Definitions

As used in this article, the term: (1) ‘‘General account’’ means all the assets and liabilities of a sponsored captive insurance company that are not attributable to a protected cell. (2) ‘‘Incorporated protected cell’’ means a protected cell that is established as a stock corporation or manager-managed limited liability company separate from the sponsored captive insurance company of which it is a part. (3) ‘‘Participant’’ means a person, and any affiliates thereof, that is insured or reinsured by a sponsored captive insurance company, where the losses of the participant are limited through a participant contract to such participant’s protected cell assets or to the pro rata share of the assets of one or more protected cells that are identified in such participant contract. (4) ‘‘Participant contract’’ means a contract by which a sponsored captive insurance company insures or reinsures the risks of a participant, or the controlled unaffiliated business thereof, and limits the losses to the participant’s protected cell assets or to the pro rata share of the assets of one or more protected cells that are identified in such participant contract. (5) ‘‘Protected cell’’ means a separate and distinct account or accounts established by a sponsored captive insurance company in which an identified pool of assets are maintained for one or more participants in accordance with the terms of one or more participant contracts to fund the liability of the sponsored captive insurance company insured or assumed on behalf of such participants as set 872 33-41-101 forth in such participant contracts. A protected cell may be an incorporated protected cell or an unincorporated protected cell. (6) ‘‘Protected cell assets’’ means all assets, contract rights, and general intangibles identified with and attributable to a specific protected cell that may not be used to pay any expenses or claims other than those attributable to such protected cell. (7) ‘‘Protected cell liability’’ means all liabilities and other obligations identified with and attributable to a specific protected cell. (8) ‘‘Sponsor’’ means any person, other than a risk retention group, that is approved by the Commissioner, in the exercise of his or her sole discretion, to organize and operate a sponsored captive insurance company and to provide all or part of its required capital and surplus. (9) ‘‘Sponsored captive insurance company’’ means any domestic stock insurer or manager-managed limited liability company formed by one or more sponsors having been granted a certificate of authority pursuant to this chapter that: (A) May only be owned by its participants and sponsors, unless the Commissioner has authorized the issuance of nonvoting securities to other persons: (B) Maintains at least $250,000.00 in capital and surplus subject to Code Section 33-41-8, which shall at all times be available to pay any expenses of or claims against it; (C) May only insure or reinsure the risks of its participants, or the controlled unaffiliated business thereof, in accordance with separate participant contracts; (D) Funds its liabilities to each participant through one or more protected cells and keeps the protected cell assets and protected cell liabilities of each protected cell segregated from the general account and from the protected cell assets and protected cell liabilities of other protected cells; and (E) Establishes administrative and accounting procedures necessary to allocate, identify, separate, and segregate the protected cell assets, protected cell liabilities, insurance and reinsurance obligations, assets, credits, liabilities, losses, tax benefits and refunds attributable to the protected cells. (10) ‘‘Unincorporated protected cell’’ means a protected cell that is not itself a legal entity separate from the sponsored captive insurance company of which it is a part. 873 History. — Code 1981, § 33-41-101, enacted by Ga. L. 2019, p. 533, § 2-14/HB 99; Ga. L. 2020, p. 493, § 33/SB 429. The 2020 amendment, effective July 33-41-103 29, 2020, part of an Act to revise, modernize, and correct the Code, revised punctuation at the end of subparagraph (9)(D). 33-41-102. Protected cells; prior written approval; annual filing of financial reports; notification upon insolvency. (a) A sponsored captive insurance company may establish one or more protected cells if the Commissioner has approved in writing a business plan, or an amendment to such plan, with respect to each protected cell that includes information about the participant, the associated participant contract or contracts, and any other information requested by the Commissioner. (b) No participant contract shall take effect without the Commissioner’s prior written approval. The addition of each new protected cell, the withdrawal of any current participant, or the termination of any existing protected cell shall constitute a change in the business plan of the sponsored captive insurance company and shall require the Commissioner’s prior written approval. (c) Each sponsored captive insurance company shall annually file with the Commissioner such financial reports as he or she shall require. Any such financial report shall include, without limitation, accounting statements detailing the financial experience of each protected cell. (d) Each sponsored captive insurance company shall notify the Commissioner in writing within ten business days of any protected cell becoming insolvent or otherwise unable to meet its claim, expense, insurance, or reinsurance obligations. History. — Code 1981, § 33-41-102, enacted by Ga. L. 2019, p. 533, § 2-14/HB 99. 