2006 Utah Code - 31A-37-102 — Definitions.

     31A-37-102.   Definitions.
     As used in this chapter:
     (1) "Affiliated company" means a company that because of common ownership, control, operation, or management is in the same corporate system as:
     (a) a parent;
     (b) an industrial insured; or
     (c) a member organization.
     (2) "Alien captive insurance company" means an insurance company:
     (a) formed to write insurance business for its parents and affiliates; and
     (b) licensed pursuant to the laws of an alien jurisdiction that imposes statutory or regulatory standards:
     (i) on companies transacting the business of insurance in the alien jurisdiction; and
     (ii) in a form acceptable to the commissioner.
     (3) "Association" means a legal association of individuals, corporations, partnerships, or associations that has been in continuous existence for at least one year if:
     (a) the association or its member organizations:
     (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
     (ii) have complete voting control over an association captive insurance company incorporated as a mutual insurer; or
     (b) the association's member organizations 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:
     (a) member organizations of the association; and
     (b) affiliates of the member organizations of the association.
     (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 that has obtained a certificate of authority by the commissioner 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 any of the following formed or holding a certificate of authority under this chapter:
     (a) a branch captive insurance company;
     (b) a pure captive insurance company;
     (c) an association captive insurance company;
     (d) a sponsored captive insurance company;
     (e) an industrial insured captive insurance company;
     (f) a captive reinsurance company; or
     (g) a special purpose captive insurance company.
     (9) "Captive reinsurance company" means a reinsurance company that is:
     (a) formed or licensed pursuant to this chapter;
     (b) wholly owned by a qualifying reinsurance parent company; and
     (c) a stock corporation.

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     (10) "Common ownership and control" means:
     (a) in the case of stock corporations, the direct or indirect ownership by the same shareholder or shareholders of 80% or more of the outstanding voting stock of two or more corporations; and
     (b) in the case of mutual corporations, the direct or indirect ownership by the same member or members of 80% or more of the surplus and the voting power of two or more corporations.
     (11) "Commissioner" means the Insurance Commissioner or the commissioner's designee.
     (12) "Consolidated debt to total capital ratio" means the ratio of Subsection (12)(a) to (b).
     (a) This Subsection (12)(a) is an amount equal to the sum of all debts and hybrid capital instruments including:
     (i) all borrowings from depository institutions;
     (ii) all senior debt;
     (iii) all subordinated debts;
     (iv) all trust preferred shares; and
     (v) all other hybrid capital instruments that are not included in the determination of consolidated GAAP net worth issued and outstanding.
     (b) This Subsection (12)(b) is an amount equal to the sum of:
     (i) total capital consisting of all debts and hybrid capital instruments as described in Subsection (12)(a); and
     (ii) shareholders' equity determined in accordance with generally accepted accounting principles for reporting to the United States Securities and Exchange Commission.
     (13) "Consolidated GAAP net worth" means the consolidated shareholders' equity determined in accordance with generally accepted accounting principles for reporting to the United States Securities and Exchange Commission.
     (14) "Controlled unaffiliated business" means a company:
     (a) that is not in the corporate system of a parent and affiliates;
     (b) that has an existing contractual relationship with a parent or affiliate; and
     (c) whose risks are managed by a pure captive insurance company in accordance with Section 31A-37-504.
     (15) "Department" means the Insurance Department.
     (16) "Industrial insured" means an insured:
     (a) that produces insurance:
     (i) by the services of a full-time employee acting as a risk manager or insurance manager; or
     (ii) using the services of a regularly and continuously qualified insurance consultant;
     (b) whose aggregate annual premiums for insurance on all risks total at least $25,000; and
     (c) that has at least 25 full-time employees.
     (17) "Industrial insured captive insurance company" means a company that insures risks of:
     (a) the industrial insureds that comprise the industrial insured group; and
     (b) the affiliates of the industrial insured group.

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     (18) "Industrial insured group" means:
     (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
     (ii) have complete voting control over an industrial insured captive insurance company incorporated as a mutual insurer; or
     (b) a group that is:
     (i) created under the Product Liability Risk Retention Act of 1981, 15 U.S.C. Section 3901 et seq., as amended, as a corporation or other limited liability association; and
     (ii) taxable under this title as a:
     (A) stock corporation; or
     (B) mutual insurer.
     (19) "Member organization" means an individual, corporation, partnership, or association that belongs to an association.
     (20) "Parent" means a corporation, partnership, or individual that directly or indirectly owns, controls, or holds with power to vote more than 50% of the outstanding voting securities of a pure captive insurance company.
     (21) "Participant" means any of the following that are insured by a sponsored captive insurance company, if the losses of the participant are limited through a participant contract to the assets of a protected cell:
     (a) an entity permitted to be a participant under Section 31A-37-403; and
     (b) any affiliate of an entity permitted to be a participant under Section 31A-37-403.
     (22) "Participant contract" means a contract by which a sponsored captive insurance company:
     (a) insures the risks of a participant; and
     (b) limits the losses of the participant to the assets of a protected cell.
     (23) "Protected cell" means a separate account established and maintained by a sponsored captive insurance company for one participant.
     (24) "Pure captive insurance company" means a company that insures risks of its parent and affiliates.
     (25) "Qualifying reinsurer parent company" means a reinsurer:
     (a) authorized to write reinsurance by this state; and
     (b) that has:
     (i) a consolidated GAAP net worth of not less than $500,000,000; and
     (ii) a consolidated debt to total capital ratio not greater than .50.
     (26) "Sponsor" means an entity that:
     (a) meets the requirements of Section 31A-37-402; and
     (b) is approved by the commissioner to:
     (i) provide all or part of the capital and surplus required by applicable law; and
     (ii) organize and operate a sponsored captive insurance company.
     (27) "Sponsored captive insurance company" means a captive insurance company:
     (a) in which the minimum capital and surplus required by applicable law is provided by sponsors;
     (b) that is formed or holding a certificate of authority under this chapter;
     (c) that insures the risks of separate participants through the contract; and

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     (d) that segregates each participant's liability through one or more protected cells.
     (28) "Treasury rates" means the United States Treasury strip asked yield as published in the Wall Street Journal as of a balance sheet date.

Amended by Chapter 312, 2004 General Session