Protected Cell Captive Insurance Companies

Florida Senate
-
2026

SB 990

By
Senator Leek

7-01128-26 2026990__
1 A bill to be entitled
2 An act relating to protected cell captive insurance
3 companies; amending s. 628.901, F.S.; revising the
4 definitions of the terms “captive insurance company”
5 and “special purpose captive insurance company”;
6 defining terms; amending s. 628.905, F.S.; specifying
7 that a protected cell captive insurance company may
8 only insure certain risks; amending s. 628.907, F.S.;
9 revising the unimpaired paid-in capital requirements
10 for captive insurance companies; revising the
11 unrestricted net asset requirements for captive
12 insurance companies incorporated as nonprofit
13 corporations; amending s. 628.908, F.S.; revising the
14 unimpaired surplus requirements for captive insurance
15 companies; amending s. 628.909, F.S.; revising
16 applicability; creating s. 628.921, F.S.; authorizing
17 one or more sponsors to form a protected cell captive
18 insurance company; requiring protected cell captive
19 insurance companies to be incorporated in a specified
20 manner; requiring applicant protected cell captive
21 insurance companies to file certain information with
22 the Office of Insurance Regulation; authorizing
23 protected cell captive insurance companies to
24 establish and maintain certain protected cells,
25 subject to certain approvals granted by the office;
26 specifying conditions on protected cell establishment
27 and maintenance; providing construction; specifying
28 requirements regarding protected cells’ assets and
29 liabilities and their attribution; requiring protected
30 cell captive insurance companies to file annual
31 reports, as required by the office, and to notify the
32 office when any protected cell is insolvent or unable
33 to meet its obligations; requiring the office’s
34 approval before a participant contract may take
35 effect; specifying requirements for any insurance
36 business written by a protected cell captive insurance
37 company and the security arrangements that must be
38 established; authorizing the office to take certain
39 actions in the event of an insolvency of a protected
40 cell captive insurance company; requiring certain
41 affidavits for owners of incorporated protected cells;
42 authorizing the assets of two or more protected cells
43 to be combined for a specified purpose; specifying
44 that such combination may not be construed in a
45 certain manner; authorizing the office to approve the
46 use of certain methods for valuation of certain assets
47 and liabilities and rating the risk attributable to a
48 protected cell; requiring a receiver to manage the
49 assets and liabilities of protected cell captive
50 insurance companies under certain circumstances;
51 prohibiting assets of protected cells from being used
52 to pay certain expenses and claims; requiring that
53 protected cell captive insurance companies’ capital
54 and surplus be available to pay certain expenses or
55 claims; specifying requirements in actions brought by
56 or against protected cell captive insurance companies;
57 specifying that certain legal actions are deemed to be
58 brought against the general account only; specifying
59 that protected cells not named in an action are not
60 deemed to be a party to the action and are entitled to
61 dismissal under certain circumstances; prohibiting the
62 assets of protected cells from being encumbered or
63 seized under certain circumstances; specifying that
64 protected cells do not have a duty to defend the
65 rights and obligations or other protected cells;
66 requiring protected cell captive insurance companies
67 and protected cells to be afforded a certain status
68 during discovery; specifying that nonparty protected
69 cells have standing under certain circumstances;
70 authorizing protected cells to be converted to any
71 authorized form of captive insurance company;
72 authorizing the office to issue a specified
73 certificate of authority; requiring converting
74 protected cells to file certain organizational
75 documents; specifying requirements for such documents;
76 specifying the formation date upon conversion;
77 requiring converted protected cells to possess certain
78 assets and liabilities; requiring the converting
79 protected cell to submit amended organizational
80 documents under certain circumstances; authorizing
81 captive insurance companies to apply to the office for
82 conversion to protected cell captive insurance
83 companies; requiring captive insurance companies to be
84 issued a revised certificate of authority under
85 certain circumstances; specifying the effective date
86 of such certificate; authorizing protected cells of a
87 captive insurance company to disaffiliate and to
88 affiliate with another protected cell captive
89 insurance company under certain circumstances;
90 authorizing the office to require changes to certain
91 documents under certain circumstances; specifying the
92 formation date of protected cells that affiliate with
93 another protected cell captive insurance company;
94 requiring such protected cells to maintain and carry
95 over certain assets and liabilities; authorizing an
96 individual protected cell to merge or otherwise
97 combine assets and liabilities with another individual
98 protected cell, subject to certain requirements;
99 specifying that a hearing is not required for certain
100 mergers; specifying the date of final conversion or
101 disaffiliation of a protected cell for certain
102 purposes; specifying that the prior entity and
103 successor entities are responsible for certain tasks;
104 providing an effective date.
105
106 Be It Enacted by the Legislature of the State of Florida:
107
108 Section 1. Present subsections (8) through (11), (12)
109 through (14), and (15) of section 628.901, Florida Statutes, are
110 redesignated as subsections (9) through (12), (19) through (21),
111 and (23), respectively, new subsections (8) and (13) through
112 (15) and subsections (16) through (18) and (22) are added to
113 that section, and subsection (2) and present subsection (14) of
114 that section are amended, to read:
115 628.901 Definitions.—As used in this part, the term:
116 (2) “Captive insurance company” means a domestic insurer
117 established under this part. A captive insurance company
118 includes a
protected cell captive insurance company,
pure
119 captive insurance company, special purpose captive insurance
120 company, or industrial insured captive insurance company formed
121 and licensed under this part.
122
(8)

