2005 Nevada Revised Statutes - Chapter 694C — Captive Insurers
CHAPTER 694C - CAPTIVE INSURERS
GENERAL PROVISIONS
NRS 694C.010 Definitions.
NRS 694C.020 Affiliatedcompany defined.
NRS 694C.030 Agencycaptive insurer defined.
NRS 694C.035 Aliencaptive insurer defined.
NRS 694C.040 Associationdefined.
NRS 694C.050 Associationcaptive insurer defined.
NRS 694C.053 Branchbusiness defined.
NRS 694C.055 Branchcaptive insurer defined.
NRS 694C.057 Branchoperations defined.
NRS 694C.060 Captiveinsurer defined.
NRS 694C.070 Commissionerdefined.
NRS 694C.075 Controlledunaffiliated business defined.
NRS 694C.080 Divisiondefined.
NRS 694C.090 Memberorganization defined.
NRS 694C.100 Mutualinsurer defined.
NRS 694C.110 Parentdefined.
NRS 694C.113 Participantdefined.
NRS 694C.115 Participantcontract defined.
NRS 694C.117 Protectedcell defined.
NRS 694C.120 Purecaptive insurer defined.
NRS 694C.130 Reciprocalinsurer defined.
NRS 694C.140 Rentalcaptive insurer defined.
NRS 694C.143 Sponsordefined.
NRS 694C.147 Sponsoredcaptive insurer defined.
NRS 694C.150 Stockinsurer defined.
NRS 694C.155 Applicabilityof chapter 696B of NRS to sponsored captiveinsurer.
NRS 694C.160 Applicabilityof other provisions.
NRS 694C.170 Regulations.
NRS 694C.180 Formationof captive insurer.
NRS 694C.190 Name.
NRS 694C.195 Formationof sponsored captive insurer.
LICENSING
NRS 694C.200 Authorizationto apply for license in certain circumstances; license required to transactinsurance; penalty.
NRS 694C.210 Application:Requirement; contents.
NRS 694C.215 Sponsoredcaptive insurer required to file certain information with Commissioner.
NRS 694C.220 Feesfor application; Commissioner authorized to retain professional services; costof services.
NRS 694C.230 Issuanceof license; annual renewal; fees.
NRS 694C.240 Insurerto include business plan with application for issuance and renewal of license;updates to business plan.
NRS 694C.250 Capitalrequired: Amount; form; Commissioner authorized to prescribe additionalrequirements; letter of credit.
NRS 694C.260 Surplusrequired: Amount; form; Commissioner authorized to prescribe additional requirements;letter of credit.
NRS 694C.270 Suspensionor revocation of license; hearings.
MISCELLANEOUS PROVISIONS
NRS 694C.300 Authorizedand prohibited types of insurance.
NRS 694C.310 Meetingsof board of directors; additional requirements to transact insurance.
NRS 694C.320 Planfor payment of dividends; regulations.
NRS 694C.330 Paymentof dividends.
NRS 694C.340 Investments;loan to parent or affiliated company in certain circumstances.
NRS 694C.350 Reinsurance;credit for reserves on risks or portions of risks in certain circumstances;plan for workers compensation deemed reinsurance in certain circumstances.
NRS 694C.360 Useof insurance of captive insurer to satisfy requirements relating to insuranceon vehicles subject to Transportation Services Authority or Taxicab Authorityprohibited; exception.
NRS 694C.370 Insurernot required to join rating organization.
NRS 694C.380 Insurerprohibited from joining or contributing to risk-sharing plan, risk pool orinsurance insolvency guaranty fund.
NRS 694C.382 Combiningassets for investment.
NRS 694C.384 Securityfor branch operations.
NRS 694C.386 Aliencaptive insurer; issuance of certificate; registration.
NRS 694C.388 Reportsand statements of alien captive insurer.
ADMINISTRATION
NRS 694C.400 Annualreport of financial condition to Commissioner; regulations designating form;alternative date to file annual report.
NRS 694C.410 Examinationby Commissioner; Commissioner authorized to obtain professional services; costof examination.
