reporting
frequency
may
be
imposed
to
ensure
the
commissioner
can
adequately
monitor
the
liquidity,
valuation,
and
market
risk
associated
with
the
marketable
securities.
Sec.
15.
Section
521J.5,
subsection
1,
Code
2026,
is
amended
to
read
as
follows:
1.
A
Subject
to
the
commissioner’s
approval,
a
captive
company
must
may
be
formed
or
organized
as
a
business
entity
as
provided
under
this
chapter
subchapter,
or
as
a
reciprocal
insurer
as
provided
under
chapter
520
.
Sec.
16.
Section
521J.5,
subsection
2,
paragraph
c,
Code
2026,
is
amended
to
read
as
follows:
c.
Organized
as
a
reciprocal
insurer
as
permitted
by
the
commissioner
by
rule
.
Sec.
17.
Section
521J.5,
subsection
5,
paragraph
c,
Code
2026,
is
amended
to
read
as
follows:
c.
A
reciprocal
insurer
shall
have
at
least
one
member
of
the
subscribers’
advisory
committee
who
is
a
resident
House
File
2766,
p.
9
of
this
state.
A
captive
risk
retention
group
formed
as
a
reciprocal
insurer
shall
have
a
minimum
of
five
members
of
the
subscribers’
advisory
committee
who
are
residents
of
this
state.
Sec.
18.
Section
521J.5,
subsections
6
and
7,
Code
2026,
are
amended
to
read
as
follows:
6.
a.
A
captive
company
formed
as
a
corporation
or
another
business
entity
shall
have
the
privileges
of,
and
shall
be
subject
to,
state
laws
governing
corporations
or
other
business
entities,
and
the
applicable
provisions
of
this
chapter
subchapter
.
b.
In
the
event
of
a
conflict
between
a
state
law
governing
corporations
or
other
business
entities
and
this
chapter
subchapter
,
this
chapter
subchapter
shall
take
precedence.
7.
a.
A
subscribers’
agreement,
or
other
organizational
document
of
a
captive
company
formed
as
a
reciprocal
insurer,
shall
authorize
a
quorum
of
a
subscribers’
advisory
committee
to
consist
of
at
least
one-third
of
the
number
of
members
on
the
advisory
committee.
In
addition
to
this
subchapter,
a
captive
company
formed
as
a
reciprocal
insurer
shall
be
subject
to
chapter
520,
unless
exempt
by
approval
of
the
commissioner
in
the
captive
company’s
plan
of
operations.
In
the
event
of
a
conflict
between
chapter
520
and
this
subchapter,
this
subchapter
shall
take
precedence.
b.
In
addition
to
this
chapter
subchapter
,
a
captive
risk
retention
group
shall
be
subject
to
chapter
515E
.
In
the
event
of
a
conflict
between
chapter
515E
and
this
chapter
subchapter
,
this
chapter
subchapter
shall
take
precedence.
Sec.
19.
Section
521J.5,
subsection
8,
Code
2026,
is
amended
by
striking
the
subsection.
Sec.
20.
Section
521J.5,
subsection
9,
paragraph
b,
Code
2026,
is
amended
to
read
as
follows:
b.
A
branch
captive
company
established
under
this
chapter
subchapter
to
write,
in
this
state,
only
insurance
or
reinsurance
of
the
employee
benefit
business
of
the
branch
captive
company’s
parent
and
affiliated
companies
shall
be
subject
to
the
federal
Employee
Retirement
Income
Security
Act
of
1974,
29
U.S.C.
§1001,
et
seq.
Sec.
21.
Section
521J.6,
subsection
2,
Code
2026,
is
amended
House
File
2766,
p.
10
to
read
as
follows:
2.
The
commissioner’s
approval
of
an
ongoing
plan
for
the
payment
of
dividends
or
other
distributions
shall
be
conditioned
upon
retention,
at
the
time
of
each
payment,
of
capital
and
surplus
in
excess
of
the
amounts
specified
by,
or
determined
in
accordance
with,
a
formula
approved
by
the
commissioner
by
rule
.
Sec.
22.
Section
521J.7,
Code
2026,
is
amended
to
read
as
follows:
521J.7
Reports.
1.
A
Unless
otherwise
directed
by
the
commissioner
in
the
first
year
of
a
captive
company’s
licensure
under
this
subchapter,
the
captive
company
shall
be
required
to
file
an
annual
report
with
the
commissioner
that
meets
the
following
requirements:
a.
1.
Except
as
provided
in
paragraph
“b”
subsection
2
,
on
or
before
April
1
of
each
year,
each
captive
company
and
each
captive
risk
retention
group
shall
submit
to
the
commissioner
a
report
on
the
company’s
financial
condition
as
of
December
31
of
the
preceding
year,
as
verified
by
oath
of
two
of
the
company’s
or
group’s
executive
officers.
The
report
shall
be
submitted
in
a
form
and
manner
as
prescribed
by
the
commissioner
by
rule.
b.
2.
A
captive
company,
other
than
a
captive
risk
retention
group,
may
apply
to
the
commissioner
to
file
the
report
required
under
paragraph
“a”
subsection
1
on
a
fiscal
year-end
basis.
If
the
commissioner
approves
reporting
on
a
fiscal
year-end
basis,
the
captive
company
shall
comply
with
all
of
the
following
requirements:
(1)
a.
Subject
to
subparagraph
(2)
paragraph
“b”
,
the
captive
company’s
report
shall
be
filed
no
later
than
ninety
calendar
days
after
the
close
of
the
company’s
fiscal
year.
(2)
b.
Prior
to
April
1,
the
captive
company
shall
file
a
report
covering
the
immediately
preceding
calendar
year
with
the
commissioner
to
provide
sufficient
information
to
support
the
captive
company’s
premium
tax
return
under
section
432.1A
.
c.
3.
Each
captive
company
shall
use
generally
accepted
accounting
principles
as
used
in
the
United
States
,
unless
the
commissioner
requires,
approves,
or
accepts
the
use
House
File
2766,
p.
11
of
United
States
statutory
accounting
principles
or
any
other
comprehensive
accounting
principles
for
the
company’s
report.
The
commissioner
may
require,
approve,
or
accept
any
appropriate
or
necessary
modifications
of
United
States
statutory
accounting
principles
or
other
comprehensive
accounting
principles
based
on
the
type
of
insurance
and
kinds
of
insurers
that
are
included
in
a
captive
company’s
report.
The
report
may
include
letters
of
credit
that
are
established,
issued,
or
confirmed
by
any
of
the
following:
(1)
a.
A
bank
chartered
in
this
state.
(2)
b.
A
member
of
the
federal
reserve
system.
(3)
c.
A
bank
chartered
by
another
state,
if
approved
by
the
commissioner.
d.
4.
An
actuarial
opinion
from
a
qualified
actuary
regarding
the
adequacy
of
the
company’s
required
reserves
to
make
full
provision
for
the
company’s
liabilities,
insured
or
reinsured,
shall
be
included
in
the
report.
The
qualified
actuary
shall
submit
a
memorandum
to
the
commissioner
that
details
the
qualified
actuary’s
support
for
the
actuarial
opinion.
The
commissioner
may
require
that
additional
information
be
submitted
to
supplement
the
actuarial
opinion.
e.
5.
All
captive
companies
shall
be
audited
annually
by
an
independent
certified
public
accountant
and
shall
annually
file
the
audited
financial
report
with
the
commissioner
on
or
before
June
1,
as
a
supplement
to
the
annual
report
required
under
section
521J.7,
subsection
1
this
section
.
f.
6.
A
captive
company
may
request
an
extension
to
file
a
report
required
by
this
section
.
A
written
request
for
an
extension
must
be
received
by
the
commissioner
not
less
than
ten
days
before
the
filing
due
date,
and
the
request
must
contain
sufficient
details
to
enable
the
commissioner
to
make
an
informed
decision
regarding
the
request.
The
commissioner
may
grant
a
thirty-day
extension
upon
a
determination
by
the
commissioner
that
a
captive
company
has
good
cause
for
the
extension.
g.
7.
A
captive
company
may
be
required
to
file
a
report
on
the
captive
company’s
financial
condition
on
a
semiannual,
quarterly,
monthly,
or
other
basis
as
determined
by
the
commissioner.
