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STATE OF IOWA
KIM REYNOLDS
GOVERNOR
May 15, 2026
The Honorable Paul Pate
Secretary of State of Iowa
State Capitol
Des Moines, Iowa 50319
Dear Mr. Secretary,
I hereby transmit:
House File 2766, an Act relating to captive insurance companies and life captive
reinsurance companies, and including civil penalties.
The above House File is hereby approved on this date.
Sincerdy,bmce^y,
Kim leynolds f \
Governor of lowa^***^^
cc: Secretary of the Senate
Clerk of the House
STATE CAPITOL DES MOINES, IOWA 50319 515.281.5211 WWW.GOVERNOR.IOWA.GOV
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House File 2766
AN ACT
RELATING TO CAPTIVE INSURANCE COMPANIES AND LIFE CAPTIVE
REINSURANCE COMPANIES, AND INCLUDING CIVIL PENALTIES.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
Section 1. Section 432.1, Code 2026, is amended by adding
the following new subsection:
NEW SUBSECTION. 7. a. A tax return filed under this
section shall not be subject to inspection under chapter 22.
It shall be unlawful for any present or former officer or
employee of the state to willfully or recklessly publish any
tax return filed under this section. A person who violates
this paragraph shall be guilty of a serious misdemeanor and, in
addition to any other penalty, shall be dismissed from state
office or discharged from state employment.
£>, This section shall not be construed to prohibit the
department of revenue from turning over information and tax
returns in the department of revenue's possession pursuant
to this subsection to duly authorized officers of the United
States, or tax officials of other states, pursuant to an
agreement between the commissioner of insurance and any of the
following:
(1) The secretary of the treasury of the United States, or
the secretary's delegate.
(2) The commissioner of insurance of another state.
Sec. 2. Section 432.lA, Code 2026, is amended by adding the
following new subsection:
House File 2766, p. 2
NEW SUBSECTION. 9. a, A tax return filed under this
section shall not be subject to inspection under chapter 22,
It shall be unlawful for any present or former officer or
employee of the state to willfully or recklessly publish any
tax return filed under this section. A person who violates
this paragraph shall be guilty of a serious misdemeanor and, in
addition to any other penalty, shall be dismissed from state
office or discharged from state employment.
i>. This section shall not be construed to prohibit the
department of revenue from turning over information and
tax returns in the department's possession pursuant to this
subsection to duly authorized officers of the United States, or
tax officials of other states, pursuant to an agreement between
the commissioner of insurance and any of the following:
(1) The secretary of the treasury of the United States, or
the secretary's delegate.
(2) The commissioner of insurance of another state.
Sec. 3. Section 490.905, subsection 1, Code 2026, is amended
to read as follows:
1. The secretary of state, upon a corporation complying with
this section and upon the filing of articles of incorporation
and upon receipt of the fees as provided in this chapter,
shall issue an acknowledgment of receipt of document as
of the date of the filing of the articles of incorporation
with the secretary of state. The acknowledgment of receipt
of document shall state on its face that it is issued in
accordance with this section. The secretary of state shall
then notify the appropriate officer of the state or country of
the corporation's last domicile that the corporation is now a
domestic corporation domiciled in this state. This section
applies to life insurance companies, to insurance companies
doing business under chapter 515, and to captive companies
doing business under chapter 521J.
Sec. 4. Section 521J.1, unnumbered paragraph 1, Code 2026,
is amended to read as follows:
As used in this chapter subchapter, unless the context
otherwise requires:
Sec. 5. Section 521J.1, subsections 2, 6, 7, 8, and 9, Code
2026, are amended to read as follows:
House File 2766, p. 3
2. '^Alien captive company'' means a captive company formed
under the laws of an alien jurisdiction any country except the
United States that imposes statutory or regulatory standards in
a form acceptable to the commissioner on companies transacting
the business of insurance in such jurisdiction.
6. ""Business entity" means a corporation^ a limited
liability company/ or other legal entity formed by an
organisational document legal entity permitted under Iowa law.
""Business entity" does not include a sole proprietorship.
7. ""Captive company" means any pure captive company,
protected cell captive company, special purpose captive
company, or industrial insured captive company formed or
authorized under this chapter subchapter. ""Captive company"
does not include a life captive reinsurance company as defined
under section 521J.101.
8. ""Captive reinsurance company" means a captive insurance
company in this state, as authorized by the commisoioncr by
rule under this subchapter, that reinsures the risk ceded by
any other insurer. ""Captive reinsurance company" does not
include a life captive reinsurance company as defined under
section 521J.101.
9. ""Captive risk retention group" means a captive insurance
risk retention group formed under this chapter subchapter and
that is subject to chapter 515E.
Sec. 6. Section 521J.1, Code 2026, is amended by adding the
following new subsection:
NEW SUBSECTION, 13A. ""Foreign captive company" means a
captive company formed and licensed under the laws of any
jurisdiction within the United States except this state.
Sec. 7. Section 521J.1, subsection 22, Code 2026, is amended
to read as follows:
22, ""Protected ceiimeans a separate account established
by a protected cell captive company formed or authorized under
this chapter subchapter in which an identified pool of assets
and liabilities are segregated and insulated, as provided in
section 521J.17, from the remainder of the protected cell
captive company's assets and liabilities in accordance with
the terms of one or more participant contracts to fund the
liability of the protected cell captive company with respect to
House Pile 2766, p. 4
the participants.
Sec. 8. Section 521J.1, subsection 24, paragraph b. Code
2026, is amended to read as follows:
b» The company is formed or authorized under this chapter
subchapter.
Sec. 9. Section 521J.1, subsection 31, Code 2026, is amended
to read as follows:
31. '^Special purpose captive company" means a captive
company that is formed or authorized under this chapter
subchapter that does not meet the definition of any other type
of captive company as defined in this oection subchapter,
or that is formed by, on behalf of, or for the benefit of a
political subdivision of this state. "^Special purpose captive
company" may include a reciprocal insurer. '^Special purpose
captive company" does not include a life captive reinsurance
company as defined under section 521J.101.
Sec. 10. Section 521J.2, subsection 1, unnumbered paragraph
1, Code 2026, is amended to read as follows:
If permitted by its organizational document, a captive
company may apply to the commissioner for a certificate of
authority to provide property insurance, casualty insurance,
life insurance, disability income insurance, surety insurance,
marine insurance, health insurance, ee a group health plan, or
the ability to accept or transfer risk by means of a parametric
contract, with the following exceptions:
Sec. 11. Section 521J,2, subsection 2, Code 2026, is amended
by adding the following new paragraph:
NEW PARAGRAPH, e. The captive company's organizational
documents, and any subsequent amendments, have been filed and
approved by the commissioner prior to being filed with the
secretary of state.
Sec. 12. Section 521J,2, subsections 3, 4, and 5, Code 2026,
are amended to read as follows:
3. a. Prior to receiving a certificate of authority, a
captive company applicant shall do all of the following:
(1) File with the commissioner all of the following:
(a) A cortifiod copy of the business entity's
organizational document.
(b) A statement under oath of an officer of the business
House Pile 2766, p. 5
entity showing the business entity's financial condition.
(c) Any other statement or document required by the
commissioner as Gstablished by rule.
(2) Submit a description of coverages, deductibles,
coverage limits, rates, and any additional information
requested by the commissioner to the commissioner for approval.
(3) Provide a statement to the commissioner that describes
all of the following:
(a) The character, reputation, and financial standing of
the organizers of the business entity.