NRS 694C.415 Examinations:Branch captive insurer; alien captive insurer.
TAXATION, REGULATION AND SUPERVISION
NRS 694C.450 Taxeson premiums; deposit of portion of taxes in Account for Regulation andSupervision of Captive Insurers; deposit of remainder of taxes in State GeneralFund.
NRS 694C.455 Taxon premiums of branch captive insurer.
NRS 694C.460 Accountfor Regulation and Supervision of Captive Insurers: Creation; deposits;transfers to agency for economic development; administrative expenses;transfers to State General Fund; warrants by State Controller on receipts toAccount.
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GENERAL PROVISIONS
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1. The association or the member organizations of theassociation:
(a) Own, control or hold with the power to vote all theoutstanding voting securities of the association captive insurer, if theassociation captive insurer is incorporated as a stock insurer; or
(b) Have complete voting control over the captiveinsurer, if the captive insurer is formed as a mutual insurer; and
2. The member organizations of the associationcollectively constitute all the subscribers of the captive insurer, if thecaptive insurer is formed as a reciprocal insurer.
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1. That is not in the corporate system of a parent andaffiliated companies;
2. That has an existing contractual relationship witha parent or affiliated company; and
3. Whose risks are managed by a captive insurerpursuant to this chapter.
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1. A pure captive insurer organized as a stockcorporation; or
2. The membership of a pure captive insurer organizedas a nonprofit corporation.
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1. Meets the requirements of subsection 3 of
2. Is approved by the Commissioner to provide all orpart of the capital and surplus required by applicable law and to organize andoperate a sponsored captive insurer.
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1. In which the minimum capital and surplus requiredby applicable law is provided by one or more sponsors;
2. That is formed or licensed pursuant to thischapter;
3. That only insures the risks of its participantsthrough separate participant contracts; and
4. That funds the liability for each participantthrough one or more protected cells where the assets of each protected cell aresegregated from the assets of other protected cells and the assets of thegeneral account of the sponsored captive insurer.
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1. The assets of a protected cell are not used to payany expense or claim other than those that are attributable to the protectedcell; and
2. The capital and surplus of the sponsored captiveinsurer are available at all times to pay any expenses of or claims against thesponsored captive insurer.
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1. The terms and conditions set forth in
2. An agency captive insurer, a rental captive insurerand an association captive insurer are subject to those provisions of
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1. Unless otherwise approved by the Commissioner, apure captive insurer, an agency captive insurer, a rental captive insurer or asponsored captive insurer must be incorporated as a stock insurer.
2. An association captive insurer must be formed as a:
(a) Stock insurer;
(b) Mutual insurer; or
(c) Reciprocal insurer, except that itsattorney-in-fact must be a corporation incorporated in this State.
3. A captive insurer shall have not less than threeincorporators or organizers, at least one of whom must be a resident of thisState.
4. Before the articles of incorporation of a captiveinsurer may be filed with the Secretary of State, the Commissioner must approvethe articles of incorporation. In determining whether to grant that approval,the Commissioner shall consider:
(a) The character, reputation, financial standing andpurposes of the incorporators or organizers;
(b) The character, reputation, financialresponsibility, experience relating to insurance and business qualifications ofthe officers and directors of the captive insurer;
(c) The competence of any person who, pursuant to acontract with the captive insurer, will manage the affairs of the captiveinsurer;
(d) The competence, reputation and experience of thelegal counsel of the captive insurer relating to the regulation of insurance;
(e) If the captive insurer is a rental captive insurer,the competence, reputation and experience of the underwriter of the captiveinsurer;
(f) The business plan of the captive insurer; and
(g) Such other aspects of the captive insurer as theCommissioner deems advisable.
5. The capital stock of a captive insurer incorporatedas a stock insurer must be issued at not less than par value.
6. At least one member of the board of directors of acaptive insurer formed as a corporation, or one member of the subscribersadvisory committee or the attorney-in-fact of a captive insurer formed as areciprocal insurer, must be a resident of this State.