“General account” means all assets and liabilities of a

123
protected cell captive insurance company not attributable to a

124
protected cell.

125
(13)

“Participant” means a person or an entity, and any

126
affiliate of
such person or entity
,
which
is insured by a

127
protected cell captive insurance company, if the losses of the

128
participant are limited through a participant contract.

129
(14)

“Participant contract” means a contract by which a

130
protected cell captive insurance company insures the risks of a

131
participant and limits the losses of each such participant to

132
its pro rata share of the assets of one or more protected cells

133
identified in such contract.

134
(15)

“Protected cell” means a separate account established

135
by a protected cell captive insurance company formed or licensed

136
under this part, in which
account
an identified pool of assets

137
and liabilities
is
segregated and insulated by means of this

138
part from the remainder of the protected cell captive insurance

139
company’s assets and liabilities in accordance with the terms of

140
one or more participant contracts to fund the liabilit
ies
of the

141
protected cell captive insurance company with respect to the

142
participants as set forth in the participant contracts.

143
(16)

“Protected cell assets” means all assets, contract

144
rights, and general intangibles identified with and attributable

145
to a specific protected cell of a protected cell captive

146
insurance company.

147
(17)

“Protected cell captive insurance company” means
a

148
captive insurance company:

149
(a)

In which the minimum capital and surplus required by

150
this part are provided by one or more sponsors;

151
(b)

That is formed or licensed under this part;

152
(c)

That insures the risks of separate participants through

153
participant contracts; and

154
(d)

That funds its liability to each participant through

155
one or more protected cells and segregates the assets of each

156
protected cell from the assets of other protected cells and from

157
the assets of the protected cell captive insurance company’s

158
general account.

159
(18)

“Protected cell liabilities” means all liabilities and

160
other obligations identified with and attributed to a specific

161
protected cell of a protected cell captive insurance company.

162
(21)
(14)
“Special purpose captive insurance company” means
163 a captive insurance company that is formed or licensed under
164 this
part which

chapter
that
does not meet the definition of any
165 other type of captive insurance company defined in this section.
166
(22)

“Sponsor” means any person or entity that is approved

167
by the office to provide all or part of the capital and surplus

168
required by this part and to organize and operate a protected

169
cell captive insurance company.

170 Section 2. Paragraph (f) is added to subsection (1) of
171 section 628.905, Florida Statutes, to read:
172 628.905 Licensing; authority.—
173 (1) A captive insurance company, if permitted by its
174 charter or articles of incorporation, may apply to the office
175 for a license to do any and all insurance authorized under the
176 insurance code, other than workers’ compensation and employer’s
177 liability, life, health, personal motor vehicle, and personal
178 residential property insurance, except that:
179
(f)
A protected cell captive insurance company may only

180
insure the risks of its protected cell participants.