House
File
2766,
p.
12
h.
8.
Captive
companies
shall
file
all
reports
required
under
this
section
in
the
form
and
manner
prescribed
by
the
commissioner
by
rule.
2.
All
reports
filed
pursuant
to
this
section
shall
be
considered
confidential
and
shall
not
be
a
public
record.
Sec.
23.
Section
521J.8,
subsection
1,
paragraph
a,
Code
2026,
is
amended
to
read
as
follows:
a.
Except
for
captive
risk
retention
groups
as
provided
under
paragraph
“c”
,
the
commissioner
may
examine
each
captive
company’s
compliance
with
this
chapter
subchapter
,
and
may
examine
the
affairs,
transactions,
accounts,
records,
and
assets
of
each
captive
company
as
the
commissioner
deems
necessary.
Sec.
24.
Section
521J.8,
subsection
5,
Code
2026,
is
amended
to
read
as
follows:
5.
The
applicable
provisions
of
chapter
507
shall
apply
to
examinations
conducted
under
this
chapter
subchapter
.
Sec.
25.
Section
521J.9,
subsection
1,
paragraphs
h
and
i,
Code
2026,
are
amended
to
read
as
follows:
h.
Failure
to
submit
or
pay
any
fee
under
this
chapter
subchapter
.
i.
Failure
to
submit
to
or
pay
the
cost
of
any
examination
under
this
chapter
subchapter
.
Sec.
26.
Section
521J.11,
subsection
1,
Code
2026,
is
amended
to
read
as
follows:
1.
A
merger
between
captive
stock
insurers,
or
a
merger
between
captive
mutual
insurers,
shall
meet
the
requirements
of
chapter
521
and
section
521J.5
,
as
applicable.
The
commissioner
may,
at
the
commissioner’s
discretion,
provide
notice
to
the
public
of
a
proposed
merger
prior
to
the
commissioner’s
approval
or
disapproval
of
a
merger.
Except
as
provided
in
this
section,
applicable
provisions
of
chapter
508B
shall
apply
to
a
merger,
consolidation,
conversion,
mutualization,
or
voluntary
dissolution
by
a
captive
company.
Sec.
27.
Section
521J.13,
subsection
1,
Code
2026,
is
amended
to
read
as
follows:
1.
a.
Industrial
insured
captive
companies
and
captive
risk
retention
groups
shall
comply
with
investment
requirements
as
established
approved
by
the
commissioner
by
rule
.
The
House
File
2766,
p.
13
commissioner
may
approve
the
use
of
alternative
reliable
methods
of
valuation
and
rating.
b.
If
a
captive
company’s
admitted
annual
report
filed
pursuant
to
section
521J.7
states
total
assets
total
of
less
than
five
million
dollars,
the
commissioner
may
approve
an
investment
of
up
to
twenty
percent
of
the
captive
company’s
admitted
assets
in
rated
credit
instruments
in
any
one
investment
that
meets
the
requirements
established
by
the
commissioner
by
rule
.
For
purposes
of
this
subsection,
total
assets
shall
be
based
on
the
accounting
basis
approved
by
the
commissioner,
provided
that
all
assets
included
in
such
total
assets
must
be
reasonably
liquid,
realizable,
and
available
to
support
the
obligations
of
the
captive.
Sec.
28.
Section
521J.14,
subsection
3,
Code
2026,
is
amended
to
read
as
follows:
3.
Insurance
by
a
captive
company
of
any
workers’
compensation
qualified
self-insured
plan
of
the
captive
company’s
parent
and
affiliates
shall
be
deemed
to
be
reinsurance
under
this
chapter
subchapter
.
Sec.
29.
Section
521J.17,
subsection
2,
unnumbered
paragraph
1,
Code
2026,
is
amended
to
read
as
follows:
A
protected
cell
captive
company
formed
or
authorized
under
this
chapter
subchapter
shall
be
subject
to
all
of
the
following
requirements:
Sec.
30.
Section
521J.17,
subsection
2,
paragraph
a,
subparagraph
(4),
Code
2026,
is
amended
to
read
as
follows:
(4)
Each
protected
cell
shall
be
incorporated.
An
incorporated
protected
cell
may
be
organized
and
operated
in
any
form
of
business
organization
as
authorized
by
the
commissioner
by
rule
formed
as
a
business
entity,
provided
the
business
entity
is
separate
from
the
protected
cell
captive
company
of
which
the
business
entity
is
a
part
.
Each
protected
cell
of
a
protected
cell
captive
company
shall
be
treated
as
a
captive
insurance
company
under
this
chapter
subchapter
,
except
that
the
limit
on
maximum
yearly
aggregate
taxes
paid
under
section
432.1A,
subsection
4
,
shall
not
apply.
Unless
otherwise
permitted
by
the
organizational
document
of
a
protected
cell
captive
company,
each
protected
cell
of
the
protected
cell
captive
company
must
have
the
same
directors,
House
File
2766,
p.
14
secretary,
and
registered
office
as
the
protected
cell
captive
company.
Sec.
31.
Section
521J.17,
subsection
2,
paragraph
c,
Code
2026,
is
amended
to
read
as
follows:
c.
The
establishment
of
a
protected
cell
shall
create,
with
respect
to
the
protected
cell,
a
legal
person
business
entity
separate
from
the
protected
cell
captive
company.
Amounts
attributed
to
a
protected
cell
under
this
chapter
subchapter
,
including
assets
transferred
to
a
protected
cell
account,
shall
be
owned
by
the
protected
cell
and
the
protected
cell
captive
company
shall
not
be
a
trustee,
or
hold
itself
out
to
be
a
trustee,
with
respect
to
the
protected
cell
assets
of
that
protected
cell
account.
Sec.
32.
Section
521J.18,
Code
2026,
is
amended
to
read
as
follows:
521J.18
Sponsors
——
qualifications.
A
sponsor
of
a
protected
cell
captive
company
may
be
any
person
approved
by
the
commissioner,
based
on
the
commissioner’s
determination
that
the
approval
of
such
person
as
a
sponsor
is
consistent
with
the
purposes
of
this
chapter
subchapter
.
In
evaluating
the
qualifications
of
a
proposed
sponsor,
the
commissioner
shall
consider
the
type
and
structure
of
the
proposed
sponsor
entity,
the
sponsor’s
experience
in
financial
operations,
the
sponsor’s
financial
stability,
the
sponsor’s
business
reputation,
and
any
other
factors
deemed
relevant
by
the
commissioner.
A
risk
retention
group
shall
not
be
a
sponsor
of
a
protected
cell
captive
company.
Sec.
33.
Section
521J.22,
subsection
3,
paragraph
a,
subparagraph
(3),
Code
2026,
is
amended
to
read
as
follows:
(3)
The
dormant
captive
company
shall
pay
an
annual
one
thousand
dollar
dormancy
tax,
due
on
or
before
March
1,
if
for
any
portion
of
the
immediately
preceding
calendar
year
the
captive
company
held
a
certificate
of
dormancy.
Each
series
of
members
and
each
protected
cell
shall
be
considered
separate
for
purposes
of
paying
the
annual
dormancy
tax
under
a
certificate
of
dormancy.
A
dormant
captive
company
is
not
otherwise
liable
for
any
annual
renewal
as
provided
in
section
521J.2,
subsection
4
subsection
5
,
paragraph
“b”
.
Sec.
34.
Section
521J.23,
Code
2026,
is
amended
to
read
as
House
File
2766,
p.
15
follows:
521J.23
Workers’
compensation
——
compliance
with
state
and
federal
laws.
1.
This
chapter
subchapter
shall
not
be
construed
to
exempt
a
captive
company,
a
captive
company’s
parent,
or
a
captive
company’s
affiliated
companies
from
compliance
with
applicable
state
and
federal
laws
governing
workers’
compensation
insurance.
2.
This
chapter
subchapter
shall
not
be
construed
to
divest
the
division
of
workers’
compensation
of
any
jurisdiction,
as
authorized
by
law,
over
workers’
compensation
self-insurance
plans.
Sec.
35.
Section
521J.24,
subsection
1,
paragraph
b,
Code
2026,
is
amended
to
read
as
follows:
b.