(b) The character, reputation, financial responsibility,
insurance experience, and business qualifications of all
officers, directors, and managing members of the business
entity.
(4) Provide any other information required by the
commissioner as established by rule.
b. If there is a subsequent material change in the
information provided to the commissioner under paragraph
the captive company shall submit appropriate supporting
documentation to the commissioner for approval. The captive
company shall not offer any additional lines of insurance until
on or after the date on which the commissioner approves the
supporting documentation. The captive company shall inform the
commissioner of any change in rates within thirty calendar days
of the captive company's adoption of a change in rate.
c. In addition to the information required under paragraphs
^a'^and each applicant captive company shall file with the
commissioner evidence of all of the following:
(1) The amount and liquidity of the captive company's assets
relative to the risks to be assumed by the captive company.
(2) The adequacy of the expertise, experience, and
character of the persons who will manage the captive company.
(3) The overall soundness of the captive company's plan of
operation.
(4) The adequacy of the loss prevention program of the
captive company's parent, members, or industrial insureds, as
applicable.
(5) Any other factors deemed relevant by the commissioner to
ascertain if the proposed captive company will be able to meet
House File 2766/ p. 6
the company's policy obligations.
d. In addition to the information required under paragraph
, each applicant that is a protected cell captive company
shall file with the commissioner all of the following;
(1) A business plan that demonstrates, at a level of detail
deemed sufficient by the commissioner, how the applicant will
account for the loss and expense experience of each protected
cell, and how the applicant will report the loss and expense
experience of each protected cell to the commissioner,
(2) A statement that acknowledges that all financial
records of the protected cell captive company, including
records pertaining to any protected cells, shall be made
available upon request for inspection or examination by the
commissioner or the commissioner's designated agent.
(3) A copy of each participant contract.
(4) Evidence that expenses will be allocated to each
protected cell in a fair and equitable manner.
e. In addition to the requirements of paragraph , a
captive company formed as a reciprocal insurer shall file with
the commissioner a certified copy of the power of attorney of
the reciprocal insurer's attorney-in-fact, a certified copy of
the reciprocal insurer's subscribers' agreement, a statement
under oath of the reciprocal insurer's attorney-in-fact that
shows the reciprocal insurer's financial condition, and any
other statements or documents required by the commissioner as-
Gotablished by rule.
•€-r ^ All documents, reports, and information submitted
pursuant to this oubaoction subchapter shall be confidential
and shall not be made public without the advance written
consent of the submitting company, with the following
exceptions:
The documents and information shall be discoverable
by a party in a civil action or in a contested case to which
the captive company that submitted the information is a party
upon a showing by the party seeking to discover the information
that the information sought is relevant to, and necessary for,
the furtherance of the action or case; the information sought
is unavailable from other nonconfidential sources; and that a
subpoena issued by a judicial or an administrative officer has
House File 2766, p. 7
been submitted to the commissioner.
The commissioner may, in the commissioner's
discretion, disclose the documents and information to a public
official having jurisdiction over the regulation of insurance
in another state, or to a public official of the federal
government, provided that the public official agrees in writing
to maintain the confidentiality of the information, and that
the laws of the state in which the public official serves
require that the information remain confidential.
■4-r ^ a. Each captive company, each individual series
of members of a limited liability company, and each protected
cell shall pay a nonrefundable fee to the commissioner of
two hundred dollars for the examination, investigation, and
processing of its application for a certificate of authority.
The commissioner shall be authorized to retain legal,
financial, and examination services from outside experts as
necessary for review of the application, the reasonable cost of
which may be charged to the applicant.
b. Each captive insurance company, each individual series of
members of a limited liability company, and each protected cell
shall pay an initial registration fcc^ and an annual renewal
registration fee— of three hundred dollars.
St 6_^ 1£ the commissioner is satisfied with the documents
and statements that an applicant captive company has filed in
compliance with this chapter subchapter, and the applicable
provisions of Title XIII, subtitle 1, the commissioner may
grant a certificate of authority to the captive company that
permits the company to do the business of insurance in this
state. The certificate of authority must be renewed annually
and may be renewed if the applicant is in compliance with this
chapter subchapter.
Sec. 13. Section 521J.4, subsection 1, paragraphs d and e.
Code 2026, are amended to read as follows:
Is not less than five one hundred thousand dollars for
a protected cell captive company. SS-t—however »—the protected
cell captive company does not assume any risks,—the risks
insured by the protected cells are homogenouo, and there are
not more than ten cells,—the commissioner may reduce the amount
to an—amount not less—than two hundred fifty-thousand dollars.
House File 2766, p. 8
e. Is not less than the applicable amount of capital and
surplus required in paragraphs through as determined
based upon the organizational form of the alien captive
company, for a branch captive company. The minimum capital
and surplus shall be jointly held by the commissioner and the
branch captive company in a bank of the federal reserve system
as approved by the commissioner by rule.
Sec. 14. Section 521J.4, subsection 3, Code 2026, is amended
to read as follows:
3. aj_ The capital and surplus required under subsection
1 and subsection 2, if applicable, shall be in the form of
cash, cash equivalent, marketable securities as approved by
the commissioner, or an irrevocable letter of credit on a form
as prescribed by the commissioner by rule and as issued by
a bank chartered by the state of Iowa, a member bank of the
federal reserve system, or a bank chartered by another state if
approved by the commissioner.
b. If a captive company elects to satisfy any portion of the
captive company^s minimum capital and surplus requirements with
marketable securities, the commissioner may require the captive
company to file financial statements or other reports on a more
frequent basis than otherwise required under this subchapter.
The increased reporting frequency may be imposed to ensure the
commissioner can adequately monitor the liquidity, valuation,
and market risk associated with the marketable securities.
Sec. 15. Section 521J.5, subsection 1, Code 2026, is amended
to read as follows:
1. ft Subject to the commissioner's approval, a captive
company must may be formed or organized as a business entity
as provided under this chapter subchapter, or as a reciprocal
insurer as provided under chapter 520.
Sec. 16. Section 521J.5, subsection 2, paragraph c. Code
2026, is amended to read as follows:
c. Organized as a reciprocal insurer as permitted by the
commissioner by rule.
Sec. 17. Section 521J.5, subsection 5, paragraph c. Code
2026, is amended to read as follows:
c, A reciprocal insurer shall have at least one member
of the subscribers' advisory committee who is a resident
House Pile 2766, p. 9
of this state. A captive risk retention group formod as a
reciprocal insurer shall have a minimum of five rncmbors of
the oubacribers^—advisory committee who arc rcsidonto of this
state.
Sec. 18. Section 521J.5, subsections 6 and 7, Code 2026, are
amended to read as follows:
6. a. A captive company formed as a corporation or another
business entity shall have the privileges of, and shall be
subject to, state laws governing corporations or other business
entities, and the applicable provisions of this chapter
subchapter.
b. In the event of a conflict between a state law governing
corporations or other business entities and this chapter
subchapter, this chapter subchapter shall take precedence.
7. a» A subscribers' agreement, or other organizational
document of a captive company formed as a reciprocal insurer,
shall authorize a quorum of a subscribers' advisory committee
to consist of at least one-third of the number of members on
the advisory committee. In addition to this subchapter, a
captive company formed as a reciprocal insurer shall be subject
to chapter 520, unless exempt by approval of the commissioner
in the captive company's plan of operations. In the event
of a conflict between chapter 520 and this subchapter, this
subchapter shall take precedence.
b. In addition to this chapter subchapter, a captive risk
retention group shall be subject to chapter 515E. In the event
of a conflict between chapter 515E and this chapter subchapter,
this chapter subchapter shall take precedence.