181 Section 3. Subsections (1) and (2) of section 628.907,
182 Florida Statutes, are amended to read:
183 628.907 Minimum capital and net assets requirements;
184 restriction on payment of dividends.—
185 (1) A captive insurance company may not be issued a license
186 unless it possesses and thereafter maintains
the following

187
applicable
unimpaired paid-in capital
requirements

of
:
188 (a)
In the case of a protected cell captive insurance

189
company, at least $100,000
.

190
(b)
In the case of a pure captive insurance company, at
191 least $100,000
.
;

192
(c)
(b)
In the case of an industrial insured captive
193 insurance company incorporated as a stock insurer, at least
194 $200,000
.
; and

195
(d)
(c)
In the case of a special purpose captive insurance
196 company, an amount determined by the office after giving due
197 consideration to the company’s business plan, feasibility study,
198 and pro forma financial statements and projections, including
199 the nature of the risks to be insured.
200 (2) The office may not issue a license to a captive
201 insurance company incorporated as a nonprofit corporation unless
202 the company possesses and maintains
the following applicable

203 unrestricted net assets
requirements

of
:
204 (a)
In the case of a protected cell captive insurance

205
company, at least $100,000.

206
(b)
In the case of a pure captive insurance company, at
207 least $250,000.
208
(c)
(b)
In the case of a special purpose captive insurance
209 company, an amount determined by the office after giving due
210 consideration to the company’s business plan, feasibility study,
211 and pro forma financial statements and projections, including
212 the nature of the risks to be insured.
213 Section 4. Subsection (1) of section 628.908, Florida
214 Statutes, is amended to read:
215 628.908 Surplus requirements; restriction on payment of
216 dividends.—
217 (1) The office may not issue a license to a captive
218 insurance company unless the company possesses and maintains
the

219
following applicable
unimpaired surplus
requirements

of
:
220 (a) In the case of a pure captive insurance company, at
221 least $150,000.
222 (b)
In the case of a protected cell captive insurance

223
company, at least $100,000.

224
(c)
In the case of an industrial insured captive insurance
225 company incorporated as a stock insurer, at least $300,000.
226
(d)
(c)
In the case of an industrial insured captive
227 insurance company incorporated as a mutual insurer, at least
228 $500,000.
229
(e)
(d)
In the case of a special purpose captive insurance
230 company, an amount determined by the office after giving due
231 consideration to the company’s business plan, feasibility study,
232 and pro forma financial statements and projections, including
233 the nature of the risks to be insured.
234 Section 5. Subsection (1) of section 628.909, Florida
235 Statutes, is amended to read:
236 628.909 Applicability of other laws.—
237 (1) The Florida Insurance Code does not apply to captive
238 insurance companies
, protected cell captive insurance companies,

239 or industrial insured captive insurance companies except as
240 provided in this part and subsections (2) and (3).
241 Section 6. Section 628.921, Florida Statutes, is created to
242 read:
243
628.921
Protected cell captive insurance companies
.—

244
(1)

One or more sponsors may form a protected cell captive

245
insurance company under this part.

246
(2)

A protected cell captive insurance company must be

247
incorporated as a stock insurer with its capital divided into

248
shares and held by the stockholders, as a mutual corporation, as

249
a nonprofit corporation with one or more members, or as a

250
limited liability company.

251
(3)

In addition to the information required by chapter 624,

252
each applicant protected cell captive insurance company must

253
file all of the following information with the office:

254
(a)

Materials demonstrating how the applicant will account

255
for the loss and expense experience of each protected cell at a

256
level of detail found to be sufficient by the office, and how it

257
will report such experience to the office.

258
(b)

A statement acknowledging that all financial records of

259
the applicant, including records pertaining to any protected

260
cells, must be made available for inspection or examination by

261
the office or the office’s designated agent.

262
(c)

All contracts or sample contracts between the applicant

263
and any participants.

264
(d)

Evidence that expenses will be allocated to each

265
protected cell in a fair and equitable manner.