7. A captive insurer formed pursuant to the provisionsof this chapter has the privileges of, and is subject to, the provisions ofgeneral corporation law set forth in chapter 78of NRS and, if formed as a nonprofit corporation, the provisions set forth in
8. The articles of association, articles ofincorporation, charter or bylaws of a captive insurer formed as a corporationmust require that a quorum of the board of directors consists of not less thanone-third of the number of directors prescribed by the articles of association,articles of incorporation, charter or bylaws.
9. The agreement of the subscribers or otherorganizing document of a captive insurer formed as a reciprocal insurer mustrequire that a quorum of its subscribers advisory committee consists of notless than one-third of the number of its members.
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1. One or more sponsors may form a sponsored captiveinsurer pursuant to this chapter.
2. A sponsored captive insurer formed or licensedpursuant to this chapter may establish and maintain one or more protected cellsto insure the risks of one or more participants, subject to the followingconditions:
(a) The shareholders of a sponsored captive insurermust be limited to its participants and sponsors, provided that the sponsoredcaptive insurer may issue nonvoting securities to other persons on termsapproved by the Commissioner;
(b) Each protected cell must be accounted forseparately on the books and records of the sponsored captive insurer to reflectthe financial condition and results of operations of that protected cell,including, but not limited to, the net income or loss, dividends, or otherdistributions to participants, and such other factors as may be set forth inthe participant contract or required by the Commissioner;
(c) The assets of a protected cell must not bechargeable with liabilities arising out of any other insurance business whichthe sponsored captive insurer may conduct;
(d) A sponsored captive insurer shall not make a sale,exchange, transfer of assets, dividend or distribution between or among any ofits protected cells without the consent of any participant for which theprotected cells are maintained;
(e) A sponsored captive insurer shall not make a sale,exchange, transfer of assets, dividend or distribution from a protected cell toa sponsor or participant without the prior written approval of theCommissioner, and the Commissioner shall not give written approval if the sale,exchange, transfer, dividend or distribution would result in the insolvency orimpairment of the protected cell;
(f) On or before March 1 of each year, a sponsoredcaptive insurer must file with the Commissioner a report of its financialcondition, including, but not limited to, accounting statements detailing thefinancial experience of each protected cell and any other information requiredby the Commissioner;
(g) A sponsored captive insurer must notify theCommissioner not more than 10 business days after a protected cell becomesinsolvent or otherwise unable to meet its claims or expense obligations;
(h) A participant contract must not become effectivewithout the prior written approval of the Commissioner;
(i) The addition of each new protected cell, thewithdrawal of any participant of a protected cell or the termination of anyexisting protected cell constitutes a change in the business plan and requiresthe prior written approval of the Commissioner; and
(j) The business written by a sponsored captive insurerwith respect to each protected cell must be:
(1) Fronted by an insurer licensed pursuant tothe laws of any state;
(2) Reinsured by a reinsurer authorized orapproved by the Commissioner; or
(3) Secured by a trust fund in the United Statesfor the benefit of policyholders and claimants or funded by an irrevocableletter of credit or other arrangement that is acceptable to the Commissioner.The amount of security provided must not be less than the reserves associatedwith those liabilities, which are not fronted or reinsured pursuant tosubparagraph (1) or (2), including reserves for losses, allocated lossadjustment expenses, incurred but not reported losses and unearned premiums forbusiness written through the protected cell maintained for the participant. TheCommissioner may require the sponsored captive insurer to increase the fundingof any security arrangement established under this subsection. If the form ofsecurity is a letter of credit, the letter of credit must be established,issued or confirmed by a bank chartered in this State, a member of the FederalReserve System or a bank chartered in another state if the bank is deemedacceptable by the Commissioner. A trust maintained pursuant to thissubparagraph must be established in a form and under such terms that areapproved by the Commissioner.
3. A sponsor of a sponsored captive insurer must:
(a) Be an insurer licensed pursuant to the laws of anystate, a reinsurer authorized or approved under the laws of any state or acaptive insurer formed or licensed pursuant to this chapter; and
(b) Not be a risk retention group.