All
books,
records,
documents,
accounts,
vouchers,
and
agreements
shall
be
kept
in
a
manner
that
the
commissioner
can
readily
ascertain
the
captive
company’s
financial
condition,
affairs,
and
operations;
can
readily
verify
the
captive
company’s
financial
statements;
and
can
confirm
the
captive
company’s
compliance
with
this
chapter
subchapter
.
Sec.
36.
Section
521J.26,
unnumbered
paragraph
1,
Code
2026,
is
amended
to
read
as
follows:
The
commissioner
shall
may
adopt
rules
pursuant
to
chapter
17A
to
implement
and
administer
this
chapter
subchapter
.
Sec.
37.
NEW
SECTION
.
521J.27
Redomestication
——
premium
tax
year
waiver.
1.
For
taxes
due
pursuant
to
section
432.1A,
a
foreign
or
alien
captive
company
organized
under
this
subchapter
that
redomesticates
into
the
state
shall
only
be
liable
for
taxes
on
premiums
paid
to
the
captive
company
after
redomestication.
2.
A
foreign
or
alien
captive
company
that
redomesticates
under
this
subchapter
shall
report
to
the
commissioner
all
premium
taxes
annually
due
under
section
432.1A,
and
may
elect
to
forgo
payment
of
the
premium
taxes
in
either
the
calendar
year
in
which
the
foreign
or
alien
captive
company
first
redomesticates
into
the
state,
or
the
immediately
succeeding
calendar
year.
A
foreign
or
alien
captive
company
that
makes
such
election
that
subsequently
surrenders
the
foreign
or
alien
captive
company’s
license
or
redomesticates
to
another
House
File
2766,
p.
16
jurisdiction
within
five
years
from
the
date
of
redomestication
into
the
state
shall
immediately
pay
to
the
commissioner
a
tax
in
an
amount
equal
to
the
foregone
premium
tax
plus
ten
percent
per
annum
from
the
date
the
foregone
premium
tax
would
have
originally
been
due.
3.
This
section
shall
not
apply
to
tax
years
beginning
on
or
after
January
1,
2030.
Sec.
38.
NEW
SECTION
.
521J.101
Definitions.
As
used
in
this
subchapter,
unless
the
context
otherwise
requires:
1.
“Affiliated
company”
means
the
same
as
defined
in
section
521J.1.
2.
“Business
entity”
means
the
same
as
defined
in
section
521J.1.
3.
“Ceding
insurer”
means
an
affiliated
company
of
a
life
captive
reinsurance
company
that
cedes
risk
to
the
life
captive
reinsurance
company
pursuant
to
a
reinsurance
contract.
4.
“Commissioner”
means
the
commissioner
of
insurance.
5.
“Dormant
life
captive
reinsurance
company”
means
a
life
captive
reinsurance
company
that
has
ceased
transacting
the
business
of
insurance,
including
but
not
limited
to
ceasing
issuance
of
insurance
policies,
and
does
not
have
any
remaining
liabilities
associated
with
the
life
captive
reinsurance
company’s
insurance
business
transactions
or
insurance
policies
prior
to
the
filing
of
an
application
for
a
certificate
of
dormancy.
6.
a.
“Insurance
securitization”
or
“securitization”
means
a
transaction
or
a
group
of
related
transactions,
including
but
not
limited
to
capital
market
offerings,
that
are
effected
through
related
risk
transfer
instruments
and
facilitation
of
administrative
agreements,
in
which
any
of
the
following
proceeds
from
the
transaction
or
group
of
related
transactions
are
used
to
fund
a
life
captive
reinsurance
company’s
obligations
under
a
reinsurance
contract
with
a
ceding
insurer:
(1)
Proceeds
obtained
by
a
life
captive
reinsurance
company,
directly
or
indirectly,
through
the
issuance
of
securities
by
the
life
captive
reinsurance
company
or
any
other
person.
(2)
Proceeds
provided
through
one
or
more
letter
of
credit
House
File
2766,
p.
17
or
other
assets
for
the
benefit
of
the
life
captive
reinsurance
company,
and
which
the
commissioner
authorizes
the
life
captive
reinsurance
company
to
treat
as
admitted
assets
for
purposes
of
the
life
captive
reinsurance
company’s
annual
statement.
b.
“Insurance
securitization”
or
“securitization”
does
not
include
the
issuance
of
a
letter
of
credit
to
satisfy
all
or
part
of
the
life
captive
reinsurance
company’s
capital
and
surplus
requirements
under
this
subchapter.
7.
“Letter
of
credit”
means
a
clean,
irrevocable,
unconditional
letter
of
credit,
issued
or
confirmed
by
a
qualified
United
States
financial
institution,
as
defined
in
section
521B.104,
subsection
1.
8.
“Life
captive
reinsurance
company”
means
a
captive
insurance
company
in
this
state
that
is
authorized
under
and
meets
the
requirements
of
this
subchapter,
and
that
reinsures
the
risk
ceded
by
a
life
insurance
company.
9.
“NAIC”
means
the
national
association
of
insurance
commissioners.
10.
“Organizational
document”
means
the
same
as
defined
in
section
521J.1.
11.
“Organizing
company”
means
a
life
insurance
company
or
an
affiliated
company
that
organizes
a
life
captive
reinsurance
company.
12.
“Parent”
means
a
person
that
owns
an
organizing
company,
either
directly
or
indirectly
through
one
or
more
intermediaries.
13.
“Person”
means
an
individual,
corporation,
limited
liability
company,
business
trust,
estate,
trust,
partnership
or
association,
joint
stock
company,
unincorporated
organization,
or
any
other
legal
entity,
or
combination
of
the
foregoing
acting
in
concert.
“Person”
does
not
include
a
joint
venture
partnership
exclusively
engaged
in
owning,
managing,
leasing,
or
developing
real
or
tangible
personal
property.
14.
“Qualified
actuary”
means
the
same
as
defined
in
section
521J.1.
15.
“Risk”
means
a
risk
associated
with
life
insurance
policies
and
contracts
written
by
a
ceding
life
insurance
company
or
assumed
by
a
ceding
life
insurance
company
from
an
affiliated
company,
which
were
written
by
the
affiliated
House
File
2766,
p.
18
company
and
for
which
the
ceding
life
insurance
company
holds
direct
statutory
reserves
as
required
by
section
508.36.
16.
“Risk-based
capital
instructions”
means
instructions
included
in
a
risk-based
capital
report
as
adopted
and
amended
by
the
NAIC.
17.
“Security”
means
the
same
as
defined
in
section
502.102.
“Security”
also
includes
any
form
of
debt
obligation,
surplus
note,
derivative,
or
other
financial
instrument
that
the
commissioner
designates
as
a
“security”
for
purposes
of
this
subchapter.
18.
“Surplus
note”
means
an
unsecured
subordinate
debt
obligation
possessing
characteristics
consistent
with
the
NAIC
statutory
accounting
principles
pursuant
to
the
most
recently
published
NAIC
accounting
practices
and
procedures
manual.
Sec.
39.
NEW
SECTION
.
521J.102
Certificate
of
authority.
1.
A
life
captive
reinsurance
company
issued
a
certificate
of
authority
shall
only
reinsure
the
risks
of
a
ceding
insurer
and
shall
not
otherwise
engage
in
the
business
of
insurance.
A
life
captive
reinsurance
company
may
purchase
retrocession
to
cede
the
risks
assumed
under
a
reinsurance
contract,
subject
to
prior
approval
of
the
commissioner.
2.
A
life
captive
reinsurance
company
shall
not
write
any
insurance
business
unless
the
life
captive
reinsurance
company
complies
with
all
of
the
following:
a.
The
life
captive
reinsurance
company
obtains
a
certificate
of
authority
from
the
commissioner.
b.
The
life
captive
reinsurance
company
maintains
its
principal
place
of
business
in
the
state.
c.
The
life
captive
reinsurance
company’s
board
of
directors
holds
at
least
one
annual
meeting
in
the
state.
d.
At
least
one
member
of
the
board
of
directors
of
the
life
captive
reinsurance
company
is
a
resident
of
the
state.
e.