266
(4)

A protected cell captive insurance company formed or

267
licensed under this part may establish and maintain one or more

268
incorporated or unincorporated protected cells, to insure risks

269
of one or more participants, subject to all of the following

270
conditions:

271
(a)1.

A protected cell captive insurance company may

272
establish one or more protected cells if the office has approved

273
in writing a plan of operation or amendments to a plan of

274
operation submitted by the protected cell captive insurance

275
company with respect to each protected cell. A plan of operation

276
must include, but is not limited to, the specific business

277
objectives and investment guidelines of the protected cell.

278
However, the office may require additional information in the

279
plan of operation. The office may make the approval of a plan of

280
operation or amendments to a plan of operation effective as of

281
any date on or before the date the approval is signed so long as

282
the effective date is no earlier than the date on which the plan

283
of operation or amendments to the plan of operation were filed

284
with the office.

285
2.

Upon the office’s written approval of the plan of

286
operation, the protected cell captive insurance company, in

287
accordance with the approved plan of operation, may attribute

288
insurance obligations with respect to its insurance business to

289
the protected cell.

290
3.

A protected cell must have its own distinct name or

291
designation, which must include the words “protected cell” or

292
“incorporated cell.” Such names or designations may also be

293
reasonably abbreviated, including, without limitation, PC or

294
P.C. for “protected cell”; IC, I.C., IPC, or I.P.C. for

295
“incorporated cell”; and SC, S.C., SPC, or S.P.C. for “series

296
cell.”

297
4.

The protected cell captive insurance company shall

298
transfer all assets attributable to a protected cell to one or

299
more separately established and identified protected cell

300
accounts bearing the name or designation of that protected cell.

301
Protected cell assets must be held in the protected cell

302
accounts for the purpose of satisfying the obligations of that

303
protected cell.

304
5.

An incorporated protected cell may be organized and

305
operated in any form of business organization authorized by the

306
office, including, but not limited to, an individual series of a

307
limited liability company under chapter 605. Each incorporated

308
protected cell of a protected cell captive insurance company

309
must be treated as a captive insurer for purposes of this part

310
and has the power to enter into contracts, including an

311
individual series of a limited liability company. Unless

312
otherwise permitted by the organizational documents of a

313
protected cell captive insurance company, each incorporated

314
protected cell of the protected cell captive insurance company

315
must have the same directors, secretary, and registered office

316
as the protected cell captive insurance company.

317
6.

All attributions of assets and liabilities between a

318
protected cell and the general account must be in accordance

319
with the plan of operation and participant contracts approved by

320
the office. A protected cell captive insurance company may not

321
make other attributions of assets or liabilities between the

322
protected cell captive insurance company’s general account and

323
its protected cells. Any attribution of assets and liabilities

324
between the general account and a protected cell must be in cash

325
or in readily marketable securities with established market

326
values.

327
(b)

The creation of a protected cell does not create, with

328
respect to that protected cell, a legal person separate from the

329
protected cell captive insurance company unless the protected

330
cell is an incorporated cell. Amounts attributed to a protected

331
cell under this part, including assets transferred to a

332
protected cell account, are owned by the protected cell. A

333
protected cell captive insurance company may not act as, or hold

334
itself out to be, a trustee of the protected cell assets of the

335
protected cell account. Notwithstanding this subsection, a

336
protected cell captive insurance company may permit a security

337
interest to attach to the assets of a protected cell assets or a

338
protected cell account
if the security interest is in favor of a

339
creditor of that protected cell and is otherwise authorized by

340
applicable law
.

341
(c)

This subsection may not be construed to prohibit the

342
protected cell captive insurance company from contracting with

343
or arranging for an investment advisor, commodity trading

344
advisor, or other third party to manage the protected cell

345
assets of a protected cell if all remuneration, expenses, and

346
other compensation of the third-party advisor or manager are

347
payable from the protected cell assets of that protected cell

348
and not from the protected cell assets of other protected cells

349
or the assets of the protected cell captive insurance company’s

350
general account.

351
(d)1.