4. A participant in a sponsored captive insurer neednot be a shareholder of the sponsored captive insurer or an affiliate of thesponsored captive insurer and:
(a) May be an association, corporation,limited-liability company, partnership, trust or other form of businessorganization;
(b) May be a sponsor of the sponsored captive insurer;and
(c) Must not be a risk retention group.
5. A participant in a sponsored captive insurer shallinsure only its own risks through a sponsored captive insurer.
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LICENSING
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1. A captive insurer, when authorized by its articlesof association, articles of incorporation or charter, may apply to theCommissioner for a license to transact insurance.
2. A captive insurer shall not transact insurance inthis State unless the captive insurer first obtains a license from theCommissioner.
3. A person who violates this section is subject tothe provisions of, and shall be punished pursuant to, the Unauthorized InsurersAct set forth in NRS 685B.020 to
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1. A certified copy of the charter and bylaws of thecaptive insurer;
2. A pro forma financial statement for the captiveinsurer that has been prepared by a certified public accountant;
3. Any other statements or documents that theCommissioner requires to be filed with the application;
4. Evidence of:
(a) The amount and liquidity of its assets relative tothe risks to be assumed by the captive insurer;
(b) The expertise, experience and character of thepersons who will manage the captive insurer;
(c) The overall soundness of the plan of operation ofthe captive insurer; and
(d) The adequacy of the programs of the captive insurerproviding for loss prevention by its parent or member organizations, asapplicable; and
5. Such other information deemed to be relevant by theCommissioner in ascertaining whether the proposed captive insurer will be ableto meet its policy obligations.
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1. Information demonstrating the manner in which theapplicant will account for the loss and expense experience of each protectedcell, at a level of detail deemed sufficient by the Commissioner, and themethod of reporting such information;
2. A written acknowledgment that all financial recordsof the sponsored captive insurer, including, but not limited to, recordspertaining to any protected cells, must be made available for inspection orexamination by the Commissioner or his designee;
3. All contracts entered into between the sponsoredcaptive insurer and any participant, including, but not limited to, participantcontracts; and
4. Evidence satisfactory to the Commissionerindicating that expenses will be allocated to each protected cell in a fair andequitable manner.
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1. If the Commissioner determines that the documents andstatements filed by the captive insurer satisfy the requirements for licensure,the Commissioner shall issue a license to the captive insurer. The license maybe renewed annually upon the satisfaction of all requirements imposed by theCommissioner and payment of the renewal fee.
2. A captive insurer must pay a fee of $300 for theissuance of a license and, on or before March 1 of each year, an annual fee of$300 for the renewal of a license.
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1. A captive insurer must not be issued a license, andshall not hold a license, unless the captive insurer has and maintains, in additionto any other capital required to be maintained pursuant to subsection 3,unimpaired paid-in capital of:
(a) For a pure captive insurer, not less than $100,000;
(b) For an association captive insurer incorporated asa stock insurer, not less than $200,000;
(c) For an agency captive insurer, not less than$300,000;
(d) For a rental captive insurer, not less than$400,000; and
(e) For a sponsored captive insurer, not less than$200,000.
2. Except as otherwise provided by the Commissionerpursuant to subsection 3, the capital required to be maintained pursuant tothis section must be in the form of cash or an irrevocable letter of credit.
3. The Commissioner may prescribe additionalrequirements relating to capital based on the type, volume and nature of theinsurance business that is transacted by the captive insurer and requirementsregarding which capital, if any, may be in the form of an irrevocable letter ofcredit.
4. A letter of credit used by a captive insurer asevidence of capital required pursuant to this section must:
(a) Be issued by a bank chartered by this State or abank that is a member of the United States Federal Reserve System and has beenapproved by the Commissioner; and
(b) Include a provision pursuant to which the letter ofcredit is automatically renewable each year, unless the issuer gives writtennotice to the Commissioner and the captive insurer at least 90 days before theexpiration date.