Sec. 19. Section 521J.5, subsection 8, Code 2026, is amended
by striking the subsection.
Sec. 20. Section 521J.5, subsection 9, paragraph b. Code
2026, is amended to read as follows:
b, A branch captive company established under this
chapter subchapter to write, in this state, only insurance or
reinsurance of the employee benefit business of the branch
captive company's parent and affiliated companies shall be
subject to the federal Employee Retirement Income Security Act
of 1974, 29 U.S.C. §1001, et seq.
Sec. 21. Section 521J.6, subsection 2, Code 2026, is amended
House File 2766, p. 10
to read as follows:
2. The commissioner's approval of an ongoing plan for
the payment of dividends or other distributions shall be
conditioned upon retention, at the time of each payment, of
capital and surplus in excess of the amounts specified by,
or determined in accordance with, a formula approved by the
commissioner by rule.
Sec. 22. Section 521J.7r Code 2026, is amended to read as
follows:
521J.7 Reports.
iT—ft Unless otherwise directed by the commissioner in
the first year of a captive company's licensure under this
subchapter, the captive company shall be required to file an
annual report with the commissioner that meets the following
requirements:
a-r ^ Except as provided in paragraph ""b" subsection
2, on or before April 1 of each year, each captive company
and each captive risk retention group shall submit to the
commissioner a report on the company's financial condition as
of December 31 of the preceding year, as verified by oath of
two of the company's or group's executive officers. The report
shall be submitted in a form and manner as prescribed by the
commissioner by rule.
^ A captive company, other than a captive risk
retention group, may apply to the commissioner to file the
report required under paragraph subsection 1 on a fiscal
year-end basis. If the commissioner approves reporting on a
fiscal year-end basis, the captive company shall comply with
all of the following requirements:
Subject to subparagraph (2) paragraph the
captive company's report shall be filed no later than ninety
calendar days after the close of the company's fiscal year.
-(-2^ ^ Prior to April 1, the captive company shall file a
report covering the immediately preceding calendar year with
the commissioner to provide sufficient information to support
the captive company's premium tax return under section 432.lA.
er- 3_^ Each captive company shall use generally accepted
accounting principles as used in the United States, unless
the commissioner requires, approves, or accepts the use
House File 2766, p. 11
of United States statutory accounting principles or any
other comprehensive accounting principles for the company's
report. The commissioner may require, approve, or accept
any appropriate or necessary modifications of United States
statutory accounting principles or other comprehensive
accounting principles based on the type of insurance and kinds
of insurers that are included in a captive company's report.
The report may include letters of credit that are established,
issued, or confirmed by any of the following:
A bank chartered in this state.
-f-S-)- ^ A member of the federal reserve system.
-(-3-)- Cj_ A bank chartered by another state, if approved by
the commissioner.
d-r ^ hn actuarial opinion from a qualified actuary
regarding the adequacy of the company's required reserves to
make full provision for the company's liabilities, insured or
reinsured, shall be included in the report. The qualified
actuary shall submit a memorandum to the commissioner that
details the qualified actuary's support for the actuarial
opinion. The commissioner may require that additional
information be submitted to supplement the actuarial opinion.
e-r ^ All captive companies shall be audited annually by an
independent certified public accountant and shall annually file
the audited financial report with the commissioner on or before
June 1, as a supplement to the annual report required under
section 521J.7,—subsection 1 this section.
#7- ^ A captive company may request an extension to file
a report required by this section. A written request for an
extension must be received by the commissioner not less than
ten days before the filing due date, and the request must
contain sufficient details to enable the commissioner to make
an informed decision regarding the request. The commissioner
may grant a thirty-day extension upon a determination by the
commissioner that a captive company has good cause for the
extension.
g-r lj_ A captive company may be required to file a report
on the captive company's financial condition on a semiannual,
quarterly, monthly, or other basis as determined by the
commissioner•
House File 2766, p. 12
h-r ^ Captive companies shall file all reports required
under this section in the form and manner prescribed by the
commissioner by rule.
•2-;—All reports filed pursuant to this section shall bo
conaidorod confidential and shall not be a public record.
Sec. 23. Section 521J.8, subsection 1, paragraph a. Code
2026, is amended to read as follows:
a. Except for captive risk retention groups as provided
under paragraph the commissioner may examine each captive
company's compliance with this chapter subchapter, and may
examine the affairs, transactions, accounts, records, and
assets of each captive company as the commissioner deems
necessary.
Sec. 24. Section 521J.8, subsection 5, Code 2026, is amended
to read as follows:
5. The applicable provisions of chapter 507 shall apply to
examinations conducted under this chapter subchapter.
Sec. 25. Section 521J.9, subsection 1, paragraphs h and i.
Code 2026, are amended to read as follows:
h. Failure to submit or pay any fee under this chapter
subchapter.
i. Failure to submit to or pay the cost of any examination
under this chapter subchapter.
Sec. 26. Section 521J.11, subsection 1, Code 2026, is
amended to read as follows:
1. A merger between captive stock insurers, or a merger
between captive mutual insurers, shall meet the requirements
of chapter 521 and section 521J.5, as applicable. The
commissioner may, at the commissioner's discretion, provide
notice to the public of a proposed merger prior to the
commissioner's approval or disapproval of a merger. Except
as provided in this section, applicable provisions of chapter
508B shall apply to a merger, consolidation, conversion,
mutualization, or voluntary dissolution by a captive company.
Sec. 27. Section 521J.13, subsection 1, Code 2026, is
amended to read as follows:
1. a. Industrial insured captive companies and captive
risk retention groups shall comply with investment requirements
as Gotablishod approved by the commissioner by rule. The
House File 2766, p. 13
commissioner may approve the use of alternative reliable
methods of valuation and rating.
b. If a captive company's admitted annual report filed
pursuant to section 521J.7 states total assets total of less
than five million dollars, the commissioner may approve an
investment of up to twenty percent of the captive company's
admitted assets in rated credit instruments in any ©fte
investment that meets the requirements established by the
commissioner by rule. For purposes of this subsection, total
assets shall be based on the accounting basis approved by the
commissioner, provided that all assets included in such total
assets must be reasonably liquid, realizable, and available to
support the obligations of the captive.
Sec. 28. Section 521J.14, subsection 3, Code 2026, is
amended to read as follows:
3. Insurance by a captive company of any workers'
compensation qualified self-insured plan of the captive
company's parent and affiliates shall be deemed to be
reinsurance under this chapter subchapter.
Sec. 29. Section 521J.17, subsection 2, unnumbered
paragraph 1, Code 2026, is amended to read as follows:
A protected cell captive company formed or authorized
under this chapter subchapter shall be subject to all of the
following requirements:
Sec. 30. Section 521J.17, subsection 2, paragraph a,
subparagraph (4), Code 2026, is amended to read as follows:
(4) Each protected cell shall be incorporated.—Aft
incorporated protoctcd coll may bo organised and operated
in any form of business organization aa authorized by the
commisoioner by rule formed as a business entity, provided the
business entity is separate from the protected cell captive
company of which the business entity is a part. Each protected
cell of a protected cell captive company shall be treated as
a captive insurance company under this chapter subchapter,
except that the limit on maximum yearly aggregate taxes paid
under section 432.lA, subsection 4, shall not apply. Unless
otherwise permitted by the organizational document of a
protected cell captive company, each protected cell of the
protected cell captive company must have the same directors.
House File 2766, p. 14
secretary, and registered office as the protected cell captive
company.