A protected cell captive insurance company must

352
establish administrative and accounting procedures necessary to

353
properly identify the one or more protected cells of the

354
protected cell captive insurance company and the protected cell

355
assets and protected cell liabilities attributable to the

356
protected cells. The directors of a protected cell captive

357
insurance company must keep protected cell assets and protected

358
cell liabilities:

359
a.

Separate and separately identifiable from the assets and

360
liabilities of the protected cell captive insurance company’s

361
general account; and

362
b.

Attributable to one protected cell separate and

363
separately identifiable from protected cell assets and protected

364
cell liabilities attributable to other protected cells.

365
2.

If subparagraph 1. is violated, the remedy of tracing

366
applies to protected cell assets that have been commingled with

367
the protected cell assets of other protected cells or with the

368
assets of the protected cell captive insurance company’s general

369
account. The remedy of tracing may not be construed as

370
exclusive.

371
(e)

When establishing a protected cell, the protected cell

372
captive insurance company must attribute to the protected cell

373
assets a value at least equal to the reserves and other

374
insurance liabilities attributed to that protected cell.

375
(f)

Each protected cell must be accounted for separately on

376
the books and records of the protected cell captive insurance

377
company to reflect the financial condition and results of

378
operations of such protected cell, net income or loss, dividends

379
or other distributions to participants, and such other factors

380
as may be provided in the participant contract or required by

381
the office.

382
(g)

An asset of a protected cell may not be charged with,

383
or otherwise made liable for, any liability arising out of

384
insurance business conducted by the protected cell captive

385
insurance company on behalf of any other protected cell or its

386
general account.

387
(h)

A
protected cell captive insurance company
may not

388
sell, exchange, or otherwise transfer assets between or among

389
any of its protected cells without the consent of such protected

390
cells.

391
(i)

A protected cell captive insurance company may not

392
sell, exchange, transfer, or otherwise distribute assets, or pay

393
any dividend or distribution, from a protected cell to the

394
company or to a participant without the approval of the office.

395
The office may not approve any sale, exchange, transfer,

396
dividend, or distribution that would result in the insolvency or

397
impairment of a protected cell.

398
(j)

All attributions of assets and liabilities to the

399
protected cells and the general account must be in accordance

400
with the plan of operation approved by the office.
A protected

401
cell captive insurance company may not attribute assets or

402
liabilities between its general account and any protected cell,

403
or between any protected cells.
The protected cell captive

404
insurance company must attribute all insurance obligations,

405
assets, and liabilities relating to a reinsurance contract

406
entered into with respect to a protected cell to such protected

407
cell. The performance under such reinsurance contract and any

408
tax benefits, losses, refunds, or credits allocated pursuant to

409
a tax allocation agreement to which the protected cell captive

410
insurance company is a party, including any payments made by or

411
due to be made to the protected cell captive insurance company

412
pursuant to the terms of such agreement, must reflect the

413
insurance obligations, assets, and liabilities relating to the

414
reinsurance contract which are attributed to such protected

415
cell.

416
(k)

In connection with the conservation, rehabilitation, or

417
liquidation of a protected cell captive insurance company, the

418
assets and liabilities of a protected cell must, to the extent

419
the office determines they are separable, at all times be kept

420
separate from, and may not be commingled with, those of other

421
protected cells and the protected cell captive insurance

422
company.

423
(l)

Each protected cell captive insurance company must

424
annually file with the office such financial reports as required

425
by the office. Any such financial report must include, without

426
limitation, accounting statements detailing the financial

427
experience of each protected cell.

428
(m)

Each protected cell captive insurance company must

429
notify the office in writing within 10 business days of any

430
protected cell that is insolvent or otherwise unable to meet its

431
claim or expense obligations.

432
(n)

A participant contract may not take effect without the

433
office’s prior written approval. The addition of each new

434
protected cell, the withdrawal of any participant, or the

435
termination of any existing protected cell constitutes a change

436
in the plan of operation requiring the office’s prior written

437
approval.

438
(o)

The business written by a protected cell captive

439
insurance company, with respect to each protected cell, must be:

440
1.

