Arkansas Code
Subchapter 16 - Licensing and Regulation of Captive Insurers
§ 23-63-1604. Capital requirements

(a)
(1) The Insurance Commissioner shall not issue a license to a producer reinsurance captive insurance company, pure captive insurance company, sponsored captive insurance company, association captive insurance company incorporated as a stock insurer, or industrial insured captive insurance company incorporated as a stock insurer unless the company possesses and maintains unimpaired paid-in capital of:
(A) In the case of a producer reinsurance captive insurance company, not less than three hundred thousand dollars ($300,000);
(B) In the case of a pure captive insurance company, not less than one hundred thousand dollars ($100,000);
(C) In the case of an association captive insurance company incorporated as a stock insurer, not less than four hundred thousand dollars ($400,000);
(D) In the case of an industrial insured captive insurance company incorporated as a stock insurer, not less than two hundred thousand dollars ($200,000);
(E) In the case of a sponsored captive insurance company, not less than two hundred fifty thousand dollars ($250,000); or
(F) 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, but in no event less than three hundred thousand dollars ($300,000).

(2) The capital may be in the form of:
(A) Cash;
(B) Other assets acceptable to the commissioner; or
(C) An irrevocable letter of credit issued by a bank chartered by this state or a member bank of the Federal Reserve System and approved by the commissioner.

(b)
(1) The commissioner may prescribe additional capital based upon the type, volume, and nature of insurance business transacted.
(2) This capital may be in the form of:
(A) Cash;
(B) Other assets acceptable to the commissioner; or
(C) An irrevocable letter of credit issued by a bank chartered by this state or a member bank of the Federal Reserve System.

(c)
(1) In the case of a branch captive insurance company, as security for the payment of liabilities attributable to branch operations, the commissioner shall require that a trust fund, funded by an irrevocable letter of credit or other acceptable asset, be established and maintained in the United States for the benefit of United States policyholders and United States ceding insurers under insurance policies issued or reinsurance contracts issued or assumed by the branch captive insurance company through its branch operations.
(2)
(A) The amount of the security may be no less than the capital and surplus required by this subchapter and the reserves on these insurance policies or reinsurance contracts, including reserves for losses, allocated loss adjustment expenses, incurred but not reported losses, and unearned premiums with regard to business written through branch operations.
(B)
(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 so long as the security remains posted with the reinsurer.
(ii) If the form of security selected is a letter of credit, the letter of credit must be issued by a bank chartered in this state or a member bank of the Federal Reserve System.

(d)
(1) A captive insurance company may not pay a dividend out of, or other distribution with respect to, capital or surplus, in excess of the limitations set forth in § 23-63-515, without the prior approval of the commissioner.
(2) Approval of an ongoing plan for the payment of dividends or other distributions must be conditioned upon the retention, at the time of each payment, of capital or surplus in excess of amounts specified by or determined in accordance with formulas approved by the commissioner.
(3) This subsection (d) shall not apply to producer reinsurance captive insurance companies.