An Act Related to Special Purpose Reinsurance Vehicles
Maine Legislature, Session 123, LD 1390
Committee: Insurance and Financial Services
Sponsors: BRAUTIGAM, SULLIVAN
Amends: 24-A MRSA §781, 24-A MRSA §782, 24-A MRSA §783, 24-A MRSA §784, 24-A MRSA §785, 24-A MRSA §786, 24-A MRSA §787-A, 24-A MRSA §787-B, 24-A MRSA §787-C, 24-A MRSA §788, 24-A MRSA §793, 24-A MRSA §795, 24-A MRSA §796, 24-A MRSA §798, 24-A MRSA §799

Legislative Document 
No. 1390 
H.P.982 
House of Representatives, March 13, 2007 
An Act Related to Special Purpose Reinsurance Vehicles 
Reference to the Committee on Insurance and Financial Services suggested and ordered 
printed. 
Presented by Representative BRAUTIGAM of Falmouth. 
Cosponsored by Senator SULLIVAN of York. 
Pnnteu on r~cyded paper 
IY/~ 
/J7.11ld£~ 
MILLICENT M. MacFARLAND 
Clerk 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1. 24-A MRSA §781, sub-§9, as enacted by PL 2003, c. 249, §2, is amended 
to read: 
9. 
Insolvency. 
"Insolvency" or "insolvent" means that the special purpose 
reinsurance vehicle or one or more of its protected cells is unable to pay its obligations 
when they are due unless the obligations are the subject of a bona fide dispute. 
Sec. 2. 24-A MRSA §781, sub-§l1-A is enacted to read: 
ll-A. Protected cell. "Protected cell" means a separate account established and 
maintained by a special purpose reinsurance vehicle for one special purpose reinsurance 
vehicle contract and the accompanying insurance securitization with a ceding insurer as 
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further provided for in section 787-A. 
Sec. 3. 24-A MRSA §781, sub-§13-A is enacted to read: 
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13-A. Securities. 
"Securities" means those different types of debt obligations, 
equity, surplus certificates, surplus notes, funding agreements, derivatives and other legal 
forms of financial instruments. 
Sec. 4. 24-A MRSA §781, sub-§16, as enacted by PL 2003, c. 249, §2, IS 
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amended to read: 
16. 
Special purpose reinsurance vehicle insurance securitization; insurance 
securitization. 
"Special purpose reinsurance vehicle insurance securitization" or 
"insurance securitization" means a package of related risk transfer instruments, capital 
market offerings and facilitating administrative agreements by which proceeds are 
obtained by a special purpose reinsurance vehicle directly or indirectly through the 
issuance of securities and are held in trust pursuant to the requirements of this subchapter 
to secure the obligations of the special purpose reinsurance vehicle under a one or more 
special purpose reinsurance vehicle eOAtraet contracts with one or more ceding insurers, 
where investment risk to the holders of these securities is contingent upon the obligations 
of the special purpose reinsurance vehicle to the ceding insurer under the special purpose 
reinsurance vehicle contract in accordance with the transaction terms, and in which the 
special purpose reinsurance vehicle's obligation to return the full initial investment to the 
holders of such securities pursuant to the transaction terms is contingent upon the funds 
not being used to pay the obligations of the special purpose reinsurance vehicle to the 
ceding insurers under the special purpose reinsurance vehicle contract. 
Sec. 5. 24-A MRSA §781, sub-§18-A is enacted to read: 
18-A. 
Surplus note. 
"Surplus note" means an unsecured debt obligation that 
possesses characteristics consistent with paragraph 3 of the Statement of Statutory 
Accounting Principles No. 41, as amended, issued by the National Association of 
Insurance Commissioners. 
Page I - 123LR1688(Ol)-1 
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Sec. 6. 24-A MRS A §782, sub-§2, ~, as enacted by PL 2003, c. 249, §2, is 
amended to read: 
. 
H. 