Fronted by an insurance company licensed under the laws

441
of any state;

442
2.

Reinsured by a reinsurer authorized or approved by this

443
state; or

444
3.

Secured by a trust fund in the United States for the

445
benefit of policyholders and claimants or funded by an

446
irrevocable letter of credit or other arrangement that is

447
acceptable to the office. The amount of security provided may

448
not be less than the reserves associated with those liabilities

449
which are neither fronted nor reinsured, including reserves for

450
losses, allocated loss adjustment expenses, incurred but not

451
reported losses, and unearned premiums for business written

452
through the participant’s protected cell. The office may require

453
the protected cell captive insurance company to increase the

454
funding of any security arrangement established under this

455
paragraph. If the form of security is a letter of credit, the

456
letter of credit must be issued or confirmed by a bank approved

457
by the office. A trust maintained pursuant to this paragraph

458
must be established in a form and upon such terms as approved by

459
the office.

460
(p)

Notwithstanding this part or other laws of this state,

461
and in addition to subsection (6), in the event of an insolvency

462
of a protected cell captive insurance company where the office

463
determines that one or more protected cells remain solvent, the

464
office may separate such cells from the protected cell captive

465
insurance company and may allow, on application of the protected

466
cell captive insurance company, for the conversion of such

467
protected cells into one or more new or existing protected cell

468
captive insurance companies, or one or more other captive

469
insurance companies, pursuant to such plan of operation as the

470
office deems acceptable.

471
(q)

Biographical affidavits are not required for

472
participants in unincorporated cells. However, biographical

473
affidavits are required for owners of incorporated cells,

474
including series members of a series limited liability company.

475
(r)

A protected cell captive insurance company formed or

476
licensed under this part may establish and operate both

477
unincorporated and incorporated protected cells.

478
(5)

Notwithstanding subsection (4), the assets of two or

479
more protected cells may be combined for purposes of investment,

480
and such combination may not be construed as defeating the

481
segregation of such assets for accounting or other purposes.

482
Notwithstanding any other provision of the insurance code, the

483
office may approve the use of alternative reliable methods for

484
the valuation of protected cell assets and liabilities and for

485
the rating of risks attributable to a protected cell
.

486
(6)

Upon any order of supervision, rehabilitation, or

487
liquidation of a protected cell captive insurance company, the

488
receiver shall manage the assets and liabilities of the

489
protected cell captive insurance company pursuant to this part.

490
(7)(a)

Assets of a protected cell may not be used to pay

491
any expenses or claims other than those attributable to such

492
protected cell.

493
(b)

A protected cell captive insurance company’s capital

494
and surplus must at all times be available to pay any expenses

495
of or claims against the protected cell captive insurance

496
company.

497
(8)(a)

The pleadings in any legal action brought by or

498
against a protected cell captive insurance company must specify

499
which protected cell or cells are or should be named a party to

500
the suit. If the general account is party to the suit, such

501
account must be separately identified in the pleadings as if it

502
were a protected cell.

503
(b)

A legal action brought against a protected cell captive

504
insurance company which does not specify one or more protected

505
cells shall be deemed to have been brought against the general

506
account only.

507
(c)

Any protected cell that is not named in the pleadings

508
of the legal action may not be deemed to be a party to the legal

509
action. Any protected cell that is erroneously named as a party

510
or named without proper cause is entitled to prompt dismissal

511
from the legal action.

512
(d)

Unless specified by the plan of operation, participant

513
contract, or other prior contractual agreement, the assets of

514
one protected cell may not be encumbered or seized to satisfy

515
the obligations of or a judgment against any other protected

516
cell. A protected cell does not have a duty to defend the rights

517
and obligations of any other protected cell.

518
(e)

In any legal action involving a protected cell captive

519
insurance company or a protected cell, any papers, documents, or

520
property of a nonparty protected cell must be afforded the same

521
status during discovery as the documents or property of any

522
other unrelated third party. A nonparty protected cell has

523
standing to appear and petition for any appropriate relief to

524
protect the confidentiality of its papers or documents.

525
(9)(a)1.

