31A-37-402. Sponsored captive insurance companies -- Certificate of authority mandatory.
(1) A sponsor of a sponsored captive insurance company shall be: an insurer authorized or approved under the laws of a state; a reinsurer authorized or approved under the laws of a state; a captive insurance company holding a certificate of authority under this chapter; an insurance holding company that: controls an insurer licensed pursuant to the laws of a state; and is subject to registration pursuant to the holding company system of laws of the state of domicile of the insurer described in Subsection; (1)(d)(i) an approved captive management firm in Utah or its affiliates; or another person approved by the commissioner after finding that the approval of the person as a sponsor is not inconsistent with the purposes of this chapter.
(2) The business written by a sponsored captive insurance company with respect to a protected cell shall be fronted by the sponsored captive insurance company through a controlled unaffiliated contract or an insurer that is: authorized or approved: under the laws of a state; or under any jurisdiction if the insurance company is a wholly owned subsidiary of an insurance company licensed pursuant to the laws of a state; reinsured by a reinsurer authorized or approved by this state; or subject to Subsection, secured by a trust fund: (2)(b) in the United States; for the benefit of policyholders and claimants; funded by an irrevocable letter of credit or other asset acceptable to the commissioner; and held by the sponsor as provided in Subsection. 31A-17-404(1) The amount of security provided by the trust fund described in Subsectionmay not be less than the reserves associated with the liabilities of the trust fund, including: (2)(a)(iii) reserves for losses; allocated loss adjustment expenses; incurred but unreported losses; and unearned premiums for business written through the participant's protected cell. The commissioner may require the sponsored captive insurance company to increase the funding of a trust established pursuant to this Subsection. (2) If the form of security in the trust described in Subsectionis a letter of credit, the letter of credit shall be established, issued, or confirmed by a bank that is: (2)(a)(iii) chartered in this state; a member of the federal reserve system; or chartered by another state if that state-chartered bank is acceptable to the commissioner. A trust and trust instrument maintained pursuant to this Subsectionshall be in a form and upon terms approved by the commissioner. (2)
(3) The business written by a sponsored captive insurance company with respect to an incorporated cell may be: fronted by the sponsored captive insurance company in accordance with Subsection; or (2)(a) with prior approval of the sponsored captive insurance company, written directly by the incorporated cell.
(4) A risk retention group may not be either a sponsor or a participant of a sponsored captive insurance company.