§ 6048c. Definitions
As used in this subchapter:
(1) “Ceding insurer” means an insurance company approved by the Commissioner and licensed
or otherwise authorized to transact the business of insurance or reinsurance in its
state or country of domicile, which cedes risk to a special purpose financial insurance
company pursuant to a reinsurance contract.
(2) “Insolvency” and “insolvent,” for purpose of applying the provisions of chapter 145
of this title to a special purpose financial insurance company, mean:
(A) that the special purpose financial insurance company is unable to pay its obligations
when they are due, unless those obligations are the subject of a bona fide dispute;
or
(B) the special purpose financial insurance company has failed to meet all criteria and
conditions for solvency of the special purpose financial insurance company established
by the Commissioner by rule or order.
(3) “Insurance securitization” and “securitization” mean a transaction or a group of related
transactions, which may include capital market offerings, that are effected through
related risk transfer instruments and facilitating administrative agreements where
all or part of the result of such transactions is used to fund the special purpose
financial insurance company’s obligations under a reinsurance contract with a ceding
insurer and by which:
(A) proceeds are obtained by a special purpose financial insurance company, directly or
indirectly, through the issuance of securities by the special purpose financial insurance
company or any other person; or
(B) a person provides one or more letters of credit or other assets for the benefit of
the special purpose financial insurance company, which the Commissioner authorizes
the special purpose financial insurance company to treat as admitted assets for purposes
of the special purpose financial insurance company’s annual report; where all or any
part of such proceeds, letters of credit, or assets, as applicable, are used to fund
the special purpose financial insurance company’s obligations under a reinsurance
contract with a ceding insurer. The terms “insurance securitization” and “securitization”
do not include the issuance of a letter of credit for the benefit of the Commissioner
to satisfy all or part of the special purpose financial insurance company’s capital
and surplus requirements under section 6048g of this chapter.
(4) “Management” means the board of directors, managing board, or other individual or
individuals vested with overall responsibility for the management of the affairs of
the special purpose financial insurance company, including officers or other agents
elected or appointed to act on behalf of the special purpose financial insurance company.
(5) “Organizational document” means:
(A) in the case of a special purpose financial insurance company formed as a stock corporation,
the special purpose financial insurance company’s articles of incorporation and bylaws;
and
(B) in the case of a special purpose financial insurance company formed as a limited liability
company, the special purpose financial insurance company’s articles of organization
and operating agreement.
(6) “Reinsurance contract” means a contract between a special purpose financial insurance
company and a ceding insurer pursuant to which the special purpose financial insurance
company agrees to provide reinsurance to the ceding insurer for risks associated with
the ceding insurer’s insurance or reinsurance business.
(7) “Security” shall have the same meaning as defined in 9 V.S.A. § 5102(28) and shall also include any form of debt obligation, equity, surplus certificate,
surplus note, funding agreement, derivative, or other financial instrument that the
Commissioner designates, by rule or order, as a “security” for purposes of this subchapter.
(8) “Special purpose financial insurance company” means a captive insurance company that
has received a license from the Commissioner to operate as a special purpose financial
insurance company pursuant to this subchapter.
(9) “Special purpose financial insurance company security” means:
(A) a security issued by a special purpose financial insurance company; or
(B) a security issued by a third party, the proceeds of which are obtained directly or
indirectly by a special purpose financial insurance company.
(10) “Surplus note” means an unsecured subordinated debt obligation possessing characteristics
consistent with paragraph 3 of the National Association of Insurance Commissioners
Statement of Statutory Accounting Principles No. 41, as amended from time to time
and as modified or supplemented by rule or order of the Commissioner. (Added 2007, No. 49, § 17; amended 2013, No. 29, § 54, eff. May 13, 2013.)