Title 38, Insurance

A captive insurance company may not be required to join a rating organization.

A captive insurance company, including a captive insurance company organized as a reciprocal insurer under this chapter, may not join or contribute financially to a plan, pool, association, or guaranty or insolvency fund in this State, and a captive insurance company, or its insu…

(A) A captive insurance company shall pay to the department by March first of each year, a tax at the rate of four-tenths of one percent on the first twenty million dollars and three-tenths of one percent on each dollar after that, up to a maximum tax of one hundred thousand doll…

The director may promulgate and, from time to time, amend rules and regulations and issue orders or written approvals relating to captive insurance companies as are necessary to enable the director to carry out the provisions of this chapter.

(A) No provisions of this title or regulations, other than those contained in this chapter or contained in specific references contained in this chapter and regulations applicable to them, apply to captive insurance companies. The South Carolina Insurance Data Security Act set fo…

(A) The director may declare inactive by written approval a captive insurance company other than a risk retention group or association captive if such captive insurance company has no outstanding insurance liabilities and agrees to cease providing insurance coverage. (B) During t…

(A) There is created a fund to be known as the "Captive Insurance Regulatory and Supervision Fund" for the purpose of providing the financial means for the director to administer Chapter 87 and Chapter 90 of this title and for reasonable expenses incurred in promoting the captive…

(A) Except as otherwise provided in this section, the terms and conditions set forth in Chapters 26 and 27 of this title pertaining to insurance reorganizations, receiverships, and injunctions apply in full to captive insurance companies formed or licensed under this chapter. (B)…

Section effective January 1, 2026. See, also, section 38-90-20 effective until January 1, 2026. (A) A captive insurance company, when permitted by its articles of incorporation, articles of organization, operating agreement, or charter, may apply to the director for a license to …

(A) An association captive insurance company or industrial insured group formed as a stock or mutual corporation, or a limited liability company may be converted to or merged with and into a reciprocal insurer in accordance with a plan and the provisions of this section. (B) A pl…

(A) One or more sponsors may form a sponsored captive insurance company under this chapter. (B) A sponsored captive insurance company formed or licensed under this chapter may establish and maintain one or more protected cells to insure risks of one or more participants, subject …

(A) A protected cell may be either unincorporated or incorporated. (B) With regard to unincorporated protected cells: (1) The unincorporated protected cell shall have its own distinct name or designation, which shall include the words "Protected Cell" or the abbreviation "PC". An…

(A) The sponsored captive insurance company shall attribute all insurance obligations, assets, and liabilities relating to a participant's risks to the participant's protected cell. (B) The protected cell assets of a protected cell may not be charged with liabilities arising out …

(A) The following may be participants in a sponsored captive insurance company formed or licensed pursuant to this chapter: (1) an association, corporation, limited liability company, partnership, trust, or other business entity; and (2) a sponsor. (B) A participant does not need…

(A) Protected cell assets are only available to the creditors of the sponsored captive insurance company that are creditors with respect to that protected cell and are therefore entitled, in conformity with this chapter, to have recourse to the protected cell assets attributable …

A licensed captive insurance company that meets the necessary requirements of this title imposed upon an insurer must be considered for issuance of a certificate of authority to act as an insurer in this State.

A captive insurance company may not adopt a name that is the same as, deceptively similar to, or likely to be confused with or mistaken for any other existing business name registered in this State.

(A) Information submitted pursuant to the provisions of this chapter is confidential and may not be made public by the director or an agent or employee of the director without the written consent of the company, except that information may be discoverable by a party in a civil ac…

(A)(1) The director may not issue a license to a captive insurance company unless the company possesses and maintains free and unimpaired paid-in capital, surplus, or unrestricted net assets for a nonprofit corporation, or a combination thereof of: (a) in the case of a pure capti…

This article provides for the creation of Special Purpose Financial Captives (SPFCs) exclusively to facilitate the securitization of one or more risks, as a means of accessing alternative sources of capital and achieving the benefits of securitization. SPFCs are created for the l…

For purposes of this article: (1) "Administrative Law Court" means that agency and court of record created pursuant to the provisions of Section 1-23-500. (2) "Affiliated company" means a company in the same corporate system as a parent, by virtue of common ownership, control, op…

(A) No provisions of Title 38, other than those specifically referenced in this article and regulations applicable to them, apply to a SPFC, and those provisions apply only as modified by this article. If a conflict occurs between a provision of Title 38 and a provision of this a…

(A) A SPFC, when permitted by its organizational documents, may apply to the director for a license to transact insurance or reinsurance business as authorized by this article. A SPFC only may insure or reinsure the risks of its counterparty. Notwithstanding another provision of …