Upon the application of a protected cell captive

526
insurance company, one of its protected cells may be converted

527
to any form of captive insurance company authorized pursuant to

528
this part with the consent of the office. Upon compliance with

529
this part, the office may issue to the converting protected cell

530
a certificate of authority with an effective date of its

531
original date of formation as a protected cell.

532
2.

If the converting protected cell is a series of a

533
limited liability company, the protected cell must file

534
organizational documents with the Secretary of State which

535
comply with this part. The organizational documents must include

536
the date of formation as a series of a limited liability

537
company. Upon conversion, the formation date of the series shall

538
be deemed the formation date of the converted protected cell.

539
The converted protected cell shall possess all assets and

540
liabilities, including outstanding insurance liabilities, owned

541
by the predecessor series.

542
3.

If the converting protected cell is any other type of

543
incorporated protected cell entity, the converting protected

544
cell must submit amended organizational documents to the

545
Secretary of State which comply with this part.

546
4.

If the converting protected cell is neither a series of

547
a limited liability company nor an incorporated protected cell,

548
the protected cell must file organizational documents with the

549
Secretary of State which comply with this part. The

550
organizational documents must include the date of formation as a

551
protected cell. Upon conversion, the formation date of the

552
protected cell is the formation date of the
converted protected

553
cell
.

The
converted protected cell
shall possess all assets and

554
liabilities, including outstanding insurance liabilities, owned

555
by the predecessor cell.

556
(b)

A captive insurance company may apply to the office for

557
conversion to become a protected cell captive insurance company

558
under any form permitted under this part. Upon compliance with

559
this part, approval by the office, and the filing of amended

560
organizational documents with the Secretary of State, the

561
captive insurance company must be issued a revised certificate

562
of authority. The effective date of the revised protected cell

563
captive insurance company’s certificate of authority shall

564
remain the same as the effective date of the prior captive

565
insurance company.

566
(c)

With the consent of both the affected protected cell

567
captive insurance companies and the office, an individual

568
protected cell of a captive insurance company may disaffiliate

569
from one protected cell captive insurance company and affiliate

570
with another protected cell captive insurance company. The

571
office may require the affected protected cell captive insurance

572
companies and the individual protected cell to make necessary

573
changes to their business plans, organizational documents,

574
participation contracts, or other governing documents before

575
approving the change in affiliation. The formation date of a

576
protected cell that affiliates with another protected cell

577
captive insurance company shall be the date of its original

578
formation with the prior protected cell captive insurance

579
company. A protected cell shall maintain and carry over all

580
assets and liabilities, including outstanding insurance

581
liabilities, to the new protected cell captive insurance

582
company.

583
(d)

With the consent of the affected protected cell captive

584
insurance company or companies, the owners or the participants

585
of the protected cells, and the office, an individual protected

586
cell of a captive insurance company may merge or otherwise

587
combine assets and liabilities with another individual protected

588
cell of a protected cell captive insurance company. The office

589
may require the affected protected cell captive insurance

590
companies and the individual protected cells to make necessary

591
changes to their business plans, organizational documents,

592
participation contracts, or other governing documents before

593
approving the change in affiliation. The formation date of a

594
protected cell that merges or otherwise combines assets and

595
liabilities with another protected cell captive insurance

596
company is the date of the original formation of the surviving

597
protected cell. The surviving protected cell must acquire all of

598
the assets and liabilities, including outstanding insurance

599
liabilities, of the merging protected cell. A hearing is not

600
required for mergers of protected cells effectuated under this

601
section.

602
(e)

Solely for the purposes of annual reports, inspections,

603
examinations, and taxation, the date of final conversion or

604
disaffiliation of a protected cell shall be deemed a termination

605
of that cell from the prior entity. The prior entity shall be

606
responsible for the accounting, oversight, and premium tax on

607
any transactions prior to the date of final conversion or

608
disaffiliation. The successor entity shall be responsible for

609
the accounting, oversight, and premium tax on any transactions

610
on or after the date of final conversion or disaffiliation.

611 Section 7. This act shall take effect July 1, 2026.