Utah Code § 31A-37-402 — Utah Code / Title 31A / Chapter 31A-37 / § 31A-37-402
§ 31A-37-402. Sponsored captive insurance companies -- Certificate of authority mandatory.
Status: in_force

(1) A sponsor of a sponsored captive insurance company shall be: (a) an insurer authorized or approved under the laws of a state; (b) a reinsurer authorized or approved under the laws of a state; (c) a captive insurance company holding a certificate of authority under this chapter; (d) an insurance holding company that: (i) controls an insurer licensed pursuant to the laws of a state; and (ii) is subject to registration pursuant to the holding company system of laws of the state of domicile of the insurer described in Subsection (1)(d)(i); (e) an approved captive management firm in Utah or its affiliates; or (f) another person approved by the commissioner after finding that the approval of the person as a sponsor is not inconsistent with the purposes of this chapter. (2) (a) The business written by a sponsored captive insurance company with respect to a protected cell shall be fronted by the sponsored captive insurance company through a controlled unaffiliated contract or an insurer that is: (i) authorized or approved: (A) under the laws of a state; or (B) under any jurisdiction if the insurance company is a wholly owned subsidiary of an insurance company licensed pursuant to the laws of a state; (ii) reinsured by a reinsurer authorized or approved by this state; or (iii) subject to Subsection (2)(b), secured by a trust fund: (A) in the United States; (B) for the benefit of policyholders and claimants; (C) funded by an irrevocable letter of credit or other asset acceptable to the commissioner; and (D) held by the sponsor as provided in Subsection 31A-17-404(1). (b) (i) The amount of security provided by the trust fund described in Subsection (2)(a)(iii) may not be less than the reserves associated with the liabilities of the trust fund, including: (A) reserves for losses; (B) allocated loss adjustment expenses; (C) incurred but unreported losses; and (D) unearned premiums for business written through the participant's protected cell. (ii) The commissioner may require the sponsored captive insurance company to increase the funding of a trust established pursuant to this Subsection (2). (iii) If the form of security in the trust described in Subsection (2)(a)(iii) is a letter of credit, the letter of credit shall be established, issued, or confirmed by a bank that is: (A) chartered in this state; (B) a member of the federal reserve system; or (C) chartered by another state if that state-chartered bank is acceptable to the commissioner. (iv) A trust and trust instrument maintained pursuant to this Subsection (2) shall be in a form and upon terms approved by the commissioner. (3) The business written by a sponsored captive insurance company with respect to an incorporated cell may be: (a) fronted by the sponsored captive insurance company in accordance with Subsection (2)(a); or (b) with prior approval of the sponsored captive insurance company, written directly by the incorporated cell. (4) A risk retention group may not be either a sponsor or a participant of a sponsored captive insurance company.