South Carolina Code of Laws
Chapter 90 - Captive Insurance Companies
Section 38-90-485. Effect of creation of protected cell; naming; management of assets.

(A)(1) The creation of a protected cell does not create, with respect to that protected cell, a legal person separate from the SPFC.
(2) Notwithstanding the provision of item (1), a protected cell must have its own distinct name or designation that includes the words "protected cell". The SPFC shall transfer all assets attributable to the protected cell to one or more separately established and identified protected cell accounts bearing the name or designation of that protected cell.
(3) Although it is not a separate legal person, the property of a SPFC in a protected cell is subject to orders of a court by name as it would have been if the protected cell were a separate legal person.
(4) The property of a SPFC in a protected cell must be served in its own name with process in all civil actions or proceedings involving or relating to the activities of that protected cell or a breach by the SPFC of a duty to the protected cell or to a counterparty to a transaction linked or attributed to it by serving the SPFC in the manner described in Section 15-9-270.
(5) A protected cell exists only at the pleasure of the SPFC. At the cessation of business of a protected cell in accordance with the plan approved by the director, the SPFC voluntarily shall close out the protected cell account.
(B) Nothing in this section may be construed to prohibit a SPFC from contracting with, or arranging for, an investment advisor, commodity trading advisor, or other third party to manage the assets of a protected cell, if all remuneration, expenses, and other compensation of the third party advisor or manager are payable from the assets of that protected cell and not from the assets of other protected cells or the assets of the SPFC's general account, unless approved by the director.
(C) Creditors with respect to a protected cell are not entitled to have recourse against the protected cell assets of other protected cells or the assets of the SPFC's general account. If an obligation of a SPFC relates only to the general account, the obligation of the SPFC extends only to that creditor, with respect to that obligation, and is entitled to have recourse only to the assets of the SPFC's general account.
(D) The assets of the protected cell may not be used to pay expenses or claims other than those attributable to the protected cell. Protected cell assets are available only to the SPFC contract counterparty and other creditors of the SPFC that are creditors only with respect to that protected cell and, accordingly, are entitled, in conformity with this article, to have recourse to the protected cell assets attributable to that protected cell and absolutely are protected from the creditors of the SPFC that are not creditors with respect to that protected cell and who, accordingly, are not entitled to have recourse to the protected cell assets attributable to that protected cell. If an obligation of a SPFC to a person or counterparty arises from a SPFC contract or related insurance securitization transaction, or is otherwise incurred, with respect to a protected cell:
(1) that obligation of the SPFC extends only to the protected cell assets attributable to that protected cell, and the person or counterparty, with respect to that obligation, is entitled to have recourse only to the protected cell assets attributable to that protected cell; and
(2) that obligation of the SPFC does not extend to the protected cell assets of another protected cell or the assets of the SPFC's general account, and that person, with respect to that obligation, is not entitled to have recourse to the protected cell assets of another protected cell or the assets of the SPFC's general account. The SPFC's capitalization held separate and apart from the capitalization of its protected cell or cells as required by Section 38-90-480(D) must be available at all times to pay expenses of or claims against the SPFC and may not be used to pay expenses or claims attributable to any protected cell.
(E) Notwithstanding another provision of law, a SPFC may allow for a security interest in accordance with applicable law to attach to protected cell assets or a protected cell account when in favor of a creditor of the protected cell or to facilitate the insurance securitization, including, without limitation, the issuance of the SPFC contract, to the extent those protected cell assets are not required at all times to support the risk, but without otherwise affecting the discharge of liabilities under the SPFC contract, or as otherwise approved by the director.
(F) A SPFC shall establish administrative and accounting procedures necessary to properly identify the one or more protected cells of the SPFC and the protected cell assets and protected cell liabilities to each protected cell. The directors of a SPFC shall keep protected cell assets and protected cell liabilities:
(1) separate and separately identifiable from the assets and liabilities of the SPFC's general account; and
(2) attributable to one protected cell separate and separately identifiable from protected cell assets and protected cell liabilities attributable to other protected cells.
(G) All contracts or other documentation reflecting protected cell liabilities clearly must indicate that only the protected cell assets are available for the satisfaction of those protected cell liabilities. In all SPFC insurance securitizations involving a protected cell, the contracts or other documentation effecting the transaction must contain provisions identifying the protected cell to which the transaction is attributed. In addition, the contracts or other documentation clearly must disclose that the assets of that protected cell, and only those assets, are available to pay the obligations of that protected cell. Notwithstanding the provisions of this subsection and subject to the provisions of this article and another applicable law or regulation, the failure to include this language in the contracts or other documentation may not be used as the sole basis by creditors, insureds or reinsureds, insurers or reinsurers, or other claimants to circumvent the provisions of this section.
(H) A SPFC with protected cells annually shall file with the department accounting statements and financial reports required by this article which, among other things, must:
(1) detail the financial experience of each protected cell and the SPFC separately; and
(2) provide the combined financial experience of the SPFC and all protected cells.
(I) A SPFC with protected cells shall notify the director in writing within ten business days of a protected cell becoming insolvent.
HISTORY: 2006 Act No. 332, Section 1, eff June 1, 2006.