The
life
captive
reinsurance
company
designates
a
registered
agent
to
accept
service
of
process,
files
the
name
and
contact
information
and
any
subsequent
changes
regarding
the
registered
agent
with
the
commissioner,
and
agrees
that
if
the
registered
agent
cannot
be
found
with
reasonable
diligence,
the
commissioner
may
act
as
an
agent
of
the
life
captive
reinsurance
company
with
respect
to
any
action
or
proceeding,
House
File
2766,
p.
19
and
the
commissioner
may
be
served
pursuant
to
section
505.30.
f.
The
life
captive
reinsurance
company
has
filed
a
copy
of
the
life
captive
reinsurance
company’s
articles
and
bylaws,
including
any
subsequent
amendment
to
the
articles
or
bylaws,
with
the
commissioner
and
with
the
secretary
of
state,
and
the
articles
and
bylaws
have
been
approved
by
the
commissioner
and
the
secretary
of
state.
3.
a.
Prior
to
receiving
a
certificate
of
authority,
a
life
captive
reinsurance
company
shall
do
all
of
the
following:
(1)
File
with
the
commissioner
all
of
the
following:
(a)
A
copy
of
the
life
captive
reinsurance
company’s
plan
of
operation.
(b)
An
affidavit
from
the
life
captive
reinsurance
company’s
president,
vice
president,
treasurer,
or
chief
financial
officer
that
includes
all
of
the
following:
(i)
A
statement
that
the
proposed
organization
and
operation
of
the
life
captive
reinsurance
company
complies
with
this
section.
(ii)
The
life
captive
reinsurance
company’s
investment
policy
reflects
and
accounts
for
the
liquidity
of
assets
and
the
reasonable
preservation,
administration,
and
management
of
assets
with
respect
to
the
risks
associated
with
the
reinsurance
contract
between
the
life
captive
reinsurance
company
and
the
parent
or
ceding
insurer.
(c)
A
statement
under
oath
by
an
officer
of
the
life
captive
reinsurance
company
that
attests
to
the
life
captive
reinsurance
company’s
financial
condition.
(d)
Documentation
that
provides
evidence
of
the
amount
and
liquidity
of
the
life
captive
reinsurance
company’s
assets
relative
to
the
risks
to
be
assumed
by
the
life
captive
reinsurance
company.
(e)
Documentation
that
provides
evidence
related
to
the
overall
soundness
of
the
life
captive
reinsurance
company’s
plan
of
operation.
(f)
A
certification
from
an
actuarial
officer
of
a
ceding
insurer
that
complies
with
section
521J.104.
(g)
A
description
of
coverages,
deductibles,
coverage
limits,
rates,
and
any
additional
information
requested
by
the
commissioner.
House
File
2766,
p.
20
(h)
A
copy
of
each
reinsurance
contract
and
each
arrangement
that
secures
the
life
captive
reinsurance
company’s
obligations
under
the
reinsurance
contract
between
the
life
captive
reinsurance
company
and
the
parent
or
ceding
insurer,
including
but
not
limited
to
any
agreements
or
other
documentation
to
implement
such
reinsurance
contract
or
arrangement.
(i)
A
legal
opinion,
in
a
form
and
manner
approved
by
the
commissioner,
that
the
offer
and
sale
of
life
captive
reinsurance
company
securities
comply
with
all
applicable
registration
requirements
or
applicable
exemptions
or
exceptions
to
such
requirements
under
state
and
federal
securities
laws.
The
legal
opinion
shall
not
be
required
as
part
of
the
life
captive
reinsurance
company’s
initial
application
for
a
certificate
of
authority
if
the
life
captive
reinsurance
company
includes
a
statement
in
the
company’s
plan
of
operation
that
the
legal
opinion
will
be
submitted
to
the
commissioner
prior
to
the
offer
or
sale
of
a
captive
reinsurance
security.
(j)
An
opinion
of
a
qualified
actuary,
approved
by
the
commissioner,
confirming
that
the
methodology
and
assumptions
to
set
and
discount
reserves
sufficiently
provide
for
the
risk
assumed
by
the
life
captive
reinsurance
company,
including
significant
stress
tests
on
key
assumptions.
(k)
A
biographical
affidavit
for
each
officer
and
each
director
of
the
life
captive
reinsurance
company
prepared
on
the
most
recent
template
for
biographical
affidavits
prescribed
by
the
NAIC.
(2)
Provide
the
commissioner
with
any
other
statement
or
document
requested
by
the
commissioner
to
evaluate
the
life
captive
reinsurance
company’s
application
for
a
certificate
of
authority.
(3)
Pay
a
nonrefundable
fee
of
two
thousand
five
hundred
dollars
to
the
commissioner
for
the
examination,
investigation,
and
processing
of
the
life
captive
reinsurance
company’s
application
for
a
certificate
of
authority.
b.
The
commissioner
shall
be
authorized
to
retain
legal,
financial,
and
examination
services
from
outside
experts
as
necessary
for
review
of
the
application,
the
reasonable
cost
of
which
may
be
charged
to
the
applicant.
House
File
2766,
p.
21
c.
If
there
is
a
subsequent
material
change
in
the
information
provided
to
the
commissioner
under
paragraph
“a”
,
the
life
captive
reinsurance
company
shall
inform
the
commissioner
within
thirty
calendar
days
of
the
date
of
the
material
change
and
shall
submit
appropriate
documentation
as
requested
by
the
commissioner
for
approval.
The
life
captive
reinsurance
company
shall
not
write
any
insurance
business
until
on
or
after
the
date
on
which
the
commissioner
approves
the
supporting
documentation.
4.
All
documents
and
information
submitted
pursuant
to
this
subchapter
shall
be
confidential
and
shall
not
be
made
public
without
the
advance
written
consent
of
the
submitting
life
captive
reinsurance
company,
with
the
following
exceptions:
a.
The
documents
and
information
shall
be
discoverable
by
a
party
in
a
civil
action
or
in
a
contested
case
to
which
the
life
captive
reinsurance
company
that
submitted
the
information
is
a
party
upon
a
showing
by
the
party
seeking
to
discover
the
information
that
the
information
sought
is
relevant
to,
and
necessary
for,
the
furtherance
of
the
action
or
case;
the
information
sought
is
unavailable
from
other
nonconfidential
sources;
and
that
a
subpoena
issued
by
a
judicial
or
an
administrative
officer
has
been
submitted
to
the
commissioner.
b.
The
commissioner
may,
in
the
commissioner’s
discretion,
disclose
the
documents
and
information
to
a
public
official
having
jurisdiction
over
the
regulation
of
insurance
in
another
state,
or
to
a
public
official
of
the
federal
government,
provided
that
the
public
official
agrees
in
writing
to
maintain
the
confidentiality
of
the
information,
and
that
the
laws
of
the
state
in
which
the
public
official
serves
require
that
the
information
remain
confidential.
5.
a.
If
an
application
filed
by
a
life
captive
reinsurance
company
is
complete,
the
commissioner
may
issue
to
the
life
captive
reinsurance
company
a
certificate
of
authority
upon
a
finding
of
all
of
the
following:
(1)
The
life
captive
reinsurance
company’s
proposed
plan
of
operation
provides
for
a
viable
operation
and
is
not
hazardous
to
any
ceding
insurer.
(2)
The
terms
of
any
reinsurance
contract
and
related
transactions
of
the
life
captive
reinsurance
company
comply
House
File
2766,
p.
22
with
this
subchapter
and
the
insurance
laws
and
rules
of
this
state.
b.
In
conjunction
with
the
issuance
of
the
certificate
of
authority
to
a
life
captive
reinsurance
company,
the
commissioner
may
issue
an
order
regarding
any
terms
and
conditions
relating
to
the
organization,
licensing,
and
operation
of
the
life
captive
reinsurance
company
that
the
commissioner
deems
appropriate
and
that
are
not
inconsistent
with
this
subchapter.
6.
A
certificate
of
authority
shall
be
valid
for
a
period
of
one
year
beginning
on
the
date
of
initial
issuance
and
the
certificate
must
be
renewed
annually.
A
certificate
of
authority
may
be
renewed
if
the
applicant
is
in
compliance
with
the
requirements
of
this
subchapter
and
has
paid
an
annual
renewal
registration
fee
at
the
time
of
renewal
in
the
amount
of
two
thousand
five
hundred
dollars.
Sec.
40.
NEW
SECTION
.
521J.103
Life
captive
reinsurance
companies
——
names.