A plan of operation, consisting of a description of the contemplated insurance 
securitization, the special purpose reinsurance vehicle contract and related 
transactions, which must include: 
(1) Draft documentation or at the discretion of the superintendent a written 
summary of all material agreements that are planned in order to effectuate the 
insurance securitization and the related contract, including the names of the 
ceding insurers, the nature of the risks being assumed, the proposed use of 
protected cells, if any, and the maximum amounts, purpose and nature and the 
interrelationships of the various transactions required to effectuate the insurance 
securitization; 
(2) The investment strategy of the special purpose reinsurance vehicle and a 
representation that the investment strategy complies with the investment 
requirements set forth in this subchapter and that the strategy includes investment 
practices or other provisions to preserve asset values that facilitate attainment of 
full funding during the term of the insurance securitization with assets that can be 
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monetized in response to a triggering event without a substantial loss in value; 
(3) A description of the method by which losses covered by the contract that 
may develop after the termination of the contract period are to be addressed 
under the provisions of the contract; and 
(4) -A- If applicable, a representation that the trust agreement under section 784, 
subsection 2, paragraph E and the trusts holding assets that secure the obligations 
of the special purpose reinsurance vehicle under the contract and the contract 
with the ceding insurers in connection with the contemplated insurance 
securitization are structured in accordance with the requirements under this 
subchapter~; and 
Sec. 7. 24-A MRSA §782, sub-§2, ~ is enacted to read: 
I. In addition to the information required by paragraph H, if a protected cell is used, 
the special purpose reinsurance vehicle shall file with the superintendent: 
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(I) A business plan demonstrating how the applicant accounts for the loss and 
expense experience of each protected cell and how that experience is to be 
reported to the superintendent in a manner determined by the superintendent; 
(2) A statement acknowledging that all financial records of the special purpose 
reinsurance vehicle, including records pertaining to any protected cells, must be 
made available for inspection or examination by the superintendent; 
(3) All contracts or sample contracts between the special purpose reinsurance 
vehicle and any ceding insurer, related to each protected cell; and 
(4) A description of the expenses allocated to each protected cell. 
Sec. 8. 24-A MRSA §782, sub-§3, ~A, as enacted by PL 2003, c. 249, §2, is 
amended to read: 
I 
A. 
The superintendent shall approve the application and issue a limited certificate 
of authority under this section if the superintendent finds that: 
(l) The proposed plan of operation provides a reasonable expectation of a 
successful operation; 
(2) 
The terms of the contract and related transactions comply with this 
subchapter and any applicable rules adopted by the superintendent; 
(3) The proposed plan of operation is not hazardous to any ceding insurer or to 
policyholders; and 
II 
(4) The insurance regulator of the state of domicile of each ceding insurer has 
notified the superintendent in writing or otherwise provided satisfactory 
assurance to the superintendent that it has approved or not disapproved the 
transaction. The s\:lperiRteRdeRt m~' waive this requiremeAt for a cediAg iAsurer 
whose domiciliaf)' state does AOt have a substaRtiall), similar law if the 
s\:lperiRteRdeRt fiRds that the domiciliaf)' regulator has had Aotice aAd adequate 
opport\:lAit)' to re't'iew the proposal aAd has AOt objected. 
Sec. 9. 24-A MRSA §782, sub-§6, as enacted by PL 2003, c. 249, §2, is amended 
to read: 
6. Documentation of insurance securitization. The special purpose reinsurance 
vehicle organizer shall provide a complete set of the documentation of the insurance 
securitization to the superintendent upon closing of any transactions, including an opinion 
of legal counsel with respect to compliance with this subchapter and any other applicable 
laws as of the effective date of any transaction. AA)' material chaRge to the special 
p\:lrpose reiAS\:lraRCe yehicle's plaA of operatioR filed pursuaAt to subsectioA 2, iAcludiAg, 
\:)\:1t Rot limited to, the issuaflce of Aew securities to cOAtiAue the iAsuraAce securitizatioA 
activities of the special purpose reiAsuraRce yehicle pursuaAt to this subchapter after 
expiratioR aRd flill satisfactioA of the iRitial secliritizatioA traAsactioAs, requires prior 
approyal of the S\:lperiAteRdeAt. A chaAge iA the couAterpart)' to s'",'ap traAsactioAs for aA 
existiRg iAsuraAce securitizatioR as allovt'ed uAder this subchapter is AOt cORsidered a 
material change \:lRless the special purpose reinsurance yehicle's managers know or 
should Imow that the Aew couRterpartY preseAts a substaAtial risk of default. 
Sec. 10. 24-A MRSA §782, sub-§7 is enacted to read: 
7. Changes in plan of operation. Any material change to the special purpose 
reinsurance vehicle's plan of operation filed pursuant to subsection 2, whether or not 
through a protected cell, requires prior approval of the superintendent, except that: 
A. If initially approved in the plan of operation, securities subsequently issued to 
continue the securitization activities of the special purpose reinsurance vehicle either 
during or after expiration, redemption or satisfaction of those securities, in whole or 
in part, issued pursuant to initial insurance securitization transactions may not be 
considered a material change; and 
B. 