Sec. 31. Section 521J.17, subsection 2, paragraph c. Code
2026, is amended to read as follows:
c. The establishment of a protected cell shall create, with
respect to the protected cell, a legal person business entity
separate from the protected cell captive company. Amounts
attributed to a protected cell under this chapter subchapter,
including assets transferred to a protected cell account, shall
be owned by the protected cell and the protected cell captive
company shall not be a trustee, or hold itself out to be a
trustee, with respect to the protected cell assets of that
protected cell account.
Sec. 32. Section 521J.18, Code 2026, is amended to read as
follows:
521J.18 Sponsors — qualifications.
A sponsor of a protected cell captive company may be
any person approved by the commissioner, based on the
commissioner's determination that the approval of such person
as a sponsor is consistent with the purposes of this chapter
subchapter. In evaluating the qualifications of a proposed
sponsor, the commissioner shall consider the type and structure
of the proposed sponsor entity, the sponsor's experience in
financial operations, the sponsor's financial stability, the
sponsor's business reputation, and any other factors deemed
relevant by the commissioner. A risk retention group shall not
be a sponsor of a protected cell captive company.
Sec. 33. Section 521J.22, subsection 3, paragraph a,
subparagraph (3), Code 2026, is amended to read as follows:
(3) The dormant captive company shall pay an annual one
thousand dollar dormancy tax, due on or before March 1, if
for any portion of the immediately preceding calendar year
the captive company held a certificate of dormancy. Each
series of members and each protected cell shall be considered
separate for purposes of paying the annual dormancy tax under
a certificate of dormancy. A dormant captive company is not
otherwise liable for any annual renewal as provided in section
521J.2, aubsGction 4 subsection 5, paragraph
Sec. 34. Section 521J.23, Code 2026, is amended to read as
House Pile 2766, p. 15
follows:
521J.23 Workers' compensation compliance with state and
federal laws.
1. This chapter subchapter shall not be construed to exempt
a captive company, a captive company's parent, or a captive
company's affiliated companies from compliance with applicable
state and federal laws governing workers' compensation
insurance.
2. This chapter subchapter shall not be construed to divest
the division of workers' compensation of any jurisdiction, as
authorized by law, over workers' compensation self-insurance
plans.
Sec. 35. Section 521J.24, subsection 1, paragraph b. Code
2026, is amended to read as follows:
b. All books, records, documents, accounts, vouchers, and
agreements shall be kept in a manner that the commissioner can
readily ascertain the captive company's financial condition,
affairs, and operations? can readily verify the captive
company's financial statements; and can confirm the captive
company's compliance with this chapter subchapter.
Sec. 36. Section 521J.26, unnumbered paragraph 1, Code
2026, is amended to read as follows:
The commissioner shall may adopt rules pursuant to chapter
17A to implement and administer this chapter subchapter.
Sec. 37. NEW SECTION. 521J.27 Redomestication ^ premium
tax year waiver.
1. For taxes due pursuant to section 432.lA, a foreign or
alien captive company organized under this subchapter that
redomesticates into the state shall only be liable for taxes on
premiums paid to the captive company after redomestication.
2. A foreign or alien captive company that redomesticates
under this subchapter shall report to the commissioner all
premium taxes annually due under section 432.lA, and may elect
to forgo payment of the premium taxes in either the calendar
year in which the foreign or alien captive company first
redomesticates into the state, or the immediately succeeding
calendar year. A foreign or alien captive company that makes
such election that subsequently surrenders the foreign or
alien captive company's license or redomesticates to another
House File 2766, p. 16
jurisdiction within five years from the date of redomestication
into the state shall immediately pay to the commissioner a tax
in an amount equal to the foregone premium tax plus ten percent
per annum from the date the foregone premium tax would have
originally been due.
3, This section shall not apply to tax years beginning on or
after January 1, 2030.
Sec. 38. NEW SECTION. 521J.iai Definitions.
As used in this subchapter, unless the context otherwise
requires:
1. "^Affiliated company" means the same as defined in section
521J.1.
2. ^Business entity" means the same as defined in section
521J.1,
3. ^Ceding insurer" means an affiliated company of a life
captive reinsurance company that cedes risk to the life captive
reinsurance company pursuant to a reinsurance contract.
4. "^Commissioner" meBiTis the commissioner of insurance.
5. "^Dormant life captive reinsurance company" means a life
captive reinsurance company that has ceased transacting the
business of insurance, including but not limited to ceasing
issuance of insurance policies, and does not have any remaining
liabilities associated with the life captive reinsurance
company's insurance business transactions or insurance policies
prior to the filing of an application for a certificate of
dormancy.
6. a, "^Insurance securitization" or "^securitization" means
a transaction or a group of related transactions, including
but not limited to capital market offerings, that are effected
through related risk transfer instruments and facilitation
of administrative agreements, in which any of the following
proceeds from the transaction or group of related transactions
are used to fund a life captive reinsurance company's
obligations under a reinsurance contract with a ceding insurer:
(1) Proceeds obtained by a life captive reinsurance
company, directly or indirectly, through the issuance of
securities by the life captive reinsurance company or any other
person.
(2) Proceeds provided through one or more letter of credit
House File 2766, p. 17
or other assets for the benefit of the life captive reinsurance
company, and which the commissioner authorizes the life captive
reinsurance company to treat as admitted assets for purposes of
the life captive reinsurance company's annual statement.
b, ^Insurance securitization^ or '^securitization'' does not
include the issuance of a letter of credit to satisfy all or
part of the life captive reinsurance company's capital and
surplus requirements under this subchapter.
7. ^"^Letter of credit" means a clean, irrevocable,
unconditional letter of credit, issued or confirmed by a
qualified United States financial institution, as defined in
section 521B.104, subsection 1.
8. ^Life captive reinsurance company" means a captive
insurance company in this state that is authorized under and
meets the requirements of this subchapter, and that reinsures
the risk ceded by a life insurance company.
9. means the national association of insurance
commissioners.
10. ^Organizational document" means the same as defined in
section 521J.1.
11. ^Organizing company" means a life insurance company or
an affiliated company that organizes a life captive reinsurance
company.
12. "^Parent" means a person that owns an organizing
company, either directly or indirectly through one or more
intermediaries.
13. ^"^Person" means an individual, corporation, limited
liability company, business trust, estate, trust, partnership
or association, joint stock company, unincorporated
organization, or any other legal entity, or combination of the
foregoing acting in concert. ^Person" does not include a joint
venture partnership exclusively engaged in owning, managing,
leasing, or developing real or tangible personal property.
14. '^Qualified actuary" means the same as defined in section
521J.1.
15. "^Risk" means a risk associated with life insurance
policies and contracts written by a ceding life insurance
company or assumed by a ceding life insurance company from
an affiliated company, which were written by the affiliated
House File 2766, p. 18
company and for which the ceding life insurance company holds
direct statutory reserves as required by section 508.36.
16. "^Risk-based capital instructions" instructions
included in a risk-based capital report as adopted and amended
by the NAIC.
17. "^Security" vxeans the same as defined in section 502.102.
^Security" also includes any form of debt obligation, surplus
note, derivative, or other financial instrument that the
commissioner designates as a "'"'security" for purposes of this
subchapter.
18. "^Surplus note" means an unsecured subordinate debt
obligation possessing characteristics consistent with the NAIC
statutory accounting principles pursuant to the most recently
published NAIC accounting practices and procedures manual.
Sec. 39. NEW SECTION. 521J.102 Certificate of authority.