A
life
captive
reinsurance
company
shall
not
adopt
a
name
that
is
the
same,
deceptively
similar,
or
likely
to
be
confused
with
or
mistaken
for
any
other
existing
business
name
already
registered
in
this
state.
Sec.
41.
NEW
SECTION
.
521J.104
Actuarial
officer
——
certification.
On
the
date
a
life
captive
reinsurance
company
files
an
application
for
a
certificate
of
authority
under
section
521J.102,
and
by
March
15
of
each
succeeding
year
that
a
life
captive
reinsurance
company
is
in
operation
and
is
ceded
new
business
from
a
ceding
insurer,
a
qualified
actuary
of
each
ceding
insurer
shall
file
with
the
commissioner
a
certification
that
the
ceding
insurer’s
transactions
with
the
life
captive
reinsurance
company
are
not
used
to
gain
an
unfair
advantage
if
pricing
of
policies
and
contracts
reinsured
by
the
life
captive
reinsurance
company
reflect,
at
the
time
the
policies
and
contracts
were
issued,
a
reasonable
long-term
estimate
of
the
cost
to
the
ceding
insurer
of
an
alternative
third-party
transaction
and
utilize
current
pricing
assumptions.
The
ceding
insurer
shall
have
an
ongoing
responsibility
to
maintain
documentation
detailing
the
process
by
which
the
qualified
House
File
2766,
p.
23
actuary
arrived
at
the
conclusions
in
the
certification
in
preparation
for
an
examination
conducted
pursuant
to
section
521J.110.
Sec.
42.
NEW
SECTION
.
521J.105
Minimum
capital
and
surplus
requirements.
1.
The
commissioner
shall
not
issue
a
certificate
of
authority
to
a
life
captive
reinsurance
company
unless
the
life
captive
reinsurance
company
possesses
and
maintains
unimpaired
paid-in
capital
and
surplus
that
is
not
less
than
five
million
dollars.
The
commissioner
may
require
additional
capital
and
surplus
based
upon
the
type,
volume,
and
nature
of
the
reinsurance
business
transacted
by
the
life
captive
reinsurance
company.
Minimum
capital
and
surplus
shall
be
in
the
form
of
cash
or
other
securities
that
are
investment-grade
at
the
time
of
acquisition
and
are
acceptable
to
the
commissioner.
2.
Except
as
otherwise
provided
in
this
section,
chapter
521E
shall
apply
to
a
life
captive
reinsurance
company.
Sec.
43.
NEW
SECTION
.
521J.106
Plan
of
operation.
A
life
captive
reinsurance
company
must
have
a
plan
of
operation
approved
by
the
life
captive
reinsurance
company’s
board
of
directors,
and,
prior
to
assuming
risks
under
a
reinsurance
contract,
shall
submit
the
plan
of
operation
to
the
commissioner
for
approval.
The
commissioner
may
approve
the
plan
of
operation
upon
finding
that
the
plan
of
operation
meets
the
requirements
of
this
section,
and
may
require
amendments
to
the
plan
of
operation
as
necessary
to
satisfy
the
requirements
of
this
section.
Any
change
in
the
life
captive
reinsurance
company’s
plan
of
operation
shall
require
prior
approval
of
the
commissioner.
The
plan
of
operation
must
include,
at
a
minimum,
all
of
the
following:
1.
A
complete
description
of
all
reinsurance
transactions,
reinsurance
security
arrangements,
securitizations,
and
any
other
material
transactions
or
arrangements
in
which
the
life
captive
reinsurance
company
engages.
2.
The
source
and
form
of
the
life
captive
reinsurance
company’s
capital
and
surplus
minimums
as
required
under
521J.105.
3.
The
life
captive
reinsurance
company’s
policy
on
investments.
House
File
2766,
p.
24
4.
Pro
forma
balance
sheets
and
income
statements
illustrating
one
or
more
adverse
case
scenarios,
as
determined
under
criteria
established
by
the
commissioner,
for
the
performance
of
the
life
captive
reinsurance
company
under
all
reinsurance
contracts.
5.
Risk-based
capital
requirements,
that,
at
a
minimum,
require
the
life
captive
reinsurance
company
to
maintain
risk-based
capital
equal
to
the
product
of
two
and
one-half
and
the
number
determined
under
the
life
risk-based
capital
formula
in
accordance
with
the
risk-based
capital
instructions.
6.
The
life
captive
reinsurance
company’s
procedures
for
notice
and
reporting
of
material
transactions.
7.
The
life
captive
reinsurance
company’s
policies
for
payments
of
dividends
and
other
distributions
to
the
organizing
company.
8.
Copies
of
all
contracts
between
the
life
captive
reinsurance
company
and
affiliated
companies.
Sec.
44.
NEW
SECTION
.
521J.107
Life
captive
reinsurance
companies
——
formation.
1.
A
life
insurance
company
or
an
affiliated
company
may
organize
a
life
captive
reinsurance
company
pursuant
to
this
subchapter.
A
life
captive
reinsurance
company
must
be
formed
as
a
corporation
and
may
only
reinsure
risks
of
the
organizing
company,
and
may
access
alternative
forms
of
financing.
2.
An
organizing
company
shall
maintain
a
minimum
of
ten
percent
voting
interest
and
ten
percent
equity
ownership
in
the
life
captive
reinsurance
company
unless
otherwise
approved
by
the
commissioner.
3.
A
life
captive
reinsurance
company’s
organizational
documents
must
limit
the
life
captive
reinsurance
company’s
authority
to
transact
the
business
of
reinsurance
to
only
reinsure
the
risks
of
a
ceding
insurer.
4.
An
organizing
company
may
invest
funds
from
its
surplus
in
a
life
captive
reinsurance
company
organized
pursuant
to
this
subchapter.
5.
An
organizing
company’s
officers
and
directors
may
serve
as
officers
and
directors
of
a
life
captive
reinsurance
company
organized
pursuant
to
subsection
1.
6.
A
life
captive
reinsurance
company
organized
under
this
House
File
2766,
p.
25
subchapter
shall
be
deemed
to
be
licensed
to
transact
the
business
of
reinsurance
for
the
purposes
of
section
521B.102,
subsection
1,
but
shall
only
reinsure
risks
of
the
organizing
company
and
affiliated
companies.
7.
A
life
captive
reinsurance
company
may,
upon
approval
of
the
commissioner,
purchase
reinsurance
to
cede
the
reinsurance
risks
assumed
by
the
life
captive
reinsurance
company.
8.
Admitted
assets
of
a
life
captive
reinsurance
company
shall
include
assets
approved
by
the
commissioner
which
shall
be
deemed
to
be,
and
reported
as,
admitted
assets
of
the
life
captive
reinsurance
company.
Sec.
45.
NEW
SECTION
.
521J.108
Dividends
and
distributions.
1.
A
life
captive
reinsurance
company
shall
not
pay
a
dividend
out
of,
or
other
distribution
with
respect
to,
the
minimum
capital
or
surplus
required
under
section
521J.105
without
the
prior
written
approval
of
the
commissioner.
2.
The
commissioner’s
approval
of
an
ongoing
plan
for
the
payment
of
dividends
or
other
distributions
shall
be
conditioned
upon
retention,
at
the
time
of
each
payment,
of
capital
and
surplus
in
excess
of
the
amounts
specified
by,
or
determined
in
accordance
with,
a
formula
approved
by
the
commissioner.
Sec.
46.
NEW
SECTION
.
521J.109
Reports
and
notifications.
1.
A
life
captive
reinsurance
company
shall
provide
the
commissioner
with
a
copy
of
documentation
of
an
insurance
securitization
no
later
than
forty-five
calendar
days
before
the
closing
on
the
transaction
for
the
securitization.
2.
In
the
event
of
a
material
change
in
the
financial
condition
or
management
of
a
life
captive
reinsurance
company,
the
company
shall
notify
the
commissioner
in
writing
within
two
business
days
of
the
material
change.
3.
A
life
captive
reinsurance
company
shall
notify
the
commissioner
within
five
business
days
of
becoming
aware
of
a
material
event
affecting
the
life
captive
reinsurance
company’s
parent,
organizing
company,
or
controlling
entity
that
has
not
previously
been
disclosed
to
the
commissioner.
4.
