2017 South Carolina Code of Laws
Title 38 - Insurance
CHAPTER 90 - CAPTIVE INSURANCE COMPANIES
Section 38-90-10. Definitions.
As used in this chapter, unless the context requires otherwise:
(1) "Alien captive insurance company" means an insurance company formed to write insurance business for its parents and affiliates and licensed pursuant to the laws of an alien jurisdiction which imposes statutory or regulatory standards in a form acceptable to the director on companies transacting the business of insurance in such jurisdiction.
(2) "Affiliated company" means a company in the same corporate system as a parent, an industrial insured, or a member organization by virtue of common ownership, control, operation, or management.
(3) "Association" means a legal association of individuals, corporations, limited liability companies, partnerships, political subdivisions, or associations that has been in continuous existence for at least one year:
(a) the member organizations of which collectively, or which does itself:
(i) own, control, or hold with power to vote all of the outstanding voting securities of an association captive insurance company incorporated as a stock insurer or organized as a limited liability company; or
(ii) have complete voting control over an association captive insurance company organized as a mutual insurer; or
(b) the member organizations of which collectively constitute all of the subscribers of an association captive insurance company formed as a reciprocal insurer.
(4) "Association captive insurance company" means a company that insures risks of the member organizations of the association and their affiliated companies.
(5) "Branch business" means any insurance business transacted by a branch captive insurance company in this State.
(6) "Branch captive insurance company" means an alien captive insurance company licensed by the director to transact the business of insurance in this State through a business unit with a principal place of business in this State.
(7) "Branch operations" means any business operations of a branch captive insurance company in this State.
(8) "Captive insurance company" means a pure captive insurance company, association captive insurance company, captive reinsurance company, sponsored captive insurance company, special purpose captive insurance company, or industrial insured captive insurance company formed or licensed under this chapter. For purposes of this chapter, a branch captive insurance company must be a pure captive insurance company with respect to operations in this State, unless otherwise permitted by the director.
(9) "Captive reinsurance company" means a reinsurance company that is formed or licensed pursuant to this chapter and is wholly owned by a qualifying reinsurance parent company. A captive reinsurance company is a stock corporation.
(10) "Consolidated debt to total capital ratio" means the ratio of the sum of (a) all debts and hybrid capital instruments including, but not limited to, all borrowings from banks, all senior debt, all subordinated debts, all trust preferred shares, and all other hybrid capital instruments that are not included in the determination of consolidated GAAP net worth issued and outstanding to (b) total capital, consisting of all debts and hybrid capital instruments as described in subitem (a) plus owners' equity determined in accordance with GAAP for reporting to the United States Securities and Exchange Commission.
(11) "Consolidated GAAP net worth" means the consolidated owners' equity determined in accordance with GAAP for reporting to the United States Securities and Exchange Commission.
(12) "Controlled unaffiliated business" means a company:
(a) that is not in the corporate system of a parent and affiliated companies;
(b) that has an existing contractual relationship with a parent or affiliated company; and
(c) whose risks are managed by a captive insurance company in accordance with Section 38-90-190.
(13) "Director" means the Director of the South Carolina Department of Insurance or the director's designee.
(14) "Department" means the South Carolina Department of Insurance.
(15) "GAAP" means generally accepted accounting principles.
(16) "General account" means the assets and liabilities of a sponsored captive insurance company other than protected cell assets and protected cell liabilities.
(17) "Industrial insured" means an insured as defined in Section 38-25-150(8).
(18) "Industrial insured captive insurance company" means a company that insures risks of the industrial insureds that comprise the industrial insured group and their affiliated companies.
(19) "Industrial insured group" means a group that meets either of the following criteria:
(a) a group of industrial insureds that collectively:
(i) own, control, or hold with power to vote all of the outstanding voting securities of an industrial insured captive insurance company incorporated as a stock insurer or limited liability company; or
(ii) have complete voting control over an industrial insured captive insurance company incorporated as a mutual insurer; or
(b) a group which is created under the Liability Risk Retention Act of 1986, 15 U.S.C. Section 3901, et seq., as amended, and Chapter 87, Title 38, as a corporation or other limited liability association taxable as a stock insurance company or a mutual insurer under this title.