A change in the counterparty to swap transactions for an existing insurance 
securitization as allowed under this subchapter is not considered a material change 
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unless the special purpose reinsurance vehicle's managers know or should know that 
the new counterparty presents a substantial risk of default. 
Sec. 11. 24-A MRSA §782, sub-§8 is enacted to read: 
8. Confidentiality. Information submitted pursuant to this section is confidential 
and may not be disclosed except as provided in section 799. 
Sec. 12. 24-A MRSA §783, as enacted by PL 2003, c. 249, §2, is amended to 
read: 
§783. Limited purpose of special purpose reinsurance vehicle 
Special purpose reinsurance vehicles authorized under this subchapter are created for 
the limited purpose of entering into insurance securitization transactions with investors 
and related agreements to pay one or more ceding insurers agreed-upon amounts under a 
special purpose reinsurance vehicle contract upon the occurrence of triggering events 
related to the insurance business of the ceding insurer. A special purpose reinsurance 
vehicle may not issue a contract for assumption of risk or indemnification of loss other 
than a special purpose reinsurance vehicle contract. 
A special purpose reinsurance 
vehicle may purchase reinsurance to cede the risks assumed under the special purpose 
reinsurance vehicle contract as approved by the superintendent. 
Sec. 13. 24-A MRSA §784, sub-§1, as enacted by PL 2003, c. 249, §2, is 
amended to read: 
1. Contracts. Special purpose reinsurance vehicles authorized under this subchapter 
may enter into and effectuate special purpose reinsurance vehicle contracts with one or 
more ceding insurers as long as the contracts.;. obligate the reinsurance vehicle to 
indemnify the ceding insurer for losses. 
A. 
Obligate the reinsurance vehicle to indemnify the ceding insurer for losses; 
B. 
Are securitized in full through a single special purpose reinsurance vehicle 
insurance securitization; and 
C. 
Are fully funded and seeured with assets held in trust in aeeordance with the 
requirements of this seetion pursuant to agreements proposed under this subehapter, 
and invested in a manner that meets the eriteria set forth in seetion 795. 
Sec. 14. 24-A MRSA §784, sub-§4, as enacted by PL 2003, c. 249, §2, IS 
amended to read: 
4. Terms of operation. 
A special purpose reinsurance vehicle may enter into 
agreements with 3rd parties and conduct business necessary to fulfill its obligations and 
administrative duties incident to the insurance securitization and the special purpose 
reinsurance vehicle contract. The agreements may include entering into swap agreements 
or other transactions that have the objective of leveling timing differences in funding 
upfront or ongoing transaction expenses or managing credit or interest rate risk of the 
investments in trust to ensure that the assets held in trust are sufficient to satisfy payment 
or repayment of the securities issued pursuant to an insurance securitization transaction or 
the obligations of the special purpose reinsurance vehicle under the contract or for any 
other purpose approved by the superintendent. 
In fulfilling its function, the special 
purpose reinsurance vehicle shall adhere to the following requirements and shall, to the 
extent of its powers, ensure that contracts obligating other parties to perform certain 
functions incident to its operations are substantively and materially consistent with the 
following requirements and guidelines. 
A. 
A special purpose reinsurance vehicle must have a distinct name, which must 
include the designation "SPRV" or "Special Purpose Reinsurance Vehicle." The 
name of the reinsurance vehicle may not be deceptively similar to, or likely to be 
confused with or mistaken for, any other existing business name registered in this 
State. 
B. 
Unless otherwise provided in the plan of operation, the principal place of 
business and office of any reinsurance vehicle organized under this subchapter must 
be located in this State. 
C. 
The assets of a reinsurance vehicle must be preserved and administered by or on 
behalf of the reinsurance vehicle to satisfy the liabilities and obligations of the 
reinsurance vehicle incident to the insurance securitization and other related 
agreements including the contract. 
D. 
Assets of the reinsurance vehicle that are pledged to secure obligations of the 
reinsurance vehicle to a ceding insurer under a contract must may be held in trust and 
administered by a qualified United States financial institution serving as trustee. The 
qualified United States financial institution may not control, be controlled by or be 
under common control with the reinsurance vehicle or any ceding insurer. 