If
a
life
captive
reinsurance
company’s
parent,
organizing
company,
or
controlling
entity
is
subject
to
group
supervision
in
another
jurisdiction,
the
commissioner
may
House
File
2766,
p.
26
request
participation
in
supervisory
colleges
or
coordination
calls
with
the
lead
regulator
of
that
jurisdiction.
The
life
captive
reinsurance
company
shall
facilitate
the
commissioner’s
participation
to
the
extent
permitted
by
law.
5.
A
life
captive
reinsurance
company
shall
immediately
notify
the
commissioner
of
an
action
by
a
ceding
insurer
or
any
other
person
to
foreclose
on,
or
otherwise
take
possession
of,
collateral
provided
by
the
life
captive
reinsurance
company
to
secure
an
obligation
of
the
life
captive
reinsurance
company.
6.
A
life
captive
reinsurance
company
shall
not
be
required
to
file
any
report,
notice,
or
other
document
with
the
NAIC
unless
required
by
the
commissioner.
7.
At
the
commissioner’s
request,
a
life
captive
reinsurance
company
shall
provide
to
the
commissioner
a
copy
of
any
financial
or
risk-related
filings
submitted
by
the
company’s
parent,
affiliate,
organizing
company,
or
controlling
entity
to
the
life
captive
reinsurance
company’s
domiciliary
insurance
regulator.
Upon
request
by
the
commissioner,
such
filings
shall
be
provided
to
the
commissioner
within
ten
business
days
of
the
submission
to
the
organizing
company’s
domestic
regulator.
8.
A
life
captive
reinsurance
company
shall
file
with
the
commissioner
all
of
the
following:
a.
On
or
before
March
1
of
each
year,
for
the
immediately
preceding
calendar
year,
all
of
the
following:
(1)
A
report
of
the
company’s
risk-based
capital
level
as
of
the
end
of
the
immediately
preceding
calendar
year
that
contains
the
information
required
by
the
risk-based
capital
instructions.
(2)
A
supplemental
compensation
exhibit
that
discloses
the
total
annual
compensation
of
the
company’s
officers,
directors,
and
key
employees.
The
supplemental
exhibit
must
follow
the
format
and
instructions
adopted
by
the
NAIC
for
life
insurance
company
filings.
b.
(1)
On
or
before
March
1
of
each
year,
for
the
immediately
preceding
calendar
year,
an
actuarial
opinion
from
the
company’s
actuary
on
reserves
for
all
risks
assumed
by
the
life
captive
reinsurance
company
pursuant
to
the
company’s
reinsurance
contracts
and
may
discount
the
life
captive
House
File
2766,
p.
27
reinsurance
company’s
reserves
in
accordance
with
the
actuarial
opinion
subject
to
approval
by
the
commissioner.
The
company’s
actuary
shall
submit
a
memorandum
to
the
commissioner
that
details
the
actuary’s
support
for
the
actuarial
opinion.
The
commissioner
may
require
additional
information
to
be
submitted
to
supplement
the
actuarial
opinion.
(2)
Biennially
on
April
1,
for
the
immediately
preceding
calendar
year,
an
opinion
by
an
independent
qualified
actuary
concerning
the
methods
and
assumptions
used
to
set
reserves.
The
independent
qualified
actuary
must
be
deemed
acceptable
by
the
commissioner
prior
to
filing
the
opinion.
c.
Completed
quarterly
and
annual
financial
statement
blanks
as
are
required
by
the
NAIC
for
traditional
life
insurance
companies,
including
any
supplements
or
interrogatories
required
by
the
NAIC,
in
accordance
with
the
NAIC
statutory
accounting
principles.
The
commissioner
may
require,
approve,
or
accept
any
appropriate
or
necessary
modifications
of
the
NAIC
statutory
accounting
principles
based
on
the
type
of
insurance
and
kind
of
insurers
included
in
the
life
captive
reinsurance
company’s
report.
The
quarterly
filings
shall
be
filed
with
the
commissioner
on
or
before
May
15
for
the
first
quarter,
August
15
for
the
second
quarter,
and
November
15
for
the
third
quarter
for
the
current
calendar
year.
The
annual
statement
shall
be
filed
with
the
commissioner
on
or
before
March
1
of
each
year
for
the
immediately
preceding
calendar
year.
d.
On
or
before
April
1
of
each
year,
all
of
the
following:
(1)
For
the
immediately
preceding
calendar
year,
a
written
management’s
discussion
and
analysis
of
the
company’s
financial
condition
and
results
of
operations.
(2)
For
the
immediately
preceding
tax
year,
a
report
providing
sufficient
information
to
support
the
company’s
premium
tax
return
submitted
pursuant
to
section
432.1A.
e.
On
or
before
June
1
of
each
year,
for
the
immediately
preceding
calendar
year,
a
report
of
the
company’s
financial
condition
audited
by
an
independent
certified
public
accountant.
The
report
shall
be
presented
in
accordance
with
the
NAIC
statutory
accounting
principles.
f.
On
or
before
August
1
of
each
year,
a
management
House
File
2766,
p.
28
report
on
internal
control
over
financial
reporting
with
the
commissioner
that
describes
the
life
captive
reinsurance
company’s
internal
control
structure
over
financial
reporting
and
identifies
any
material
weaknesses
as
of
the
end
of
the
preceding
calendar
year.
9.
Not
less
than
ten
business
days
prior
to
a
filing
due
date,
a
life
captive
reinsurance
company
may
submit
a
written
request
for
an
extension
to
file
a
report
required
under
subsection
8.
The
request
must
contain
sufficient
details
to
enable
the
commissioner
to
make
an
informed
decision
about
the
request.
The
commissioner
may
grant
an
extension
upon
a
determination
that
the
life
captive
reinsurance
company
has
good
cause
for
the
extension.
Sec.
47.
NEW
SECTION
.
521J.110
Examinations.
1.
a.
The
commissioner
may
examine
each
life
captive
reinsurance
company’s
compliance
with
this
subchapter,
and
may
examine
the
affairs,
transactions,
accounts,
records,
and
assets
of
each
life
captive
reinsurance
company
as
the
commissioner
deems
necessary,
but
not
less
frequently
than
every
five
calendar
years.
b.
The
commissioner
shall,
upon
the
completion
of
an
examination
under
paragraph
“a”
,
or
at
such
regular
intervals
prior
to
completion
of
an
examination
as
the
commissioner
determines,
prepare
an
account
of
the
costs
incurred
in
performing
and
preparing
the
report
of
the
examination
which
shall
be
charged
to
and
paid
by
the
life
captive
reinsurance
company
examined.
If
the
life
captive
reinsurance
company
fails
or
refuses
to
pay
the
charges,
the
charges
may
be
recovered
in
an
action
brought
in
the
name
of
the
state.
2.
This
section
shall
apply
to
all
business
written
by
a
life
captive
reinsurance
company.
3.
The
applicable
provisions
of
chapter
507
shall
apply
to
examinations
conducted
under
this
subchapter.
Sec.
48.
NEW
SECTION
.
521J.111
Suspension
or
revocation.
1.
A
life
captive
reinsurance
company’s
certificate
of
authority
to
conduct
the
business
of
insurance
in
this
state
may
be
suspended
or
revoked
by
the
commissioner
for
any
of
the
following
reasons:
a.
Insolvency
or
impairment
of
capital
or
surplus.
House
File
2766,
p.
29
b.
Failure
to
meet
and
maintain
the
minimum
capital
and
surplus
requirements
under
section
521J.105.
c.
Refusal
or
failure
to
submit
an
annual
report
pursuant
to
section
521J.109,
or
to
submit
a
report
or
statement
required
by
law
or
by
lawful
order
of
the
commissioner.
d.
Failure
to
comply
with
the
life
captive
reinsurance
company’s
own
charter,
bylaws,
or
other
organizational
document.
e.
Failure
to
submit
to
an
examination
under
section
521J.110.
f.
Use
of
methods
that
render
the
life
captive
reinsurance
company’s
operation
detrimental,
or
the
company’s
condition
unsound,
with
respect
to
the
company’s
policyholders
or
to
the
public.
g.
Failure
to
pay
tax
on
premiums
as
required
under
section
432.1A.
h.
Failure
to
submit
any
fee
required
under
this
subchapter.
i.