1. A life captive reinsurance company issued a certificate
of authority shall only reinsure the risks of a ceding insurer
and shall not otherwise engage in the business of insurance. A
life captive reinsurance company may purchase retrocession to
cede the risks assumed under a reinsurance contract, subject to
prior approval of the commissioner.
2. A life captive reinsurance company shall not write any
insurance business unless the life captive reinsurance company
complies with all of the following;
a. The life captive reinsurance company obtains a
certificate of authority from the commissioner.
b. The life captive reinsurance company maintains its
principal place of business in the state.
c. The life captive reinsurance company's board of directors
holds at least one annual meeting in the state.
d. At least one member of the board of directors of the life
captive reinsurance company is a resident of the state.
e. The life captive reinsurance company designates a
registered agent to accept service of process, files the name
and contact information and any subsequent changes regarding
the registered agent with the commissioner, and agrees that if
the registered agent cannot be found with reasonable diligence,
the commissioner may act as an agent of the life captive
reinsurance company with respect to any action or proceeding.
House File 2766, p. 19
and the commissioner may be served pursuant to section 505.30.
f. The life captive reinsurance company has filed a copy
of the life captive reinsurance company's articles and bylaws,
including any subsequent amendment to the articles or bylaws,
with the commissioner and with the secretary of state, and the
articles and bylaws have been approved by the commissioner and
the secretary of state.
3. a. Prior to receiving a certificate of authority, a life
captive reinsurance company shall do all of the following:
(1) File with the commissioner all of the following:
(a) A copy of the life captive reinsurance company's plan
of operation.
(b) An affidavit from the life captive reinsurance
company's president, vice president, treasurer, or chief
financial officer that includes all of the following:
(i) A statement that the proposed organization and
operation of the life captive reinsurance company complies with
this section.
(ii) The life captive reinsurance company's investment
policy reflects and accounts for the liquidity of assets and
the reasonable preservation, administration, and management
of assets with respect to the risks associated with the
reinsurance contract between the life captive reinsurance
company and the parent or ceding insurer.
(c) A statement under oath by an officer of the life
captive reinsurance company that attests to the life captive
reinsurance company's financial condition.
(d) Documentation that provides evidence of the amount
and liquidity of the life captive reinsurance company's
assets relative to the risks to be assumed by the life captive
reinsurance company.
(e) Documentation that provides evidence related to the
overall soundness of the life captive reinsurance company's
plan of operation.
(f) A certification from an actuarial officer of a ceding
insurer that complies with section 521J.104.
(g) A description of coverages, deductibles, coverage
limits, rates, and any additional information requested by the
commissioner.
House File 2766, p. 20
(h) A copy of each reinsurance contract and each arrangement
that secures the life captive reinsurance company's obligations
under the reinsurance contract between the life captive
reinsurance company and the parent or ceding insurer, including
but not limited to any agreements or other documentation to
implement such reinsurance contract or arrangement.
(i) A legal opinion, in a form and manner approved by
the commissioner, that the offer and sale of life captive
reinsurance company securities comply with all applicable
registration requirements or applicable exemptions or
exceptions to such requirements under state and federal
securities laws. The legal opinion shall not be required
as part of the life captive reinsurance company's initial
application for a certificate of authority if the life captive
reinsurance company includes a statement in the company's
plan of operation that the legal opinion will be submitted
to the commissioner prior to the offer or sale of a captive
reinsurance security.
(j) An opinion of a qualified actuary, approved by the
commissioner, confirming that the methodology and assumptions
to set and discount reserves sufficiently provide for the risk
assumed by the life captive reinsurance company, including
significant stress tests on key assumptions.
(k) A biographical affidavit for each officer and each
director of the life captive reinsurance company prepared on
the most recent template for biographical affidavits prescribed
by the NAIC.
(2) Provide the commissioner with any other statement or
document requested by the commissioner to evaluate the life
captive reinsurance company's application for a certificate of
authority.
(3) Pay a nonrefundable fee of two thousand five hundred
dollars to the commissioner for the examination, investigation,
and processing of the life captive reinsurance company's
application for a certificate of authority.
b. The commissioner shall be authorized to retain legal,
financial, and examination services from outside experts as
necessary for review of the application, the reasonable cost of
which may be charged to the applicant.
House File 2765, p. 21
c. If there is a subsequent material change in the
information provided to the commissioner under paragraph
the life captive reinsurance company shall inform the
commissioner within thirty calendar days of the date of the
material change and shall submit appropriate documentation as
requested by the commissioner for approval. The life captive
reinsurance company shall not write any insurance business
until on or after the date on which the commissioner approves
the supporting documentation.
4. All documents and information submitted pursuant to this
subchapter shall be confidential and shall not be made public
without the advance written consent of the submitting life
captive reinsurance company, with the following exceptions:
a. The documents and information shall be discoverable by
a party in a civil action or in a contested case to which the
life captive reinsurance company that submitted the information
is a party upon a showing by the party seeking to discover
the information that the information sought is relevant to,
and necessary for, the furtherance of the action or case; the
information sought is unavailable from other nonconfidential
sources; and that a subpoena issued by a judicial or an
administrative officer has been submitted to the commissioner.
b. The commissioner may, in the commissioner's discretion,
disclose the documents and information to a public official
having jurisdiction over the regulation of insurance in another
state, or to a public official of the federal government,
provided that the public official agrees in writing to maintain
the confidentiality of the information, and that the laws of
the state in which the public official serves require that the
information remain confidential.
5. a. If an application filed by a life captive reinsurance
company is complete, the commissioner may issue to the life
captive reinsurance company a certificate of authority upon a
finding of all of the following:
(1) The life captive reinsurance company's proposed plan of
operation provides for a viable operation and is not hazardous
to any ceding insurer.
(2) The terms of any reinsurance contract and related
transactions of the life captive reinsurance company comply
House File 2766, p. 22
with this subchapter and the insurance laws and rules of this
state.
b. In conjunction with the issuance of the certificate
of authority to a life captive reinsurance company, the
commissioner may issue an order regarding any terms and
conditions relating to the organization, licensing, and
operation of the life captive reinsurance company that the
commissioner deems appropriate and that are not inconsistent
with this subchapter.
6. A certificate of authority shall be valid for a period
of one year beginning on the date of initial issuance and
the certificate must be renewed annually. A certificate of
authority may be renewed if the applicant is in compliance with
the requirements of this subchapter and has paid an annual
renewal registration fee at the time of renewal in the amount
of two thousand five hundred dollars.
Sec. 40. NEW SECTION. 521J.103 Life captive reinsurance
companies — names.
A life captive reinsurance company shall not adopt a name
that is the same, deceptively similar, or likely to be confused
with or mistaken for any other existing business name already
registered in this state.
Sec. 41, NEW SECTION. 521J.104 Actuarial officer —
certification.
On the date a life captive reinsurance company files an
application for a certificate of authority under section
521J.102, and by March 15 of each succeeding year that a life
captive reinsurance company is in operation and is ceded new
business from a ceding insurer, a qualified actuary of each
ceding insurer shall file with the commissioner a certification
that the ceding insurer's transactions with the life captive
reinsurance company are not used to gain an unfair advantage
if pricing of policies and contracts reinsured by the life
captive reinsurance company reflect, at the time the policies
and contracts were issued, a reasonable long-term estimate of
the cost to the ceding insurer of an alternative third-party
transaction and utilize current pricing assumptions. The
ceding insurer shall have an ongoing responsibility to maintain
documentation detailing the process by which the qualified
House Pile 2766, p. 23
actuary arrived at the conclusions in the certification in
preparation for an examination conducted pursuant to section
521J,110.