E. 
The agreement governing the trust described in paragraph 0 if any must create 
one or more trust accounts into which all pledged assets must be deposited and held 
until distributed in accordance with the trust agreement. The pledged assets must be 
held by the trustee at the trustee's office in the United States and may be held in 
certificated or electronic form. 
F. 
The provisions for withdrawal by ceding insurers of funds from the trust must be 
clean and unconditional, subject only to the following requirements: comply with the 
ceding insurer's applicable domiciliary credit for reinsurance laws. 
(1) The ceding insurer has the right to withdraw assets from the trust account at 
any time without notice to the reinsurance vehicle subject only to written notice 
to the trustee from the ceding insurer that funds in the amount requested are due 
and payable by the reinsurance vehicle; 
(2) No other statement or document need be presented in order to 'withdraw 
assets, except that the ceding insurer may be required to acknowledge receipt of 
withdra't¥n assets; 
(3) The trust agreement described in paragraph E must indicate that it is not 
subject to any conditions or qualifications outside of the trust agreement; 
(4) The trust agreement described in paragraph E may not contain references to 
an)' other agreements or documents; and 
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(5) 
Reference may not be made tcH:he fact that these funds may represent 
reinsurance premiums or that the funds have been deposited fur any specific 
purpose. 
G. 
The trust agreement described in paragraph E if any must be established for the 
sole use and benefit of the ceding insurer at least to the full extent of the reinsurancc 
vehicle's obligations to the ceding insurer under the contract or as may- oth(;!w!?e b~ 
0.l2.ecified under the contract. In the case of more than one ceding insurer or mQL~ 
than one reinsurance contract with the same ceding insure!.:, a separate tfust agrt'cment 
must be entered into with each ceding insurer and a separate trust account must be 
maintained for each ceding insurer unless otherwise approved by t),,? sURerintenili:n1. 
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H. 
The trust agreement described ill paragraph E must provide for the-trnstt>e--kr. 
(I) Receiye assets and hold all assets in a safe place; 
(2) Determine that all assets are in a form that the ceding insurer or the trustee, 
upon direction by the ceding insurer, may whenever necessaF)' negotiate the 
assets, without consent or signature from the reinsurance vehicle or any other 
person or entity; 
(3) furnish to the reinsurance vehicle, the superintendent and the ceding insurer 
a statement of all assets in the trust account referred to in paragraph E reported at 
fair value upon its inception and at intervals no less frequent than the end of each 
c-alendar quarter; 
(4) Notify the reinsurance vehl€le and the ceding insurer within 10 days of any 
deposits to or withdra',,,'als from the trust account referred to in paragraph E; 
(5) 
Upon written demand of the ceding insurer, immediately take steps 
necet:saF)' to transfer absolutely all right, title and interest in the assets held in the 
trust account referred to in paragraph E to the ceding insurer and deliver physical 
cttStedy of the assets to the ceding insurer;-and 
(6) 
Allow no substitutions or 'Nithdra'Nals of assets from the trust account 
referred to in paragraph E except on written instructions from the ceding insurer. 
I. 
The trust agreement described in paragraph E must provide that at least 30 days 
eut net more than 45 days befure termination of the trust account written notification 
of termination must be deli,,'ered by the 3rd party to the ceding insurer. 
J..-- The trust agreement described in paragraph E may be made subject to and 
g-nvtwned by the laws of any state in addition to the requirements fur the trust as 
provided in this subchapter-i¥.r-l-e~t-attHs" disclosed in the plan of operation 
ffcl-e6 with and apprO'>'ed by the superintendent. 
K.--'+fl.e-.lrust agreement described in paragraph E must prohibit im'asion of the trust 
account referred to Ht"-paragraph E for the pl;lrpose of paying compensation to -0;: 
re~sing the expenses of the trustee; 
L. 
The trust agreement -deseribed in paragraph E must provide that the trustee be 
~~ab-le-furtRe--tru5te&S-eWtHl-egH-genee,wiMul misconduct or lack of goed-faith-; 
M. 