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1. A captive insurer must not be issued a license, andshall not hold a license, unless the captive insurer has and maintains, in additionto any other surplus required to be maintained pursuant to subsection 3, anunencumbered surplus of:
(a) For a pure captive insurer, not less than $100,000;
(b) For an association captive insurer incorporated asa stock insurer, not less than $300,000;
(c) For an agency captive insurer, not less than$300,000;
(d) For a rental captive insurer, not less than$400,000;
(e) For an association captive insurer incorporated asa mutual insurer or reciprocal insurer, not less than $500,000; and
(f) For a sponsored captive insurer, not less than$300,000.
2. Except as otherwise provided in subsection 3, thesurplus required to be maintained pursuant to this section must be in the formof cash or an irrevocable letter of credit.
3. The Commissioner may prescribe additionalrequirements relating to surplus based on the type, volume and nature of theinsurance business that is transacted by the captive insurer and requirementsregarding which surplus, if any, may be in the form of an irrevocable letter ofcredit.
4. A letter of credit used by a captive insurer asevidence of required surplus pursuant to this section must:
(a) Be issued by a bank chartered by this State or abank that is a member of the United States Federal Reserve System and has beenapproved by the Commissioner; and
(b) Include a provision pursuant to which the letter ofcredit is automatically renewable each year, unless the issuer gives writtennotice to the Commissioner and the captive insurer at least 90 days before theexpiration date.
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1. The Commissioner may suspend or revoke the licenseof a captive insurer if, after an examination and hearing, the Commissionerdetermines that:
(a) The captive insurer:
(1) Is insolvent or has impaired its requiredcapital or surplus;
(2) Has failed to meet a requirement of
(3) Has refused or failed to submit an annualreport, as required by NRS 694C.400,or any other report or statement required by law or by order of the Commissioner;
(4) Has failed to comply with the provisions ofits charter or bylaws;
(5) Has failed to submit to an examinationrequired pursuant to NRS 694C.410;
(6) Has refused or failed to pay the cost of anexamination required pursuant to NRS694C.410;
(7) Has used any method in transacting insurancepursuant to this chapter which is detrimental to the operation of the captiveinsurer or would make its condition unsound with respect to its policyholdersor the general public; or
(8) Has failed otherwise to comply with the lawsof this state; and
(b) The suspension or revocation of the license of thecaptive insurer is in the best interest of its policyholders or the generalpublic.
2. The provisions of
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MISCELLANEOUS PROVISIONS
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1. Except as otherwise provided in this section, acaptive insurer licensed pursuant to this chapter may transact any form ofinsurance described in NRS 681A.020 to681A.080, inclusive.
2. A captive insurer licensed pursuant to thischapter:
(a) Shall not directly provide personal motor vehicleor homeowners insurance coverage, or any component thereof.
(b) Shall not accept or cede reinsurance, except asotherwise provided in NRS 694C.350.
(c) May provide excess workers compensation insurance toits parent and affiliated companies, unless otherwise prohibited by the laws ofthe state in which the insurance is transacted.
(d) May reinsure workers compensation insuranceprovided pursuant to a program of self-funded insurance of its parent and affiliatedcompanies if:
(1) The parent or affiliated company which isproviding the self-funded insurance is certified as a self-insured employer bythe Commissioner, if the insurance is being transacted in this State; or
(2) The program of self-funded insurance isotherwise qualified pursuant to, or in compliance with, the laws of the statein which the insurance is transacted.
3. A pure captive insurer shall not insure any risksother than those of its parent and affiliated companies or controlled unaffiliatedbusinesses.
4. An association captive insurer shall not insure anyrisks other than those of the member organizations of its association and theaffiliated companies of the member organizations.
5. An agency captive insurer shall not insure anyrisks other than those of the policies that are placed by or through theinsurance agency or brokerage that owns the captive insurer.
6. A rental captive insurer shall not insure any risksother than those of the policyholders or associations that have entered intoagreements with the rental captive insurer for the insurance of those risks.Such agreements must be in a form which has been approved by the Commissioner.