(20) "Member organization" means any individual, corporation, limited liability company, partnership, or association that belongs to an association.
(21) "Parent" means any corporation, limited liability company, partnership, or individual that directly or indirectly owns, controls, or holds with power to vote more than fifty percent of the outstanding voting interests of a captive insurance company.
(22) "Participant" means an entity as defined in Section 38-90-240, and any affiliates of that entity, that are insured by a sponsored captive insurance company, where the losses of the participant are limited through a participant contract to the assets of a protected cell.
(23) "Participant contract" means a contract by which a sponsored captive insurance company insures the risks of a participant and limits the losses of the participant to the assets of a protected cell.
(24) "Protected cell" means an identified pool of assets and liabilities of a sponsored captive insurance company for one or more participants that is segregated and insulated from the remainder of the sponsored captive insurance company's assets and liabilities as set forth in this chapter. A protected cell may be unincorporated or incorporated.
(25) "Protected cell account" means a specifically identified bank or custodial account established by a sponsored captive insurance company for the purpose of segregating the protected cell assets of one protected cell from the protected cell assets of other protected cells and from the assets of the sponsored captive insurance company's general account.
(26) "Protected cell assets" means all assets, contract rights, and general intangibles, identified with and attributable to a specific protected cell of a sponsored captive insurance company.
(27) "Protected cell liabilities" means all liabilities and other obligations identified with and attributable to a specific protected cell of a sponsored captive insurance company.
(28) "Pure captive insurance company" means a company that insures risks of its parent, affiliated companies, controlled unaffiliated business, or a combination thereof.
(29) "Qualifying reinsurer parent company" means a reinsurer authorized to write reinsurance by this State and that has a consolidated GAAP net worth of not less than five hundred million dollars and consolidated debt to total capital ratio not greater than 0.50.
(30) "Risk retention group" means a captive insurance company formed under the Product Liability Risk Retention Act of 1986, 15 U.S.C. Section 3901, et seq., as amended.
(31) "Special purpose captive insurance company" means a captive insurance company that is formed or licensed under this chapter that does not meet the definition of any other type of captive insurance company defined in this section.
(32) "Sponsor" means an entity that is approved by the director to provide all or part of the capital and surplus required by applicable law and to organize and operate a sponsored captive insurance company.
(33) "Sponsored captive insurance company" means a captive insurance company:
(a) in which the minimum capital and surplus required by applicable law is provided by one or more sponsors;
(b) that is formed or licensed under this chapter;
(c) that segregates liability through one or more protected cells; and
(d) that insures the risks of participants through participant contracts.
(34) "Treasury rates" means the United States Treasury strips asked yield as published in the Wall Street Journal as of a balance sheet date.
HISTORY: 2000 Act No. 331, Section 1; 2001 Act No. 58, Section 8, eff May 29, 2001; 2002 Act No. 188, Section 2, eff March 12, 2002; 2002 Act No. 228, Sections 11.A, 11.B, eff May 1, 2002; 2003 Act No. 73, Section 24.A, eff June 25, 2003; 2004 Act No. 291, Sections 15, 16, eff July 29, 2004; 2014 Act No. 282 (S.909), Section 4, eff June 10, 2014.
Effect of Amendment
2014 Act No. 282, Section 4, added paragraph (16), definition of "general account"; rewrote paragraph (24), definition of "protected cell"; added paragraph (25), definition of "protected cell account"; added paragraph (26), definition of "protected cell assets"; added paragraph (27), definition of "protected cell liabilities"; added paragraph (30), definition of "risk retention group"; in paragraph (32), definition of "sponsor", deleted reference to Section 38-90-220; in paragraph (33), definition of "sponsored captive insurance company", rewrote paragraphs (c) and (d); and redesignated the paragraphs accordingly.