(l) Notwithstanding the provisions of paragraph F, subparagraphs (3) to (5) and 
paragraph M, subparagraph (5), ',',{heA a trust agreement descrtbe&-ffi-i*if~ 
is established in conjunction with a contract, then the trust agreement may 
provide that the ceding insurer shall undertake to use and apply any amounts 
drawn upon the trust account vlithout diminution because of the inso Ivency of the 
ceding insurer or the reinsurance vehicle for the follo'Ning purposes: 
(a) 
To payor reimburse the ceding insurer amounts due to the ceding 
insurer under the contract, including, but not limited to, unearned premiums 
due to the ceding insurer if not othen."ise paid by the reinsurance vehicle in 
accordance 'Nith the terms of that trust agreement; or 
(-bJ-\Vhen the ceding insurer has received notification of termination of the 
trust account referred to in paragraph E and when some or all of the 
reinsurance vehicle's obligations under the specific contract remain 
unliquidated and undischarged 10 days before the termination date, to 
viithdravl amounts equal to the undischarged obligations and deposit the 
amounts in a separate account in the name of the ceding insurer in any 
qualified United States financial institution apart from its general assets in 
trust for the sole purpose of discharging any contractual obligations of the 
reinsurance vehicle that may remain executoF)' after the withdrawal and for 
any period after the termination date. 
Assets so held must revert to the 
reinsurance vehicle when they are no longer necessary to secure the 
obligations of the reinsurance vehicle and may not exceed the sum of the 
following amounts as determined in good faith by the ceding insurer: 
(i) 
Losses and loss expenses paid by the ceding insurer but not 
recovered from the reinsurance vehicle; 
(ii) Reserves for losses reported and outstanding; 
(iii) Reserves for losses incurred but not rep~ 
(iv) Reserves for loss expenses; 
(v) Reserves for unearned premiums; and 
(vi) Any additional amount necessaF)' to maintain full funding of the 
aggregate limit remaining under the contract if the period of coverage or 
the agreed upon period of loss development has yet to expire. 
(2) The provisions to be included in the trust agreement described in paragraph 
E pursuant to this paragraph may instead be included in the underlying contfa€t.: 
A special purpose reinsurance vehicle contract-must contain provisions that: 
8-) Require the reinsurance vehicle Lo entei' into a trust agreement described-tn 
paragraph E and to establish a trust account re-feffod to in paragraph E ·fBf-the 
benefit of the ceding insurer and specifying what recoverables or reserves- or-bffih 
the trust-agreement is to cover; 
f2) Stipulate that assets deposited -ffi.-the--t:Rl.st- accoun~ 
their current fair value and may consist onty4permitted inV€5t~ 
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(3) Require the reinsurance vehicle, before depositing assets with the trustee, to 
execute assignments or endorsements in blank or to transfer legal title to the 
trustee of all shares, obligations or any other assets requiring assignments· it! 
order that the ceding insurer or the trustee upon the direction of the ceding insurer 
may whenever necessary negotiate any such assets lNithout consent or signature 
from the reinsurance vehicle or any other entity; 
(4) Require that all settlements of account between the ceding insurer and the 
reinsurance vehicle be made in cash or its equivalent; and 
(5) Stipulate that the reinsurance vehicle and the ceding insurer agree that the 
assets in the trust account referred to in paragraph E and established pursuant to 
the provisions of the contract may be 'Nithdrawn by the ceding insurer at any time 
not'Nithstanding any other provisions in the contract and must be used and 
applied by the ceding insurer or any successor by operation of law of the ceding 
insurer, including, but not limited to, and subject to the provisions of section 793, 
any liquidator, rehabilitator, receiver or conservator of the ceding insurer, without 
diminution because of insolvency on the part of the ceding insurer or the 
reinsurance vehicle, only for the follo'Ning purposes: 
(a) To transfer all such assets into one or more trust accounts pursuant to 
Paragraph L for the benefit of the ceding insurer pursuant to the terms of the 
contract and in compliance 'Nith this subchapter; and 
(b) To pay any other amounts that the ceding insurer claims are due under 
the contract. 
N. 
The contract entered into by the reinsurance vehicle may contain provisions that 
give the reinsurance vehicle the right to seek approval from the ceding insurer to 
""ithdra',.., from the trust account referred to in paragraph E all or part of the assets 
contained in the trust account and to transfer the assets to the reinsurance vehicle as 
long as: 
( I ) The reinsurance vehicle shall at the time of the 'Nithdrawal replace the 
withdrawn assets with other qualified assets having a fair value equal to the fair 
'ialue of the assets withdra't't'A and that meet the requirements of section 795; and 
(2) After the 'Nithdra'Nals and transfer, the fair value of the assets in the trust 
account referred to in paragraph E securing the obligations of the reinsurance 
vehicle under the contract is no less than an amount needed to satisfy the full 
funding requirement of the contract. The ceding insurer has the sole discretion to 
determine '""hether these provisions have been satisfied but may not unreasonably 
nor arbitraril)' withhold its approval. 
