20-1098.05 - Arizona Statutes

20-1098.05. Protected cell captive insurers A. One or more sponsors may form a protected cell captive insurer as prescribed in this article. B. A protected cell captive insurer may establish and maintain one or more protected cells to insure the risks of one or more participants, subject to the following conditions: 1. A protected cell captive insurer shall not have any stockholders other than its participants and sponsors. 2. A protected cell captive insurer shall separately account for each protected cell in its books and records to reflect the financial condition and results of operations of each protected cell, net income or loss of each protected cell, dividends or other distributions to participants of each protected cell and any other factors prescribed in the participant contract or required by the director. 3. The assets of a protected cell are not chargeable with liabilities arising out of any other insurance business the protected cell captive insurer may conduct. 4. A protected cell captive insurer shall not sell, exchange or transfer assets, issue a dividend or make a distribution between or among any of its protected cells without the written consent of all its protected cells. 5. A protected cell captive insurer shall not sell, exchange or transfer assets, issue a dividend or make a distribution to a sponsor or participant unless the director approves the transaction and determines that the transaction will not cause insolvency or impairment of any protected cell. 6. At the time of filing its annual report pursuant to section 20-1098.07 a protected cell captive insurer shall annually file with the department: (a) An accounting statement, in the form the director requires, detailing the financial experience of each protected cell. (b) Any other financial reports prescribed by the director. 7. A protected cell captive insurer shall notify the director in writing within ten days after learning of any protected cell that is insolvent or otherwise unable to meet its claim or expense obligations. 8. A protected cell captive insurer shall obtain the director's written approval of any participant contract before the contract becomes effective. 9. The addition of a new participant or the withdrawal of a participant from an existing protected cell is deemed a change in the captive insurer's business plan and requires the director's prior approval. 10. With respect to each protected cell, the insurance business written by a protected cell captive insurer shall be any of the following: (a) Assumed from an insurance company licensed under the laws of any state. (b) Reinsured by a reinsurer authorized or accredited by this state. (c) Secured by a trust fund or an irrevocable letter of credit with an evergreen clause.