In fulfilling its function, the SPFC shall adhere to the following requirements and, to the extent of its powers, shall ensure that contracts obligating other parties to perform certain functions incident to its operations are substantively and materially consistent with the following requirements and guidelines:
(1) The assets of a SPFC must be preserved and administered by or on behalf of the SPFC to satisfy the liabilities and obligations of the SPFC incident to the insurance securitization and other related agreements.
(2) Assets held by a SPFC in trust must be valued at their fair value.
(3) The proceeds from the sale of securities pursuant to the insurance securitization must be deposited with the trustee to the extent required to secure its obligations under the SPFC contract as provided by this article and must be held or invested by the trustee pursuant to the provisions of Section 38-90-530 and the asset management agreement, if any, filed with the department.
(4) Assets of the SPFC, other than those held in trust for the counterparty, and income on trust assets received by the SPFC may be used to pay interest or other consideration on any securities or outstanding debt or other obligation of the SPFC, and nothing in this article may be construed or interpreted to prevent a SPFC from entering into a swap agreement or other asset management transaction that has the effect of hedging or guaranteeing the fixed or floating interest rate returns paid on the assets in trust or required for the securities issued by the SPFC generated from or other consideration or payment flows in the transaction.
(5) In the SPFC insurance securitization, the contracts or other relating documentation must contain provisions identifying the SPFC.
(6) Unless otherwise approved by the director, a SPFC may not:
(a) issue or otherwise administer primary insurance policies;
(b) enter into a SPFC contract with a person that is not licensed or otherwise authorized to transact the business of insurance or reinsurance in at least its state or country of domicile;
(c) assume or retain exposure to insurance or reinsurance losses for its own account that is not funded by proceeds from a SPFC securitization that meets the provisions of this article. However, the SPFC may wholly or partially reinsure or retrocede the risks assumed to a third party reinsurer on terms approved by the director.
(7) A SPFC may not:
(a) have any direct obligation to the policyholders or reinsureds of the counterparty;
(b) lend or otherwise invest, or place in custody, trust, or under management any of its assets with, or to borrow money or receive a loan from, other than by issuance of the securities pursuant to an insurance securitization, or advance from, anyone convicted of a felony, anyone who is untrustworthy or of known bad character, or anyone convicted of a criminal offense involving the conversion or misappropriation of fiduciary funds or insurance accounts, theft, deceit, fraud, misrepresentation, or corruption.
HISTORY: 2004 Act No. 291, Section 28, eff July 29, 2004.
Structure South Carolina Code of Laws
Chapter 90 - Captive Insurance Companies
Section 38-90-10. Definitions.
Section 38-90-20. Licensing; required information and documentation; fee; renewal.
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 38-90-60. Incorporation options and requirements.
Section 38-90-75. Discounting of loss and loss adjustment expense reserves.
Section 38-90-90. Suspension or revocation of license.
Section 38-90-100. Applicability of investment requirements.
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 38-90-150. Rules, regulations, and orders.
Section 38-90-165. Declaration of inactivity.
Section 38-90-175. Captive Insurance Regulatory and Supervision Fund created; disbursements.
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 38-90-250. Certificate of authority.
Section 38-90-420. Definitions.
Section 38-90-430. Relation to other Title 38 provisions.
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 38-90-520. 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 38-90-560. Examinations by director; confidentiality of examination reports.
Section 38-90-580. Tax rates and payment schedules.
Section 38-90-600. Conservation, rehabilitation, or liquidation of SPFC.
Section 38-90-610. Disclosure of information by director.