Section 31A-37-204 - Paid-in capital - Other capital(1)(a) The commissioner may not issue a certificate of authority to a company described in Subsection (1)(c) unless the company possesses and thereafter maintains unimpaired paid-in capital and unimpaired paid-in surplus of: (i) in the case of a pure captive insurance company:(A) except as provided in Subsection (1)(a)(i)(B), not less than $250,000; or(B) if the pure captive insurance company is not acting as a pool that facilitates risk distribution for other captive insurers, an amount that is the greater of: (I) not less than 20% of the company's total aggregate risk; or(ii) in the case of an association captive insurance company, not less than $750,000;(iii) in the case of an industrial insured captive insurance company incorporated as a stock insurer, not less than $700,000;(iv) in the case of a sponsored captive insurance company, not less than $250,000 of which a minimum of $50,000 is provided by the sponsor; or(v) in the case of a special purpose captive insurance company, an amount determined by the commissioner after giving due consideration to the company's business plan, feasibility study, and pro-formas, including the nature of the risks to be insured.(b) The paid-in capital and surplus required under this Subsection (1) may be in the form of: (ii) an irrevocable letter of credit:(A) issued by: (I) a bank chartered by this state;(II) a member bank of the Federal Reserve System; or(III) a member bank of the Federal Deposit Insurance Corporation;(B) approved by the commissioner;(iii) marketable securities as determined by Subsection (5); or(iv) some other thing of value approved by the commissioner, for a period not to exceed 45 days, to facilitate the formation of a captive insurance company in this state pursuant to an approved plan of liquidation and reorganization of another captive insurance company or alien captive insurance company in another jurisdiction.(c) This Subsection (1) applies to: (i) a pure captive insurance company;(ii) a sponsored captive insurance company;(iii) a special purpose captive insurance company;(iv) an association captive insurance company; or(v) an industrial insured captive insurance company.(2)(a) The commissioner may, under Section 31A-37-106, prescribe additional capital based on the type, volume, and nature of insurance business transacted.(b) The capital prescribed by the commissioner under this Subsection (2) may be in the form of: (ii) an irrevocable letter of credit issued by:(A) a bank chartered by this state; or(B) a member bank of the Federal Reserve System; or(iii) marketable securities as determined by Subsection (5).(3)(a) Except as provided in Subsection (3)(c), a branch captive insurance company, as security for the payment of liabilities attributable to branch operations, shall, through its branch operations, establish and maintain a trust fund:(i) funded by an irrevocable letter of credit or other acceptable asset; and(ii) in the United States for the benefit of:(A) United States policyholders; and(B) United States ceding insurers under:(I) insurance policies issued; or(II) reinsurance contracts issued or assumed.(b) The amount of the security required under this Subsection (3) shall be no less than: (i) the capital and surplus required by this chapter; and(ii) the reserves on the insurance policies or reinsurance contracts, including: (B) allocated loss adjustment expenses;(C) incurred but not reported losses; and(D) unearned premiums with regard to business written through branch operations.(c) Notwithstanding the other provisions of this Subsection (3):(i) the commissioner may permit a branch captive insurance company that is required to post security for loss reserves on branch business by its reinsurer to reduce the funds in the trust account required by this section by the same amount as the security posted if the security remains posted with the reinsurer; and(ii) a branch captive insurance company that is the result of the licensure of an alien captive insurance company that is not formed in an alien jurisdiction is not subject to the requirements of this Subsection (3).(4)(a) A captive insurance company may not pay the following without the prior approval of the commissioner: (i) a dividend out of capital or surplus in excess of the limits under Section 16-10a-640; or(ii) a distribution with respect to capital or surplus in excess of the limits under Section 16-10a-640.(b) The commissioner shall condition approval of an ongoing plan for the payment of dividends or other distributions on the retention, at the time of each payment, of capital or surplus in excess of:(i) amounts specified by the commissioner under Section 31A-37-106; or(ii) determined in accordance with formulas approved by the commissioner under Section 31A-37-106.(5) For purposes of this section, marketable securities means:(a) a bond or other evidence of indebtedness of a governmental unit in the United States or Canada or any instrumentality of the United States or Canada; or(b) securities: (i) traded on one or more of the following exchanges in the United States:(ii) when no particular security, or a substantially related security, applied toward the required minimum capital and surplus requirement of Subsection (1) represents more than 50% of the minimum capital and surplus requirement; and(iii) when no group of up to four particular securities, consolidating substantially related securities, applied toward the required minimum capital and surplus requirement of Subsection (1) represents more than 90% of the minimum capital and surplus requirement.(6) Notwithstanding Subsection (5), to protect the solvency and liquidity of a captive insurance company, the commissioner may reject the application of specific assets or amounts of specific assets to satisfying the requirement of Subsection (1).Amended by Chapter 120, 2024 General Session ,§ 35, eff. 5/1/2024.Amended by Chapter 194, 2023 General Session ,§ 22, eff. 5/3/2023.Amended by Chapter 252, 2021 General Session ,§ 41, eff. 5/5/2021.Amended by Chapter 168, 2017 General Session ,§ 61, eff. 5/9/2017.Amended by Chapter 138, 2016 General Session ,§ 38, eff. 5/10/2016.Amended by Chapter 244, 2015 General Session ,§ 41, eff. 5/12/2015.Amended by Chapter 312, 2004 General Session