Sec. 42. NEW SECTION. 521J.105 Minimum capital and surplus
requirements.
1. The commissioner shall not issue a certificate of
authority to a life captive reinsurance company unless the life
captive reinsurance company possesses and maintains unimpaired
paid-in capital and surplus that is not less than five million
dollars. The commissioner may require additional capital
and surplus based upon the type, volume, and nature of the
reinsurance business transacted by the life captive reinsurance
company. Minimum capital and surplus shall be in the form of
cash or other securities that are investment-grade at the time
of acquisition and are acceptable to the commissioner.
2. Except as otherwise provided in this section, chapter
521E shall apply to a life captive reinsurance company.
Sec. 43. NEW SECTION. 521J.106 Plan of operation.
A life captive reinsurance company must have a plan of
operation approved by the life captive reinsurance company's
board of directors, and, prior to assuming risks under a
reinsurance contract, shall submit the plan of operation to the
commissioner for approval. The commissioner may approve the
plan of operation upon finding that the plan of operation meets
the requirements of this section, and may require amendments to
the plan of operation as necessary to satisfy the requirements
of this section. Any change in the life captive reinsurance
company's plan of operation shall require prior approval of
the commissioner. The plan of operation must include, at a
minimum, all of the following:
1. A complete description of all reinsurance transactions,
reinsurance security arrangements, securitizations, and any
other material transactions or arrangements in which the life
captive reinsurance company engages.
2. The source and form of the life captive reinsurance
company's capital and surplus minimums as required under
521J.105.
3. The life captive reinsurance company's policy on
investments.
House File 2766, p. 24
4. Pro forma balance sheets and income statements
illustrating one or more adverse case scenarios, as determined
under criteria established by the commissioner, for the
performance of the life captive reinsurance company under all
reinsurance contracts.
5. Risk-based capital requirements, that, at a minimum,
require the life captive reinsurance company to maintain
risk-based capital equal to the product of two and one-half and
the number determined under the life risk-based capital formula
in accordance with the risk-based capital instructions.
6. The life captive reinsurance company's procedures for
notice and reporting of material transactions.
7. The life captive reinsurance company's policies for
payments of dividends and other distributions to the organizing
company.
8. Copies of all contracts between the life captive
reinsurance company and affiliated companies.
Sec. 44. NEW SECTION. 521J.107 Life captive reinsurance
companies — formation.
1. A life insurance company or an affiliated company may
organize a life captive reinsurance company pursuant to this
subchapter. A life captive reinsurance company must be formed
as a corporation and may only reinsure risks of the organizing
company, and may access alternative forms of financing.
2. An organizing company shall maintain a minimum of ten
percent voting interest and ten percent equity ownership in the
life captive reinsurance company unless otherwise approved by
the commissioner.
3. A life captive reinsurance company's organizational
documents must limit the life captive reinsurance company's
authority to transact the business of reinsurance to only
reinsure the risks of a ceding insurer.
4. An organizing company may invest funds from its surplus
in a life captive reinsurance company organized pursuant to
this subchapter.
5. An organizing company's officers and directors may serve
as officers and directors of a life captive reinsurance company
organized pursuant to subsection 1.
6. A life captive reinsurance company organized under this
House Pile 2766, p. 25
subchapter shall be deemed to be licensed to transact the
business of reinsurance for the purposes of section 521B.102,
subsection 1, but shall only reinsure risks of the organizing
company and affiliated companies.
7. A life captive reinsurance company may, upon approval of
the commissioner, purchase reinsurance to cede the reinsurance
risks assumed by the life captive reinsurance company.
8. Admitted assets of a life captive reinsurance company
shall include assets approved by the commissioner which shall
be deemed to be, and reported as, admitted assets of the life
captive reinsurance company.
Sec. 45. NEW SECTION. 521J.108 Dividends and distributions.
1. A life captive reinsurance company shall not pay a
dividend out of, or other distribution with respect to, the
minimum capital or surplus required under section 521J.105
without the prior written approval of the commissioner.
2. The commissioner's approval of an ongoing plan for
the payment of dividends or other distributions shall be
conditioned upon retention, at the time of each payment, of
capital and surplus in excess of the amounts specified by,
or determined in accordance with, a formula approved by the
commissioner.
Sec. 46. NEW SECTION. 521J,109 Reports and notifications.
1. A life captive reinsurance company shall provide the
commissioner with a copy of documentation of an insurance
securitization no later than forty-five calendar days before
the closing on the transaction for the securitization.
2. In the event of a material change in the financial
condition or management of a life captive reinsurance company,
the company shall notify the commissioner in writing within two
business days of the material change.
3. A life captive reinsurance company shall notify the
commissioner within five business days of becoming aware of a
material event affecting the life captive reinsurance company's
parent, organizing company, or controlling entity that has not
previously been disclosed to the commissioner.
4. If a life captive reinsurance company's parent,
organizing company, or controlling entity is subject to group
supervision in another jurisdiction, the commissioner may
House Pile 2766, p. 26
request participation in supervisory colleges or coordination
calls with the lead regulator of that jurisdiction. The life
captive reinsurance company shall facilitate the commissioner's
participation to the extent permitted by law.
5. A life captive reinsurance company shall immediately
notify the commissioner of an action by a ceding insurer or any
other person to foreclose on, or otherwise take possession of,
collateral provided by the life captive reinsurance company to
secure an obligation of the life captive reinsurance company.
6. A life captive reinsurance company shall not be required
to file any report, notice, or other document with the NAIC
unless required by the commissioner.
7. At the commissioner's request, a life captive
reinsurance company shall provide to the commissioner a copy
of any financial or risk-related filings submitted by the
company's parent, affiliate, organizing company, or controlling
entity to the life captive reinsurance company's domiciliary
insurance regulator, upon request by the commissioner, such
filings shall be provided to the commissioner within ten
business days of the submission to the organizing company's
domestic regulator.
8. A life captive reinsurance company shall file with the
commissioner all of the following:
a. On or before March 1 of each year, for the immediately
preceding calendar year, all of the following:
(1) A report of the company's risk-based capital level as
of the end of the immediately preceding calendar year that
contains the information required by the risk-based capital
instructions.
(2) A supplemental compensation exhibit that discloses the
total annual compensation of the company's officers, directors,
and key employees. The supplemental exhibit must follow the
format and instructions adopted by the NAIC for life insurance
company filings.
b, (1) On or before March 1 of each year, for the
immediately preceding calendar year, an actuarial opinion from
the company's actuary on reserves for all risks assumed by the
life captive reinsurance company pursuant to the company's
reinsurance contracts and may discount the life captive
House File 2766, p. 27
reinsurance company's reserves in accordance with the actuarial
opinion subject to approval by the commissioner. The company's
actuary shall submit a memorandum to the commissioner that
details the actuary's support for the actuarial opinion. The
commissioner may require additional information to be submitted
to supplement the actuarial opinion.
(2) Biennially on April 1, for the immediately preceding
calendar year, an opinion by an independent qualified actuary
concerning the methods and assumptions used to set reserves.