33-41-103. Incorporated protected cells; legal entity status; requirements for formation; naming; rights and authority. (a) A sponsored captive insurance company licensed under this chapter may establish and maintain one or more protected cells to insure or reinsure risks subject to the provisions, terms, and conditions set forth in this chapter, and it is the intent of the General Assembly to provide sponsored captive insurance companies with the option to establish one or more protected cells as incorporated protected cells without limiting any rights or protections applicable to unincorporated protected cells. 874 33-41-104 (b) The creation of a protected cell pursuant to this chapter does not create, with respect to such protected cell, a legal person separate from the sponsored captive insurance company of which it is a part unless such protected cell is an incorporated protected cell. (c) In addition to the provisions required by subparagraphs (c)(1)(B) and (c)(1)(C) of Code Section 33-41-5, an incorporated protected cell must also include the following in its formation documents: (1) A reference to the sponsored captive insurance company of which it will be a part; and (2) A statement that the entity is a protected cell incorporated for the limited purposes authorized by the sponsored captive insurance company’s certificate of authority. (d) An incorporated protected cell shall not use any name that is either similar, misleading, or confusing with respect to any other name already in use by any other entity doing business in this state. (e) An incorporated protected cell shall be entitled to enter into contracts and undertake obligations in its own name and for its own account unless prohibited by an applicable participant contract. In the case of a contract or obligation undertaken directly by an incorporated protected cell to which the sponsored captive insurance company is not a party, either in its own name and for its own account or on behalf of a protected cell, the counterparts to the contract or obligation shall have no right or recourse against the sponsored captive insurance company, any other protected cell not a party to such contract or obligation or any assets other than against assets properly attributable to the incorporated protected cell that is a party to the contract or obligation. History. — Code 1981, § 33-41-103, enacted by Ga. L. 2019, p. 533, § 2-14/HB 99; Ga. L. 2020, p. 493, § 33/SB 429. The 2020 amendment, effective July 29, 2020, part of an Act to revise, modernize, and correct the Code, revised punctuation at the end of subsection (c). 33-41-104. Accounting and financial matters of incorporated protected cells. (a) All attributions of assets and liabilities to the protected cells and the general account shall be made by the sponsored captive insurance company in accordance with the business plan and applicable participant contracts as approved by the Commissioner, and unless the sponsor consents and the Commissioner has granted prior written approval, the general account shall not be used to pay any expenses or claims attributed solely to a protected cell. (b) When establishing a protected cell, the sponsored captive insurance company shall attribute to the protected cell assets with a value at 875 33-41-104 least equal to the reserves and other insurance liabilities attributable to such protected cell in cash or in readily marketable securities with established market value. (c) Amounts attributable to a protected cell under this chapter are owned by the protected cell. No sponsored captive insurance company shall be, or hold itself out to be, a trustee with respect to those protected cell assets of such protected cell account. Notwithstanding this subsection, the sponsored captive insurance company may allow for a security interest to attach to protected cell assets when in favor of a creditor of the protected cell and otherwise allowable under applicable law. (d) Each protected cell shall be accounted for separately on the books and records of the sponsored captive insurance company to reflect each protected cell’s financial condition and results of operations, net income or loss, dividends or other distributions to participants, and such other factors regarding