Failure
to
pay
the
cost
of
an
examination
under
section
521J.110.
j.
Failure
to
comply
with
the
laws
of
this
state.
2.
a.
If
the
commissioner
finds
upon
examination,
hearing,
or
other
review
that
a
life
captive
reinsurance
company
has
committed
an
act
specified
in
subsection
1,
the
commissioner
may
suspend
or
revoke
the
life
captive
reinsurance
company’s
certificate
of
authority.
b.
If
the
commissioner
does
not
revoke
a
life
captive
reinsurance
company’s
certificate
of
authority
during
a
suspension
imposed
under
paragraph
“a”
,
the
life
captive
reinsurance
company’s
certificate
of
authority
may
be
reinstated
if
the
commissioner
finds
that
the
cause
of
the
suspension
has
been
rectified.
Sec.
49.
NEW
SECTION
.
521J.112
Mergers.
1.
A
merger
between
life
captive
reinsurance
companies
must
meet
the
requirements
of
chapter
521
and
section
521J.107,
as
applicable.
The
commissioner
may,
at
the
commissioner’s
discretion,
provide
notice
to
the
public
of
a
proposed
merger
prior
to
the
commissioner’s
approval
or
disapproval
of
the
merger.
2.
A
plan
for
a
merger
must
be
fair
and
equitable
to
House
File
2766,
p.
30
the
shareholders
of
the
life
captive
reinsurance
companies
and
shall
provide
for
the
purchase
of
the
shares
of
any
nonconsenting
shareholder
of
a
life
captive
reinsurance
company.
Sec.
50.
NEW
SECTION
.
521J.113
Investments.
1.
A
life
captive
reinsurance
company’s
investment
program
shall
take
into
account
the
safety
of
the
company’s
assets,
investment
yield
and
return,
stability
in
the
value
of
the
investment,
and
liquidity
necessary
to
meet
the
company’s
expected
business
needs
and
investment
diversification.
The
assets
of
a
life
captive
reinsurance
company
shall
be
preserved
and
administered
by
or
on
behalf
of
the
life
captive
reinsurance
company
to
satisfy
the
liabilities
and
obligations
of
the
life
captive
reinsurance
company
incident
to
the
reinsurance
contract
between
the
life
captive
reinsurance
company
and
the
parent
or
ceding
insurer,
any
insurance
securitizations,
and
other
related
agreements.
For
the
purposes
of
this
section,
assets
do
not
include
letters
of
credit
and
guaranties
of
a
parent.
2.
At
the
discretion
of
the
commissioner,
a
life
captive
reinsurance
company
shall
either
comply
with
section
511.8
or
invest
the
life
captive
reinsurance
company’s
assets
in
cash
and
securities
that
are
investment-grade
at
the
time
of
acquisition,
provided
that
a
life
captive
reinsurance
company
may
invest
up
to
ten
percent
of
the
life
captive
reinsurance
company’s
assets
in
securities
or
other
investments
that
are
not
investment-grade
at
the
time
of
acquisition,
not
to
include
any
of
the
following:
a.
Securities
rated
5
or
higher
by
the
NAIC
securities
valuation
office
at
the
time
of
acquisition.
b.
Asset-based
or
mortgage-backed
securities
rated
3
or
higher
by
the
NAIC
securities
valuation
office
at
the
time
of
acquisition.
c.
Convertible
bonds.
d.
Preferred
or
common
stock.
e.
Private
equity
or
hedge
funds.
3.
a.
A
life
captive
reinsurance
company
securitization
shall
include
a
disclosure
that
all
or
part
of
the
proceeds
of
such
insurance
securitization
will
be
used
to
fund
the
House
File
2766,
p.
31
life
captive
reinsurance
company’s
obligations
to
the
ceding
insurer.
b.
For
purposes
of
this
subsection,
“life
captive
reinsurance
company
securitization”
means
the
security-offering
memorandum
or
other
document
issued
to
prospective
investors
regarding
the
offer
and
sale
of
a
surplus
note
or
other
security.
4.
A
life
captive
reinsurance
company’s
admitted
assets
must
include
proceeds
from
a
securitization,
premium
and
other
amounts
payable
by
a
ceding
insurer
to
the
life
captive
reinsurance
company,
letters
of
credit,
guaranties
of
a
parent,
and
any
other
assets
approved
by
the
commissioner,
which
shall
be
deemed
to
be,
and
reported
as,
admitted
assets
of
the
life
captive
reinsurance
company.
The
commissioner
may
reduce
the
amount
of
admitted
assets
previously
approved
by
the
commissioner,
other
than
assets
already
covered
by
the
most
recent
NAIC
accounting
practices
and
procedures
manual
of
the
NAIC,
if
the
commissioner
determines
that
the
value
of
those
assets
has
decreased.
A
minimum
of
thirty
calendar
days
prior
to
reducing
the
amount
of
admitted
assets
previously
approved,
the
commissioner
shall
notify
the
life
captive
reinsurance
company
of
the
reduction
and
provide
the
life
captive
reinsurance
company
an
opportunity
to
remedy
the
issues
identified
by
the
commissioner.
5.
A
life
captive
reinsurance
company
shall
not
make
a
loan
to
or
an
investment
in
any
person,
other
than
as
permitted
in
the
life
captive
reinsurance
company’s
plan
of
operation,
without
prior
written
approval
of
the
commissioner,
and
any
such
loan
or
investment
must
be
evidenced
by
documentation
approved
by
the
commissioner.
A
life
captive
reinsurance
company
shall
not
loan
minimum
capital
and
surplus
funds.
6.
An
organizing
company
shall
report
to
the
commissioner
the
company’s
ownership
in
the
life
captive
reinsurance
company
and
value
the
ownership
equal
to
the
audited
statutory
surplus
of
the
life
captive
reinsurance
company.
Sec.
51.
NEW
SECTION
.
521J.114
Permitted
reinsurance.
1.
A
life
captive
reinsurance
company
may
reinsure,
pursuant
to
a
reinsurance
contract,
only
the
risks
of
a
ceding
insurer.
House
File
2766,
p.
32
2.
Unless
otherwise
approved
in
advance
by
the
commissioner,
a
life
captive
reinsurance
company
shall
not
assume
or
retain
exposure
to
reinsurance
losses
for
the
life
captive
reinsurance
company’s
own
account
that
are
not
funded
by
any
of
the
following:
a.
Proceeds
from
a
securitization.
b.
Premium
and
other
amounts
payable
by
a
ceding
insurer
to
the
life
captive
reinsurance
company
pursuant
to
a
reinsurance
contract.
c.
Letters
of
credit.
d.
Guaranties
of
a
parent.
e.
A
return
on
investment
of
proceeds
from
either
a
securitization
or
a
premium,
and
other
amounts
payable
by
the
ceding
insurer
to
the
life
captive
reinsurance
company
pursuant
to
the
reinsurance
contract.
3.
A
life
captive
reinsurance
company
may
cede
risks
assumed
through
a
reinsurance
contract
to
one
or
more
reinsurers
through
the
purchase
of
retrocession,
subject
to
prior
approval
of
the
commissioner.
4.
A
life
captive
reinsurance
company
may
enter
into
contracts
and
conduct
other
commercial
activities
related
or
incidental
to
and
necessary
to
fulfill
the
purposes
of
a
reinsurance
contract,
an
insurance
securitization,
and
this
subchapter.
Such
contracts
and
commercial
activities
must
be
included
in
the
life
captive
reinsurance
company’s
plan
of
operation
or
otherwise
be
approved
in
advance
by
the
commissioner,
and
may
include
but
are
not
limited
to
any
of
the
following:
a.
Entering
into
reinsurance
contracts
or
issuing
life
captive
reinsurance
company
securities,
and
complying
with
the
terms
of
the
contracts
and
securities.
b.
Entering
into
guaranty
trust,
guaranteed
investment
contract,
swap,
or
other
derivative,
tax,
administration,
services
reimbursement,
or
fiscal
agent
transactions.
c.
Complying
with
trust
indenture,
reinsurance,
or
retrocession.
5.
A
reinsurance
contract
shall
not
contain
a
provision
for
payment
by
the
life
captive
reinsurance
company
in
discharge
of
the
life
captive
reinsurance
company’s
obligations
to
a
person
House
File
2766,
p.