The independent qualified actuary must be deemed acceptable by
the commissioner prior to filing the opinion.
c. Completed quarterly and annual financial statement blanks
as are required by the NAIC for traditional life insurance
companies, including any supplements or interrogatories
required by the NAIC, in accordance with the NAIC statutory
accounting principles. The commissioner may require, approve,
or accept any appropriate or necessary modifications of the
NAIC statutory accounting principles based on the type of
insurance and kind of insurers included in the life captive
reinsurance company's report. The quarterly filings shall be
filed with the commissioner on or before May 15 for the first
quarter, August 15 for the second quarter, and November 15 for
the third quarter for the current calendar year. The annual
statement shall be filed with the commissioner on or before
March 1 of each year for the immediately preceding calendar
year.
d. On or before April 1 of each year, all of the following:
(1) For the immediately preceding calendar year, a written
management's discussion and analysis of the company's financial
condition and results of operations.
(2) For the immediately preceding tax year, a report
providing sufficient information to support the company's
premium tax return submitted pursuant to section 432.lA.
e. On or before June 1 of each year, for the immediately
preceding calendar year, a report of the company's financial
condition audited by an independent certified public
accountant. The report shall be presented in accordance with
the NAIC statutory accounting principles.
f. On or before August 1 of each year, a management
House File 2766, p. 28
report on internal control over financial reporting with the
cominissioner that describes the life captive reinsurance
company's internal control structure over financial reporting
and identifies any material weaknesses as of the end of the
preceding calendar year,
9. Not less than ten business days prior to a filing due
date, a life captive reinsurance company may submit a written
request for an extension to file a report required under
subsection 8. The request must contain sufficient details to
enable the commissioner to make an informed decision about
the request. The commissioner may grant an extension upon a
determination that the life captive reinsurance company has
good cause for the extension.
Sec, 47. NEW SECTION. 521J.110 Examinations.
1. a. The commissioner may examine each life captive
reinsurance company's compliance with this subchapter, and
may examine the affairs, transactions, accounts, records,
and assets of each life captive reinsurance company as the
commissioner deems necessary, but not less frequently than
every five calendar years.
b. The commissioner shall, upon the completion of an
examination under paragraph f or at such regular intervals
prior to completion of an examination as the commissioner
determines, prepare an account of the costs incurred in
performing and preparing the report of the examination which
shall be charged to and paid by the life captive reinsurance
company examined. If the life captive reinsurance company
fails or refuses to pay the charges, the charges may be
recovered in an action brought in the name of the state.
2. This section shall apply to all business written by a
life captive reinsurance company.
3. The applicable provisions of chapter 507 shall apply to
examinations conducted under this subchapter.
Sec. 48. NEW SECTION. 521J.111 Suspension or revocation.
1. A life captive reinsurance company's certificate of
authority to conduct the business of insurance in this state
may be suspended or revoked by the commissioner for any of the
following reasons:
a. Insolvency or impairment of capital or surplus.
House File 2766, p. 29
b» Failure to meet and maintain the minimum capital and
surplus requirements under section 521J.105.
c» Refusal or failure to submit an annual report pursuant to
section 521J.109, or to submit a report or statement required
by law or by lawful order of the commissioner.
d. Failure to comply with the life captive reinsurance
company's own charter, bylaws, or other organizational
document.
e. Failure to submit to an examination under section
521J.110.
f. Use of methods that render the life captive reinsurance
company's operation detrimental, or the company's condition
unsound, with respect to the company's policyholders or to the
public.
g. Failure to pay tax on premiums as required under section
432.lA.
h. Failure to submit any fee required under this subchapter.
i. Failure to pay the cost of an examination under section
521J.110.
j. Failure to comply with the laws of this state.
2. a. If the commissioner finds upon examination, hearing,
or other review that a life captive reinsurance company has
committed an act specified in subsection 1, the commissioner
may suspend or revoke the life captive reinsurance company's
certificate of authority.
b. If the commissioner does not revoke a life captive
reinsurance company's certificate of authority during a
suspension imposed under paragraph '"a", the life captive
reinsurance company's certificate of authority may be
reinstated if the commissioner finds that the cause of the
suspension has been rectified.
Sec. 49. NEW SECTION. 521J.112 Mergers.
1. A merger between life captive reinsurance companies must
meet the requirements of chapter 521 and section 521J.107,
as applicable. The commissioner may, at the commissioner's
discretion, provide notice to the public of a proposed merger
prior to the commissioner's approval or disapproval of the
merger.
2. A plan for a merger must be fair and equitable to
House File 2766, p. 30
the shareholders of the life captive reinsurance companies
and shall provide for the purchase of the shares of any
nonconsenting shareholder of a life captive reinsurance
company.
Sec. 50. NEW SECTION, 521J.113 Investments.
1. A life captive reinsurance company's investment program
shall take into account the safety of the company's assets,
investment yield and return, stability in the value of the
investment, and liquidity necessary to meet the company's
expected business needs and investment diversification.
The assets of a life captive reinsurance company shall be
preserved and administered by or on behalf of the life captive
reinsurance company to satisfy the liabilities and obligations
of the life captive reinsurance company incident to the
reinsurance contract between the life captive reinsurance
company and the parent or ceding insurer, any insurance
securitizations, and other related agreements. For the
purposes of this section, assets do not include letters of
credit and guaranties of a parent.
2. At the discretion of the commissioner, a life captive
reinsurance company shall either comply with section 511.8
or invest the life captive reinsurance company's assets in
cash and securities that are investment-grade at the time of
acquisition, provided that a life captive reinsurance company
may invest up to ten percent of the life captive reinsurance
company's assets in securities or other investments that are
not investment-grade at the time of acquisition, not to include
any of the following;
a. Securities rated 5 or higher by the NAIC securities
valuation office at the time of acquisition.
b. Asset-based or mortgage-backed securities rated 3 or
higher by the NAIC securities valuation office at the time of
acquisition.
c. Convertible bonds.
d. Preferred or common stock.
e. Private equity or hedge funds.
3. a. A life captive reinsurance company securitization
shall include a disclosure that all or part of the proceeds
of such insurance securitization will be used to fund the
House File 2766, p. 31
life captive reinsurance company's obligations to the ceding
insurer.
b. For purposes of this subsection, ^life captive
reinsurance company securitization" means the security-offering
memorandum or other document issued to prospective investors
regarding the offer and sale of a surplus note or other
security•
4. A life captive reinsurance company's admitted assets
must include proceeds from a securitization, premium and
other amounts payable by a ceding insurer to the life captive
reinsurance company, letters of credit, guaranties of a parent,
and any other assets approved by the commissioner, which
shall be deemed to be, and reported as, admitted assets of
the life captive reinsurance company. The commissioner may
reduce the amount of admitted assets previously approved by
the commissioner, other than assets already covered by the
most recent NAIC accounting practices and procedures manual
of the NAIC, if the commissioner determines that the value of
those assets has decreased. A minimum of thirty calendar days
prior to reducing the amount of admitted assets previously
approved, the commissioner shall notify the life captive
reinsurance company of the reduction and provide the life
captive reinsurance company an opportunity to remedy the issues
identified by the commissioner.
5. A life captive reinsurance company shall not make a loan
to or an investment in any person, other than as permitted
in the life captive reinsurance company's plan of operation,
without prior written approval of the commissioner, and any
such loan or investment must be evidenced by documentation
approved by the commissioner. A life captive reinsurance
company shall not loan minimum capital and surplus funds.
6. An organizing company shall report to the commissioner
the company's ownership in the life captive reinsurance company
and value the ownership equal to the audited statutory surplus
of the life captive reinsurance company.
Sec. 51. NEW SECTION. 521J,114 Permitted reinsurance.
1. A life captive reinsurance company may reinsure,
pursuant to a reinsurance contract, only the risks of a ceding
insurer.
