SB 1038 — AN ACT CONCERNING CAPTIVE INSURANCE COMPANIES.

GeneralSenate Assembly Raised Bill No.

1038 JanuaryPublic Session,Act 2023 LCO No.

376823-15 ReferredtoCommitteeonINSURANCEANDREALAN ESTATEACT IntroducedCONCERNING by:CAPTIVE INSURANCE COMPANIES.

(INS) AN ACT CONCERNING CAPTIVE INSURANCE COMPANIES.

LCO(2) 3768No \\PRDFS1\SCOUSERS\FORZANOF\WS\2023SB-01038-R01association captive insurance company may insure any risks other than those of 7its SB.docxassociation, the member organizations of its Senate Bill No.

1038 (2) No association captive insurance company may insure any risks other than those of its association, the member organizations of its association, and the member organizations' affiliated companies;

LCOPublic 3768Act {\\PRDFS1\SCOUSERS\FORZANOF\WS\2023SB-010382 of 7 R02-SB.docx } Bill No.

23-15 2 of 7 Senate Bill No.

(6)Public (A)Act Except as otherwise specified, each sponsored captive insurance company shall attribute assets and liabilities to the protected LCO 3768 {\\PRDFS1\SCOUSERS\FORZANOF\WS\2023SB-01033 of 7 R02-SB.docx } Bill No.

103823-15 cells3 and the general account in accordance with the plan of operation7 approvedSenate byBill theNo. commissioner, and shall not attribute any other assets or liabilities between its general account and any protected cell or between any protected cells.

For1038 purposes(6) of(A) thisExcept subdivision,as "generalotherwise account"meansallassetsandliabilitiesofasponsoredspecified, captiveinsuranceeach sponsored captive insurance company thatshall areattribute notassets attributableand liabilities to athe protected cell.cells and the general account in accordance with the plan of operation approved by the commissioner, and shall not attribute any other assets or liabilities between its general account and any protected cell or between any protected cells.

For purposes of this subdivision, "general account"meansallassetsandliabilitiesofasponsoredcaptiveinsurance company that are not attributable to a protected cell.

The addition of each new protected cell or thewithdrawal of any participant or terminationofany existing protected cell shall constitute a change in the sponsored captive insurancePublic company'sAct planNo. of operation and shall require the commissioner's prior written approval;

(10)23-15 If4 required by the commissioner, the business written by a LCO 3768 {\\PRDFS1\SCOUSERS\FORZANOF\WS\2023SB-01034 of 7 R02-SB.docxSenate } Bill No.

1038 sponsored captive insurance companycompany's withplan respectof tooperation eachand protected cell shall berequire (A) fronted by an insurance company licensed under the lawscommissioner's ofprior anywritten state,approval; (B) reinsured by a reinsurer authorized or approved by this state, or (C) secured by a trust fund in the United States for the benefit ofpolicyholdersandclaimantsor fundedby anirrevocableletter of credit or other arrangement that is acceptable to the commissioner.

(10) If required by the commissioner, the business written by a sponsored captive insurance company with respect to each protected cell shall be (A) fronted by an insurance company licensed under the laws of any state, (B) reinsured by a reinsurer authorized or approved by this state, or (C) secured by a trust fund in the United States for the benefit ofpolicyholdersandclaimantsor fundedby anirrevocableletter of credit or other arrangement that is acceptable to the commissioner.

(C) Unless otherwise approved by the commissioner, assets allocated toPublic aAct protectedNo. cell shall be valued in accordance with therules otherwise applicable to the protected cell's assets;

(D)23-15 If,5 and to the extent provided under the applicable contracts, such portion of the assets of any such protected cell equal to the reserves and other contract liabilities with respect to such account shall not be LCO 3768 {\\PRDFS1\SCOUSERS\FORZANOF\WS\2023SB-01035 of 7 R02-SB.docxSenate } Bill No.

1038 chargeablewithliabilitiesarisingoutofanyotherbusinesstheprotectedto cella mayseparate conduct;account shall be valued in accordance with the laws and regulations of this state otherwise applicable to the protected cell's assets;

(D) To the extent provided under the applicable contracts, such portion of the assets of any such protected cell equal to the reserves and other contract liabilities with respect to such account shall not be chargeablewithliabilitiesarisingoutofanyotherbusinesstheprotected cell may conduct;

Such committee membersare notrequiredto beaffiliatedwithsuchprotected cell.Public Act No.

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1038 cell.

LCOApproved 3768June {\\PRDFS1\SCOUSERS\FORZANOF\WS\2023SB-01038-67, of2023 7Public R02-SB.docxAct } Bill No.

103823-15 This7 actof shall7 take effect as follows and shall amend the following sections:

Section 1 October 1, 2023 38a-91bb(a) Sec.

2 October 1, 2023 38a-91rr(a) Sec.

3 October 1, 2023 38a-91uu(d) INS Joint Favorable FIN Joint Favorable LCO 3768 R02-SB.docx }OUSERS\FORZANOF\WS\2023SB-01038- 7 of 7