(A) A SPFC may be established as a stock corporation, limited liability company, mutual, partnership, or other form of organization approved by the director. (B) The SPFC's organizational documents must limit the SPFC's authority to transact the business of insurance or reinsuran…

(A) A SPFC initially shall possess and after that maintain minimum capitalization of not less than two hundred and fifty thousand dollars. All of the minimum initial capitalization must be in cash. All other funds of the SPFC in excess of its minimum initial capitalization must b…

(A) A SPFC may insure only the risks of a counterparty. (B) A SPFC may not issue a contract for assumption of risk or indemnification of loss other than a SPFC contract. However, the SPFC may cede risks assumed through a SPFC contract to third party reinsurers through the purchas…

(A) This section and Section 38-90-485 provide a basis for the creation and use of protected cells by a SPFC as a means of accessing alternative sources of capital, lowering formation and administrative expenses, and generally making insurance securitizations more efficient. If a…

(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 c…

(A) A SPFC may issue securities, including surplus notes and other forms of financial instruments, subject to and in accordance with applicable law, its approved plan of operation, and its organizational documents. (B) A SPFC, in connection with the issuance of securities, may en…

A SPFC may enter into swap agreements, or other forms of asset management agreements, including guaranteed investment contracts, or other transactions that have the objective of leveling timing differences in funding of up-front or ongoing transaction expenses or managing asset, …

(A) A SPFC, at any given time, may enter into and effectuate a SPFC contract with a counterparty, provided that the SPFC contract obligates the SPFC to indemnify the counterparty for losses and that contingent obligations of the SPFC under the SPFC contract are securitized throug…

Securities issued by a SPFC pursuant to an insurance securitization may not be considered to be insurance or reinsurance contracts. An investor in these securities or a holder of these securities, by sole means of this investment or holding, may not be considered to be transactin…

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 foll…

(A) Assets of the SPFC held in trust to secure obligations under the SPFC contract must at all times be held in: (1) cash and cash equivalents; (2) securities listed by the securities Valuation Office of the NAIC and qualifying as admitted assets under statutory accounting conven…

(A) A SPFC may not declare or pay dividends in any form to its owners other than in accordance with the insurance securitization transaction agreements, and in no extent shall the dividends decrease the capital of the SPFC below two hundred fifty thousand dollars, and, after givi…

(A) Any material change of the SPFC's plan of operation pursuant to the provisions of Section 38-90-440(E)(5), whether or not through a SPFC protected cell, shall require prior approval of the director, provided however: (1) if initially approved in the plan of operation, securit…

(A) At least once every five years, and whenever the director determines it to be prudent, the director or his designee shall visit each SPFC and thoroughly inspect and examine its affairs to ascertain its financial condition, its ability to fulfill its obligations, and whether i…

(A) At the cessation of business of a SPFC following termination or cancellation of a SPFC contract and the redemption of any related securities issued in connection with them, the authority granted by the director expires or, in the case of retiring and surviving protected cells…

(A) A SPFC shall pay to the department by March first of each year, a tax at the rate of four-tenths of one percent on the first twenty million dollars and three-tenths of one percent on each dollar after that, subject to a minimum annual tax of five thousand dollars and a maximu…

A SPFC contract meeting the provisions of this article must be granted credit for reinsurance treatment or otherwise qualifies as an asset or a reduction from liability for reinsurance ceded by a domestic insurer to a SPFC as an assuming insurer pursuant to the provisions of Sect…

(A) A captive insurance company may be: (1) incorporated as a stock insurer; (2) incorporated as a nonprofit corporation; (3) organized as a limited liability company; (4) incorporated as a mutual insurer without capital stock, the governing body of which is elected by the member…

(A) Except as otherwise modified in this section, the terms and conditions set forth in Chapters 26 and 27 of this title pertaining to administrative supervision of insurers and the rehabilitation, receiverships, and liquidation of insurers apply in full to SPFCs or each of the S…

Information submitted pursuant to the provisions of this article is confidential and may not be made public by the director or an agent or employee of the director without the prior written consent of the SPFC, except that: (1) information submitted pursuant to the provisions of …

(A) A contested case brought by a third party based on a decision of the director pursuant to this article is governed by applicable law of the State of South Carolina except that, the third party shall: (1) prove its case by a clear and convincing evidence standard; (2) demonstr…

The director may promulgate regulations necessary to effectuate the purposes of this article. Regulations promulgated pursuant to this section do not affect a SPFC insurance securitization in effect at the time of the promulgation.

(A) A captive insurance company may not be required to make an annual report except as provided in this chapter. The director has the authority to waive or grant an extension to the requirements of this section. (B)(1) A captive insurance company shall submit annually to the dire…