House File 2766, p. 32
2. Unless otherwise approved in advance by the
commissioner, a life captive reinsurance company shall not
assume or retain exposure to reinsurance losses for the life
captive reinsurance company's own account that are not funded
by any of the following:
a» Proceeds from a securitization.
b. Premium and other amounts payable by a ceding insurer to
the life captive reinsurance company pursuant to a reinsurance
contract.
c. Letters of credit.
d. Guaranties of a parent.
e. A return on investment of proceeds from either a
securitization or a premium, and other amounts payable by the
ceding insurer to the life captive reinsurance company pursuant
to the reinsurance contract.
3. A life captive reinsurance company may cede risks assumed
through a reinsurance contract to one or more reinsurers
through the purchase of retrocession, subject to prior approval
of the commissioner.
4. A life captive reinsurance company may enter into
contracts and conduct other commercial activities related
or incidental to and necessary to fulfill the purposes of
a reinsurance contract, an insurance securitization, and
this subchapter. Such contracts and commercial activities
must be included in the life captive reinsurance company's
plan of operation or otherwise be approved in advance by the
commissioner, and may include but are not limited to any of the
following:
a. Entering into reinsurance contracts or issuing life
captive reinsurance company securities, and complying with the
terms of the contracts and securities.
b. Entering into guaranty trust, guaranteed investment
contract, swap, or other derivative, tax, administration,
services reimbursement, or fiscal agent transactions.
c. Complying with trust indenture, reinsurance, or
retrocession.
5. A reinsurance contract shall not contain a provision for
payment by the life captive reinsurance company in discharge of
the life captive reinsurance company's obligations to a person
House Pile 2766, p. 33
other than the ceding insurer or a receiver of the ceding
insurer, except upon prior approval of the commissioner.
Sec. 52. NEW SECTION. 521J.115 Rating organizations.
A life captive reinsurance company shall not be required to
join a rating organization.
Sec. 53. NEW SECTION, 521J,116 Compulsory organizations.
A life captive reinsurance company shall not join or
contribute financially to a plan, pool, association, or
guaranty or insolvency fund in this state.
Sec. 54. NEW SECTION. 521J.117 Dormant life captive
reinsurance companies.
1. A life captive reinsurance company that is domiciled
in this state and complies with this section may apply to the
commissioner for a certificate of dormancy. A certificate
of dormancy shall be valid for five years from the date of
issuance and may not be renewed.
2. a, A life captive reinsurance company that has been
issued a certificate of dormancy shall comply with all of the
following:
(1) The dormant life captive reinsurance company shall
possess and maintain unimpaired, paid-in capital and surplus of
not less than twenty-five thousand dollars.
(2) A dormant life captive reinsurance company shall
annually submit to the commissioner, within ninety calendar
days of the end of the dormant life captive reinsurance
company's fiscal year, a report on the dormant life captive
reinsurance company's financial condition, verified under
oath by two of the dormant life captive reinsurance company's
executive officers, in the form and manner established by the
commissioner by rule.
(3) If, for any portion of the immediately preceding
calendar year, the life captive reinsurance company held a
certificate of dormancy, the dormant life captive reinsurance
company shall pay an annual one thousand dollar dormancy tax,
due on or before March 1.
b. From the date a certificate of dormancy is issued through
the date the certificate expires, a dormant life captive
reinsurance company that has been issued the certificate shall
not be subject to section 432.lA.
House File 2766, p. 34
3. At the discretion of the commissioner, a dormant life
captive reinsurance company may be subject to an annual
examination.
4. Prior to a dormant life captive reinsurance company
issuing an insurance policy, the company must apply to
the commissioner for approval to surrender the company's
certificate of dormancy and to resume conducting the business
of insurance.
5. The commissioner shall revoke a dormant life captive
reinsurance company's certificate of dormancy if the company
violates this section.
Sec. 55. NEW SECTION. 521J,118 Books and records.
1. a. Unless otherwise approved by the commissioner, a
life captive reinsurance company shall maintain the company's
original books, records, documents, accounts, vouchers,
and agreements in this state and make them available for
examination and inspection by the commissioner as requested by
the commissioner. The life captive reinsurance company may
store and reproduce the books, records, documents, accounts,
vouchers, and agreements electronically.
b. All books, records, documents, accounts, vouchers, and
agreements shall be kept in a manner that the commissioner
can readily ascertain the life captive reinsurance company's
financial condition, affairs, and operations; can readily
verify the life captive reinsurance company's financial
statements; and can confirm the life captive reinsurance
company's compliance with this subchapter.
2. Unless otherwise approved by the commissioner, all
books, records, documents, accounts, vouchers, and agreements
maintained by a life captive reinsurance company under
subsection 1 shall remain available in the state until the
commissioner approves destruction or other disposition of the
books, records, documents, accounts, vouchers, and agreements.
Sec. 56. NEW SECTION. 521J,119 Material transactions.
1. A life captive reinsurance company shall not take any
of the following actions unless the company provides the
commissioner at least thirty calendar days' prior written
notice and the commissioner expressly approves the action:
a. Dissolve the life captive reinsurance company.
House File 2766r p. 35
b. Sell, exchange, lease, mortgage, assign, pledge, or
otherwise transfer or grant a security interest in over thirty
percent of the assets of the life captive reinsurance company.
c. Incur material indebtedness.
6, Make a material loan or other material extension of
credit.
e. Make a material payment out of capital and surplus other
than dividends or distributions paid in accordance with this
subchapter.
f. Conduct a merger or consolidation to which the life
captive reinsurance company is a constituent party.
g. Transfer to or redomesticate in a different jurisdiction.
h. Terminate all or a part of the life captive reinsurance
company's business.
2. A life captive reinsurance company shall submit to the
commissioner periodic written requests for authorization prior
to making payments of interest on, and repayments of principal
of, surplus notes and other debt obligations issued by a life
captive reinsurance company. The commissioner shall not
approve a payment or repayment if the commissioner determines
that the payment or repayment would jeopardize the ability of
the life captive reinsurance company or any other person to
fulfill the company's or person's obligations.
Sec, 57, NEW SECTION, 521J.120 Securities.
A life captive reinsurance company security shall not
be subject to regulation as an insurance or reinsurance
contract. An investor in, or holder of, the security shall
not be considered to transact in the business of insurance
in the state solely based on such interest in the security.
An underwriter's placement agents, selling agents, partners,
commissioners, officers, members, managers, employees,
agents, representatives, and advisors involved in an insurance
securitization by a life captive reinsurance company shall
not be considered insurance producers or brokers, or to be
conducting business as an insurance company, as a reinsurance
company, or as an insurance agency, brokerage, intermediary,
advisory, or consulting business, solely based on underwriting
activities in connection with securitization.
Sec. 58, NEW SECTION. 521J.121 Rules.
House File 2766, p. 36
The commissioner may adopt rules pursuant to chapter 17A to
implement and administer this subchapter.
Sec. 59. CODE EDITOR DIRECTIVE. The Code editor is
directed to designate sections 521J.1 through 521J.27, as
enacted and amended by this Act, as subchapter I of chapter
521J entitled ^^Captive Insurance Companies", and to designate
sections 521J,101 through 521J.121, as enacted by this Act,
as subchapter II of chapter 521J entitled ^^Life Captive
Reinsurance Companies".
./Itka A\joi^C'^i3XA.PAT GRASSL]
Speaker ofi^the House
AMY SINODAIR
President of the Senate
I hereby certify that this bill originated in the House and
is known as House File 2766, Ninety-first General Assembly.
Approved 2026
MEGHAN NELSON
Chief C he House
KIM RE
Governor
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