each protected cell as may be provided in the applicable participant contract or required by the Commissioner. (e) The assets of a protected cell shall not be chargeable with liabilities of any other protected cell or, unless otherwise agreed in the applicable participant contract, of the sponsored captive insurance company generally. (f ) No sale, exchange, transfer of assets, dividend, or distribution, other than a transaction in accordance with the applicable participant contract, may be made with respect to a protected cell by or to a sponsored captive insurance company or participant without the Commissioner’s written approval. In no event shall such approval be given if the sale, exchange, transfer, dividend, or distribution would result in the insolvency or impairment of a protected cell. (g) The remedy of tracing is applicable to protected cell assets if they are commingled with protected cell assets of other protected cells or the general account in violation of this article and any applicable participant contracts. The remedy of tracing shall not be construed as an exclusive remedy. (h) The sponsored captive insurance company shall attribute all insurance obligations, assets, and liabilities relating to a reinsurance contract entered into with respect to a protected cell to such protected cell as set forth in the business plan and participant contracts approved by the Commissioner, which may include a tax allocation agreement to which the sponsored captive insurance company is a party. (i) Notwithstanding any other provision of this chapter, the assets of two or more protected cells may be combined for purposes of investment, and such combination shall not be construed as defeating the segregation of such assets for accounting or other purposes. 876 33-41-105 (j) Notwithstanding any other provisions of this title, sponsored captive insurance companies shall not be subject to any restrictions on eligible investments whatever; however, the Commissioner may prohibit or limit any investment that threatens the solvency or liquidity of any sponsored captive insurance company. (k) If required by the Commissioner, in his or her discretion, the business written by a sponsored captive insurance company, with respect to each protected cell, shall be: (1) Fronted by an insurance company licensed pursuant to the laws of any state; (2) Reinsured by a reinsurer authorized or approved by the Commissioner; or (3) Secured by a trust fund in the United States for the benefit of participants, policyholders, and claimants or funded by an irrevocable letter of credit or other arrangement that is acceptable to the Commissioner. The Commissioner, in his or her sole discretion, shall approve the form, terms, and funding amount of any trust, and may require the sponsored captive insurance company to increase the funding of any security arrangement established under this chapter. If the form of security is a letter of credit, the letter of credit must be in conformance with Code Section 33-41-9 and approved by the Commissioner. History. — Code 1981, § 33-41-104, enacted by Ga. L. 2019, p. 533, § 2-14/HB 99. 33-41-105. Commingling of assets prohibited; separation of cells. (a) In connection with the conservation, rehabilitation, or liquidation of captive insurance companies set forth in Code Section 33-41-21, including sponsored captive insurance companies, the assets and liabilities of a protected cell shall at all times be kept separate from, and shall not be commingled with, those of other protected cells and the sponsored captive insurance company except to the extent that the assets and liabilities of any one or more protected cells are determined to have not been allocated, segregated, and separated pursuant to the business plan and participant contracts approved by the Commissioner, and which are subject to the tracing provisions set forth in this article. (b) Notwithstanding the provisions of this title, in the event of the insolvency of a sponsored captive insurance company where the Commissioner determines that one or more protected cells remain solvent, the Commissioner may separate such cells from the sponsored captive insurance company and may allow, on application of the sponsored 877 33-41-106 captive insurance company or participant, for the conversion of such protected cells into one or more new or existing other captive insurance companies. History. — Code 1981, § 33-41-105, enacted by Ga. L. 2019, p. 533, § 2-14/HB 99. 33-41-106. Application of Code Section 33-41-16 to sponsored captive insurance companies. All provisions set forth in subsection (c) of Code Section 33-41-16 shall also apply to sponsored captive insurance companies in the same manner. History. — Code 1981, § 33-41-106, enacted by Ga. L. 2019, p. 533, § 2-14/HB 99. 878 T.33, C.42 LONG-TERM CARE INSURANCE 33-42-2 CHAPTER 42 LONG-TERM CARE INSURANCE Sec. 33-42-1. 33-42-2. 33-42-3. 33-42-4. 33-42-5. Short title.