7. A sponsored captive insurer shall not insure anyrisks other than those of its participants.
8. As used in this section, excess workerscompensation insurance means insurance in excess of the specified per-incidentor aggregate limit, if any, established by:
(a) The Commissioner, if the insurance is beingtransacted in this State; or
(b) The chief regulatory officer for insurance in thestate in which the insurance is being transacted.
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1. The board of directors of a captive insurer shallmeet at least once each year in this State. The captive insurer shall:
(a) Maintain its principal place of business in thisState; and
(b) Appoint a resident of this State as a registeredagent to accept service of process and otherwise act on behalf of the captiveinsurer in this State. If the registered agent cannot be located withreasonable diligence for the purpose of serving a notice or demand on thecaptive insurer, the notice or demand may be served on the Secretary of Statewho shall be deemed to be the agent for the captive insurer.
2. A captive insurer shall not transact insurance inthis State unless:
(a) The captive insurer has made adequate arrangementswith a bank located in this State that is authorized pursuant to state orfederal law to transfer money;
(b) If the captive insurer employs or has entered intoa contract with a natural person or business organization to manage the affairsof the captive insurer, the natural person or business organization meets thestandards of competence and experience satisfactory to the Commissioner;
(c) The captive insurer employs or has entered into acontract with a qualified and experienced certified public accountant who isapproved by the Commissioner or a firm of certified public accountants that isnationally recognized;
(d) The captive insurer employs or has entered into acontract with qualified, experienced actuaries who are approved by theCommissioner to perform reviews and evaluations of the operations of thecaptive insurer; and
(e) The captive insurer employs or has entered into acontract with an attorney who is licensed to practice law in this State and whomeets the standards of competence and experience in matters concerning theregulation of insurance in this State established by the Commissioner byregulation.
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1. A specific amount that a captive insurer must havein excess capital for the approval of an ongoing plan for the payment ofdividends or other distributions; or
2. A formula pursuant to which the specific amount ofrequired excess capital may be calculated.
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1. Except as otherwise provided in this section and
2. A pure captive insurer is not subject to anyrestrictions on allowable investments, except that the Commissioner mayprohibit or limit any investment that threatens the solvency or liquidity ofthe pure captive insurer.
3. A pure captive insurer may make a loan to itsparent or affiliated company if the loan:
(a) Is first approved in writing by the Commissioner;
(b) Is evidenced by a note that is in a form that isapproved by the Commissioner; and
(c) Does not include any money that has been set asideas capital or surplus as required by subsection 1 of
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1. A captive insurer may provide reinsurance on risksceded by any other insurer.
2. A captive insurer may take credit for reserves onrisks or portions of risks ceded to a reinsurer that is in compliance with
3. The Commissioner may authorize a captive insurer totake credit for reserves on risks or portions of risks ceded to a pool, anexchange or an association acting as a reinsurer. The Commissioner may requiresuch documents, financial information or other evidence as he determinesnecessary to show that the pool, exchange or association will be able toprovide adequate security for its financial obligations. The Commissioner maydeny authorization or impose any limitations on the activities of a reinsurancepool, exchange or association that, in his judgment, are necessary and properto provide adequate security for the ceding captive insurer and for the protectionand benefit of the general public.
4. For the purposes of this chapter, insuranceprovided by a captive insurer of any plan for workers compensation of itsparent and affiliated companies which is certified or otherwise qualified inthe state in which the insurance is provided as a self-insurance plan shall bedeemed to be reinsurance.
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1. As security for the payment of liabilitiesattributable to the branch operations of a branch captive insurer, theCommissioner shall require that a trust fund, funded by an irrevocable letterof credit or other acceptable asset, be established and maintained in theUnited States for the benefit of United States policyholders and ceding UnitedStates insurers under insurance policies or reinsurance contracts issued orassumed by the branch captive insurer through its branch operations.