Structure South Carolina Code of Laws

South Carolina Code of Laws

Title 38 - Insurance

Chapter 90 - Captive Insurance Companies

Section 38-90-10. Definitions.

Section 38-90-20. Licensing; required information and documentation; fee; renewal.

Section 38-90-25. Reserved.

Section 38-90-30. Adoption of name.

Section 38-90-35. Discovery of confidential information in civil actions.

Section 38-90-40. Capitalization requirements.

Section 38-90-45. Reserved.

Section 38-90-50. Reserved.

Section 38-90-55. Reserved.

Section 38-90-60. Incorporation options and requirements.

Section 38-90-70. Reports.

Section 38-90-75. Discounting of loss and loss adjustment expense reserves.

Section 38-90-80. Inspections and examinations; confidentiality of reports; limitations applicable to branch captive insurance companies; application of general provisions.

Section 38-90-90. Suspension or revocation of license.

Section 38-90-100. Applicability of investment requirements.

Section 38-90-105. Loans.

Section 38-90-110. Reinsurance; effect on reserves.

Section 38-90-120. Requirement to join ratings organization.

Section 38-90-130. Participation in plan, pool, association, or guaranty or insolvency fund.

Section 38-90-140. Tax payment; rates; "common ownership and control" defined.

Section 38-90-145. Reserved.

Section 38-90-150. Rules, regulations, and orders.

Section 38-90-160. Application of provisions of title; director discretion; exemption of special purpose captive insurance companies.

Section 38-90-165. Declaration of inactivity.

Section 38-90-175. Captive Insurance Regulatory and Supervision Fund created; disbursements.

Section 38-90-180. Applicability of provisions relating to insurance reorganizations, receiverships, and injunctions; sponsored captive insurance company assets and capital provisions.

Section 30-90-185. Reserved.

Section 38-90-190. Reserved.

Section 38-90-200. Conversion of certain stock, mutual corporations, or limited liability companies into reciprocal insurers; plan for conversion.

Section 38-90-210. Formation of sponsored captive insurance company; establishing protected cells.

Section 38-90-215. Protected cells.

Section 38-90-220. Requirements applicable to sponsors.

Section 38-90-225. Participants in a sponsored captive insurance company.

Section 38-90-230. Protected cell assets; availability to creditors.

Section 38-90-235. Repealed by 2014 Act No. 282, Section 24, eff June 10, 2014.

Section 38-90-240. Reserved.

Section 38-90-250. Certificate of authority.

Section 38-90-410. Purpose.

Section 38-90-420. Definitions.

Section 38-90-430. Relation to other Title 38 provisions.

Section 38-90-440. License to transact business in State; contents of application; fees; foreign corporations.

Section 38-90-450. Organization requirements; privileges and restrictions.

Section 38-90-460. Capitalization.

Section 38-90-470. Authorized contracts.

Section 38-90-480. Protected cells.

Section 38-90-485. Effect of creation of protected cell; naming; management of assets.

Section 38-90-490. Issuance of securities.

Section 38-90-500. Swap agreements and other forms of asset management agreements.

Section 38-90-510. Authority to enter into contracts; contents.

Section 38-90-515. Securities issued by SPFC as insurance contract; underwriters or selling agents as insurance producers.

Section 38-90-520. Requirements and guidelines for asset management.

Section 38-90-530. Trust agreements for assets held in trust or pledged to secure obligations.

Section 38-90-540. Payment of dividends.

Section 38-90-550. Material changes of SPFC'S plan; filing of audit and statement of operations; examination of records.

Section 38-90-560. Examinations by director; confidentiality of examination reports.

Section 38-90-570. Expiration of authority granted by director on cessation of business; suspension or revocation of license; penalties; administrative hearing.

Section 38-90-580. Tax rates and payment schedules.

Section 38-90-590. Conditions for SPFC contract being granted credit for reinsurance treatment or otherwise qualifying as asset or reduction from liability for benefit of counterparty.

Section 38-90-600. Conservation, rehabilitation, or liquidation of SPFC.

Section 38-90-610. Disclosure of information by director.

Section 38-90-620. Standards and criteria applicable in contested case brought by third party and certain actions by director.

Section 38-90-630. Promulgation of regulations.

Section 38-90-810. Repealed.

Section 38-90-820. Repealed.

Section 38-90-830. Repealed.

Section 38-90-840. Repealed.

Section 38-90-850. Repealed.

Section 38-90-860. Repealed.

Section 38-90-870. Repealed.

Section 38-90-875. Repealed.

Section 38-90-880. Repealed.

Section 38-90-890. Repealed.