33
other
than
the
ceding
insurer
or
a
receiver
of
the
ceding
insurer,
except
upon
prior
approval
of
the
commissioner.
Sec.
52.
NEW
SECTION
.
521J.115
Rating
organizations.
A
life
captive
reinsurance
company
shall
not
be
required
to
join
a
rating
organization.
Sec.
53.
NEW
SECTION
.
521J.116
Compulsory
organizations.
A
life
captive
reinsurance
company
shall
not
join
or
contribute
financially
to
a
plan,
pool,
association,
or
guaranty
or
insolvency
fund
in
this
state.
Sec.
54.
NEW
SECTION
.
521J.117
Dormant
life
captive
reinsurance
companies.
1.
A
life
captive
reinsurance
company
that
is
domiciled
in
this
state
and
complies
with
this
section
may
apply
to
the
commissioner
for
a
certificate
of
dormancy.
A
certificate
of
dormancy
shall
be
valid
for
five
years
from
the
date
of
issuance
and
may
not
be
renewed.
2.
a.
A
life
captive
reinsurance
company
that
has
been
issued
a
certificate
of
dormancy
shall
comply
with
all
of
the
following:
(1)
The
dormant
life
captive
reinsurance
company
shall
possess
and
maintain
unimpaired,
paid-in
capital
and
surplus
of
not
less
than
twenty-five
thousand
dollars.
(2)
A
dormant
life
captive
reinsurance
company
shall
annually
submit
to
the
commissioner,
within
ninety
calendar
days
of
the
end
of
the
dormant
life
captive
reinsurance
company’s
fiscal
year,
a
report
on
the
dormant
life
captive
reinsurance
company’s
financial
condition,
verified
under
oath
by
two
of
the
dormant
life
captive
reinsurance
company’s
executive
officers,
in
the
form
and
manner
established
by
the
commissioner
by
rule.
(3)
If,
for
any
portion
of
the
immediately
preceding
calendar
year,
the
life
captive
reinsurance
company
held
a
certificate
of
dormancy,
the
dormant
life
captive
reinsurance
company
shall
pay
an
annual
one
thousand
dollar
dormancy
tax,
due
on
or
before
March
1.
b.
From
the
date
a
certificate
of
dormancy
is
issued
through
the
date
the
certificate
expires,
a
dormant
life
captive
reinsurance
company
that
has
been
issued
the
certificate
shall
not
be
subject
to
section
432.1A.
House
File
2766,
p.
34
3.
At
the
discretion
of
the
commissioner,
a
dormant
life
captive
reinsurance
company
may
be
subject
to
an
annual
examination.
4.
Prior
to
a
dormant
life
captive
reinsurance
company
issuing
an
insurance
policy,
the
company
must
apply
to
the
commissioner
for
approval
to
surrender
the
company’s
certificate
of
dormancy
and
to
resume
conducting
the
business
of
insurance.
5.
The
commissioner
shall
revoke
a
dormant
life
captive
reinsurance
company’s
certificate
of
dormancy
if
the
company
violates
this
section.
Sec.
55.
NEW
SECTION
.
521J.118
Books
and
records.
1.
a.
Unless
otherwise
approved
by
the
commissioner,
a
life
captive
reinsurance
company
shall
maintain
the
company’s
original
books,
records,
documents,
accounts,
vouchers,
and
agreements
in
this
state
and
make
them
available
for
examination
and
inspection
by
the
commissioner
as
requested
by
the
commissioner.
The
life
captive
reinsurance
company
may
store
and
reproduce
the
books,
records,
documents,
accounts,
vouchers,
and
agreements
electronically.
b.
All
books,
records,
documents,
accounts,
vouchers,
and
agreements
shall
be
kept
in
a
manner
that
the
commissioner
can
readily
ascertain
the
life
captive
reinsurance
company’s
financial
condition,
affairs,
and
operations;
can
readily
verify
the
life
captive
reinsurance
company’s
financial
statements;
and
can
confirm
the
life
captive
reinsurance
company’s
compliance
with
this
subchapter.
2.
Unless
otherwise
approved
by
the
commissioner,
all
books,
records,
documents,
accounts,
vouchers,
and
agreements
maintained
by
a
life
captive
reinsurance
company
under
subsection
1
shall
remain
available
in
the
state
until
the
commissioner
approves
destruction
or
other
disposition
of
the
books,
records,
documents,
accounts,
vouchers,
and
agreements.
Sec.
56.
NEW
SECTION
.
521J.119
Material
transactions.
1.
A
life
captive
reinsurance
company
shall
not
take
any
of
the
following
actions
unless
the
company
provides
the
commissioner
at
least
thirty
calendar
days’
prior
written
notice
and
the
commissioner
expressly
approves
the
action:
a.
Dissolve
the
life
captive
reinsurance
company.
House
File
2766,
p.
35
b.
Sell,
exchange,
lease,
mortgage,
assign,
pledge,
or
otherwise
transfer
or
grant
a
security
interest
in
over
thirty
percent
of
the
assets
of
the
life
captive
reinsurance
company.
c.
Incur
material
indebtedness.
d.
Make
a
material
loan
or
other
material
extension
of
credit.
e.
Make
a
material
payment
out
of
capital
and
surplus
other
than
dividends
or
distributions
paid
in
accordance
with
this
subchapter.
f.
Conduct
a
merger
or
consolidation
to
which
the
life
captive
reinsurance
company
is
a
constituent
party.
g.
Transfer
to
or
redomesticate
in
a
different
jurisdiction.
h.
Terminate
all
or
a
part
of
the
life
captive
reinsurance
company’s
business.
2.
A
life
captive
reinsurance
company
shall
submit
to
the
commissioner
periodic
written
requests
for
authorization
prior
to
making
payments
of
interest
on,
and
repayments
of
principal
of,
surplus
notes
and
other
debt
obligations
issued
by
a
life
captive
reinsurance
company.
The
commissioner
shall
not
approve
a
payment
or
repayment
if
the
commissioner
determines
that
the
payment
or
repayment
would
jeopardize
the
ability
of
the
life
captive
reinsurance
company
or
any
other
person
to
fulfill
the
company’s
or
person’s
obligations.
Sec.
57.
NEW
SECTION
.
521J.120
Securities.
A
life
captive
reinsurance
company
security
shall
not
be
subject
to
regulation
as
an
insurance
or
reinsurance
contract.
An
investor
in,
or
holder
of,
the
security
shall
not
be
considered
to
transact
in
the
business
of
insurance
in
the
state
solely
based
on
such
interest
in
the
security.
An
underwriter’s
placement
agents,
selling
agents,
partners,
commissioners,
officers,
members,
managers,
employees,
agents,
representatives,
and
advisors
involved
in
an
insurance
securitization
by
a
life
captive
reinsurance
company
shall
not
be
considered
insurance
producers
or
brokers,
or
to
be
conducting
business
as
an
insurance
company,
as
a
reinsurance
company,
or
as
an
insurance
agency,
brokerage,
intermediary,
advisory,
or
consulting
business,
solely
based
on
underwriting
activities
in
connection
with
securitization.
Sec.
58.
NEW
SECTION
.
521J.121
Rules.
House
File
2766,
p.
36
The
commissioner
may
adopt
rules
pursuant
to
chapter
17A
to
implement
and
administer
this
subchapter.
Sec.
59.
CODE
EDITOR
DIRECTIVE.
The
Code
editor
is
directed
to
designate
sections
521J.1
through
521J.27,
as
enacted
and
amended
by
this
Act,
as
subchapter
I
of
chapter
521J
entitled
“Captive
Insurance
Companies”,
and
to
designate
sections
521J.101
through
521J.121,
as
enacted
by
this
Act,
as
subchapter
II
of
chapter
521J
entitled
“Life
Captive
Reinsurance
Companies”.
______________________________
PAT
GRASSLEY
Speaker
of
the
House
______________________________
AMY
SINCLAIR
President
of
the
Senate
I
hereby
certify
that
this
bill
originated
in
the
House
and
is
known
as
House
File
2766,
Ninety-first
General
Assembly.
______________________________
MEGHAN
NELSON
Chief
Clerk
of
the
House
Approved
_______________,
2026
______________________________
KIM
REYNOLDS
Governor