2. The amount of the security must be not less thanthe total amount required by NRS 694C.250and 694C.260, and any reserves on suchinsurance policies or reinsurance contracts, including reserves for losses,allocated loss adjustment expenses, incurred but not reported losses and unearnedpremiums with regard to business written through the branch operations. TheCommissioner may authorize a branch captive insurer that is required to postsecurity for loss reserves on branch business by its reinsurer to reduce thefunds in the trust account required by this section by that same amount as longas the security remains posted with the reinsurer.
3. If the form of the security is a letter of credit,the letter of credit must be established, issued or confirmed by a bankchartered in this State or a bank that is a member of the Federal ReserveSystem.
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ADMINISTRATION
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1. On or before March 1 of each year, a captiveinsurer shall submit to the Commissioner a report of its financial condition,as prepared by a certified public accountant. A captive insurer shall usegenerally accepted accounting principles and include any useful or necessarymodifications or adaptations thereof that have been approved or accepted by theCommissioner for the type of insurance and kinds of insurers to be reportedupon, and as supplemented by additional information required by theCommissioner. Except as otherwise provided in this section, each associationcaptive insurer, agency captive insurer or rental captive insurer shall fileits report in the form required by NRS680A.265. The Commissioner shall adopt regulations designating the form inwhich pure captive insurers must report.
2. A pure captive insurer may apply, in writing, forauthorization to file its annual report based on a fiscal year that isconsistent with the fiscal year of the parent company of the pure captiveinsurer. If an alternative date is granted:
(a) The annual report is due not later than 60 daysafter the end of each such fiscal year; and
(b) The pure captive insurer shall file on or beforeMarch 1 of each year such forms as required by the Commissioner by regulationto provide sufficient detail to support its premium tax return filed pursuantto NRS 694C.450.
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1. Except as otherwise provided in this section, atleast once every 3 years, and at such other times as the Commissionerdetermines necessary, the Commissioner, or his designee, shall visit eachcaptive insurer and thoroughly inspect and examine the affairs of the captiveinsurer to ascertain:
(a) The financial condition of the captive insurer;
(b) The ability of the captive insurer to fulfill itsobligations; and
(c) Whether the captive insurer has complied with theprovisions of this chapter and the regulations adopted pursuant thereto.
2. Upon the application of a captive insurer, theCommissioner may conduct the visits required pursuant to subsection 1 every 5years if the captive insurer conducts comprehensive annual audits:
(a) The scope of which is satisfactory to theCommissioner; and
(b) Which are conducted by an independent auditorappointed by the Commissioner.
3. The Commissioner may contract to obtain legal,financial and examination services from outside the Division to conduct theexamination and make recommendations to the Commissioner. The cost of theexamination must be paid to the Commissioner by the captive insurer.
4. The provisions of
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1. The examination of a branch captive insurerpursuant to NRS 694C.410 must be ofbranch business and branch operations only, so long as the branch captive insurerprovides to the Commissioner on an annual basis a certificate of compliance, orequivalent documentation, issued by or filed with the licensing authority ofthe jurisdiction in which the branch captive insurer is formed, anddemonstrates to the satisfaction of the Commissioner that it is operating in asound financial condition and in accordance with all applicable laws andregulations of that jurisdiction.
2. As a condition of licensure, the alien captiveinsurer must authorize the Commissioner to examine the affairs of the aliencaptive insurer in the jurisdiction in which the alien captive insurer isformed.
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TAXATION, REGULATION AND SUPERVISION
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1. Except as otherwise provided in this section, acaptive insurer shall pay to the Division, not later than March 1 of each year,a tax at the rate of:
(a) Two-fifths of 1 percent on the first $20,000,000 ofits net direct premiums;
(b) One-fifth of 1 percent on the next $20,000,000 ofits net direct premiums; and
(c) Seventy-five thousandths of 1 percent on eachadditional dollar of its net direct premiums.
