SS/SCS/SB 215 - This act allows for the formation of captive insurance companies within Missouri under certain conditions.CAPTIVE INSURANCE COMPANIES - This act regulates captive insurance companies. Under the act, captive insurance companies are allowed to apply for a license to provide insurance and annuity contracts to its parent, affiliated, or controlled unaffiliated companies. Captive insurance companies are not permitted to provide personal motor vehicle or homeowner’s insurance. A captive insurance company may reinsure worker’s compensation of its parent and affiliated companies, provided that this act shall not divest the division of worker’s compensation of any jurisdiction over worker’s compensation self-insured plans. Captive insurance companies may accept or cede reinsurance. Captive insurance companies that insure life and health risks must comply with all state and federal laws.
LICENSING - The act delineates the process by which a captive insurance company may obtain a license to do business within Missouri (filing of organizational documents, submission of insurance coverages, deductibles, etc., filing of asset information, the overall soundness of its plan of operation, and the filing of other information to determine whether the company will be able to meet its policy obligations).
LICENSE AND RENEWAL FEES - The act requires each captive insurance company to pay the director a $7,500 fee for examining, investigating and processing the company’s application for a license. The act also requires captive insurance companies to pay an annual license fee of $7,500. Captive insurance companies may deduct the license, renewal fees paid from premium taxes paid to the state (379.1302).
NAMES OF COMPANIES - Under the act, captive insurance companies are prohibited from adopting a name that is likely to be confused or mistaken with an existing company.
MINIMUM CAPITAL AND SURPLUS REQUIREMENTS - The act delineates capital and surplus requirements for captive insurance companies based upon its type of licensure. For example, a pure captive insurance company must maintain a paid-in capital and surplus of at least $250,000, while an industrial insured captive insurance company must maintain at least $500,000
Under the act, no dividend can be paid without prior approval from the Director of the Department of Insurance.
FORMATION OF CAPTIVE INSURANCE COMPANIES IN MISSOURI - Under the act, a pure captive insurance company may be incorporated as a stock insurer, as a nonprofit corporation, or as a manager-managed limited liability company. The act delineates what types of corporation forms association and industrial insured captive companies may organize as.
FINANCIAL STATEMENTS/EXAMINATIONS - Under the act, captive insurance companies must annually report their financial condition to the director using generally accepted accounting principles. A captive insurance company will be examined at least once every three years by the director or his or her agent to determine its financial condition, its ability to fulfill its obligations and to whether it has complied with this act and other statutory provisions. The expenses and charges of the examination shall be paid by the captive insurance company. Examination reports and other associated documents are confidential and are not subject to subpoena and may not be made public without the written consent of the captive insurance company.
GROUNDS AND PROCEDURES FOR SUSPENSION - The act delineates various reasons that the director may suspend or revoke the captive insurance company's license (insolvency, failure to submit an annual report, failure to comply with other laws). The director may suspend or revoke a license if the director deems it in the best interest of the public and the policyholders of such captive insurance company.
LEGAL INVESTMENTS - Under the act, association captive insurance companies must comply with investment requirements contained in Chapter 375 and Sections 379.080 and 379.082 as applicable. No pure captive insurance company shall be subject to investment restrictions. The director may limit investments that threaten the solvency of a pure captive insurance company. In addition to other investment standards and restrictions, pure captive insurance companies may not make a loan to or an investment in its parent company or affiliates without prior written approval of the director.
REINSURANCE - Under the act, captive insurance companies may provide reinsurance and may reinsure risks or portions of risks ceded to reinsurers with prior approval of the director.
RATING ORGANIZATIONS - Under the act, a captive insurance company cannot be required to join a rating organization.
EXEMPTION FROM COMPULSORY ASSOCIATIONS - The act provides that no captive insurance company shall be permitted to join or contribute financially to a plan, pool, association, guaranty, or insolvency fund nor shall a captive insurance company receive any benefits from a guaranty fund.
PREMIUM TAXES - The act sets forth the premium insurance tax rates and time periods in which captive insurance companies must pay. A percentage of the premium taxes, along with other fees and assessments, shall be paid into the Insurance Dedicated Fund to defray costs associated with regulating captive insurance companies.
BRANCH CAPTIVES - The act allows branch captives to be established within Missouri to write insurance or reinsurance. In order to do insurance business within Missouri, the branch captive insurance company must maintain its principal place of business for its branch operations within Missouri. The act also sets forth various reporting and filing requirements for branch captive insurance companies.
SPECIAL PURPOSE LIFE REINSURANCE COMPANIES - This act provides for the creation and operation of special purpose life reinsurance captives (SPLRCs) as a means of facilitating financing of life insurance reserves, annuity reserves, or accident and health reserves and reinsuring the embedded value of insurance business.
The act provides that only the provisions of this act shall apply to SPLRCs, its operations, assets, investments and contracts.
The act requires SPLRCs to apply for a license from the director. The act sets forth the contents of the application. The act sets forth minimum surplus requirements ($250,000) and other financial requirements.
Under the act, all SPLRCs must file a plan of operation with the director. The plan of operation must contain a description of the contemplated financial transactions and a detailed description of transaction documents to which the SPLRC will be a party.
The act requires the SPLRC to pay an initial license fee of $7,500 and an annual renewal fee of $7,500.
The act sets forth the various standards for granting a license to a SPLRC. The director must find that the plan of operation provides a reasonable and expected successful operation. The director shall consider whether the SPLRC and its management are of known good character and are not affiliated with persons known to have been involved with the improper manipulation of assets, accounts or reinsurance.
The act provides that an SPLRC may be organized as a stock corporation, a statutory close corporation, a LLC or other form of organization approved by the director.
Under the act, SPLRCs may enter into SPLRC contracts with ceding companies under certain conditions. Similarly, a SPLRC may into swap agreements.
The act sets forth various regulations regarding SPLRCs with respect to the issuance of securities, the valuing of assets, the payment of dividends, the maintenance of books and records, and their tax treatment.
The act provides that information filed with the director by the SPLRC is confidential unless discoverable in civil litigation under certain circumstances or is disclosed to insurance regulators under certain conditions.
The act also authorizes the director to petition a court for an order of conservation, rehabilitation, or liquidation under certain conditions.
STEPHEN WITTE