2. Except as otherwise provided in this section, acaptive insurer shall pay to the Division, not later than March 1 of each year,a tax at a rate of:
(a) Two hundred twenty-five thousandths of 1 percent onthe first $20,000,000 of revenue from assumed reinsurance premiums;
(b) One hundred fifty thousandths of 1 percent on thenext $20,000,000 of revenue from assumed reinsurance premiums; and
(c) Twenty-five thousandths of 1 percent on eachadditional dollar of revenue from assumed reinsurance premiums.
The tax onreinsurance premiums pursuant to this subsection must not be levied on premiumsfor risks or portions of risks which are subject to taxation on a direct basispursuant to subsection 1. A captive insurer is not required to pay any reinsurancepremium tax pursuant to this subsection on revenue related to the receipt ofassets by the captive insurer in exchange for the assumption of loss reservesand other liabilities of another insurer that is under common ownership andcontrol with the captive insurer, if the transaction is part of a plan todiscontinue the operation of the other insurer and the intent of the parties tothe transaction is to renew or maintain such business with the captive insurer.
3. If the sum of the taxes to be paid by a captiveinsurer calculated pursuant to subsections 1 and 2 is less than $5,000 in anygiven year, the captive insurer shall pay a tax of $5,000 for that year. Themaximum aggregate tax for any year must not exceed $175,000. The maximumaggregate tax to be paid by a sponsored captive insurer applies only to eachprotected cell and does not apply to the sponsored captive insurer as a whole.
4. Two or more captive insurers under common ownershipand control must be taxed as if they were a single captive insurer.
5. Notwithstanding any specific statute to thecontrary and except as otherwise provided in this subsection, the tax providedfor by this section constitutes all the taxes collectible pursuant to the lawsof this State from a captive insurer, and no occupation tax or other taxes maybe levied or collected from a captive insurer by this State or by any county,city or municipality within this State, except for taxes imposed pursuant to
6. Twenty-five percent of the revenues collected fromthe tax imposed pursuant to this section must be deposited with the State Treasurerfor credit to the Account for the Regulation and Supervision of CaptiveInsurers created pursuant to NRS 694C.460.The remaining 75 percent of the revenues collected must be deposited with theState Treasurer for credit to the State General Fund.
7. A captive insurer that is issued a license pursuantto this chapter after July 1, 2003, is entitled to receive a nonrefundablecredit of $5,000 applied against the aggregate taxes owed by the captiveinsurer for the first year in which the captive insurer incurs any liabilityfor the payment of taxes pursuant to this section. A captive insurer isentitled to a nonrefundable credit pursuant to this section not more than onceafter the captive insurer is initially licensed pursuant to this chapter.
8. As used in this section, unless the contextotherwise requires:
(a) Common ownership and control means:
(1) In the case of a stock insurer, the director indirect ownership of 80 percent or more of the outstanding voting stock oftwo or more corporations by the same member or members.
(2) In the case of a mutual insurer, the director indirect ownership of 80 percent or more of the surplus and the voting powerof two or more corporations by the same member or members.
(b) Net direct premiums means the direct premiumscollected or contracted for on policies or contracts of insurance written by acaptive insurer during the preceding calendar year, less the amounts paid topolicyholders as return premiums, including dividends on unabsorbed premiums orpremium deposits returned or credited to policyholders.
(Added to NRS by
NRS
(Added to NRS by
NRS
1. There is hereby created in the State General Fundan Account for the Regulation and Supervision of Captive Insurers. Money in theAccount must be used only to carry out the provisions of this chapter. Exceptas otherwise provided in NRS 694C.450,all fees and assessments received by the Commissioner or Division pursuant tothis chapter must be credited to the Account. Not more than 2 percent of thetax collected and deposited in the Account pursuant to
2. Except as otherwise provided in this section, allpayments from the Account for the maintenance of staff and associated expenses,including contractual services, as necessary, must be disbursed from the StateTreasury only upon warrants issued by the State Controller, after receipt ofproper documentation of the services rendered and expenses incurred.
3. At the end of each fiscal year, that portion of thebalance in the Account which exceeds $500,000 must be transferred to the StateGeneral Fund.
4. The State Controller may anticipate receipts to theAccount and issue warrants based thereon.
(Added to NRS by
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