O. 
The contract ml:lst provide that investors in the reinsurance vehicle agree that 
any obligation to repay principal, interest or dividends on the securities issued by the 
reinsl:lrance vehicle must be reduced upon the occurrence of a triggering event, to the 
extent that the assets of the reinsurance vehicle held in trust for the benefit of the 
ceding insurer are remitted to the ceding insurer in fulfillment of the obligations of 
the reinsurance vehicle under the contract. 
P. 
Assets held by a reinsurance vehicle in trust must be valued at their fair value, 
Q. 
THe proceeds from tHe sale of securities by the reiflsuraflce vehicle to ifl't'estors 
must be deposited with tHe trustee as described ifl this subCHapter afld must be held or 
ifl'/ested by tHe trustee ifl accordaflce with the requiremeflts of seetiofl 795. 
R. 
A reinsurance vehicle organized under this subchapter may engage only in fully 
funded contracts to support in full the ceding insurer's exposures assumed by the 
reinsurance vehicle. 
A contract must be indemnity-triggered unless the 
superintendent adopts rules pursuant to section 797 authorizing non indemnity-
triggered contracts and addressing the treatment of the portion of the risk that is 
non indemnity-based, including accounting, disclosure, risk-based capital treatment 
and the manner in which risks associated with a non indemnity-based contract may be 
evaluated and managed. Assets of the reinsurance vehicle and income on trust assets 
received by the reinsurance vehicle may be used to pay interest or other consideration 
on any securities or outstanding debt or other obligation of the reinsurance vehicle 
and nothing in this paragraph may be construed or interpreted to prevent a 
reinsurance vehicle from entering into a swap agreement or other transaction that has 
the effect of guaranteeing interest or other consideration. 
S. 
In the special purpose reinsurance vehicle insurance securitization, the contracts 
or other relating documentation must contain provisions identifying the reinsurance 
vehicle that enters into the reinsurance securitization and the contracts or other 
documentation must clearly disclose that the assets of the reinsurance vehicle and 
only those assets are available to pay the obligations of that reinsurance vehicle. 
Notwithstanding this paragraph, and subject to the provisions of this subchapter and 
any other applicable law, the failure to include such language in the contracts or other 
documentation may not be used as the sole basis by creditors, reinsurers or other 
claimants to circumvent the provisions of this subchapter. 
T. 
A reinsurance vehicle is not authorized to: 
(l) Issue or otherwise administer primary insurance policies; 
(2) Have any obligation to the policyholders or reinsureds of the ceding insurer; 
(3) 
Enter into a contract with a person that is not licensed or otherwise 
authorized to conduct the business of insurance or reinsurance in at least its state 
or country of domicile; or 
(4) Assume or retain exposure to insurance or reinsurance losses for its own 
account that is not initially fully funded by proceeds from an insurance 
securitization that meets the requirements of this subchapter, except that the 
reinsurance vehicle may wholly or partially reinsure or retrocede the risks 
assumed to a 3rd-party reinsurer on terms approved by the superintendent. 
U. 
At the cessation of business of a reinsurance vehicle, the limited certificate of 
authority granted by the superintendent under section 782 expires or, in the case of 
retiring and surviving protected cells, is modified, and the reinsurance vehicle may no 
longer be authorized to conduct activities pursuant to this subchapter until a new 
certificate of authority is issued pursuant to a new filing in accordance with section 
782. 
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V. 
It is unlawful for a reinsurance vehicle to lend or otherwise invest or place in 
custody, in trust or under management any of its assets with or to borrow money or 
receive a loan or advance from, other than by issuance of the securities pursuant to an 
insurance securitization, from anyone convicted of a felony, anyone who is 
untrustworthy or of known bad character or anyone convicted of a criminal offense 
involving the conversion or misappropriation of fiduciary funds or insurance 
accounts, theft, deceit, fraud, misrepresentation or corruption. 
Sec. 15. 24-A MRSA §785, sub-§l, as enacted by PL 2003, c. 249, §2, is 
amended to read: 
1. Powers. A special purpose reinsurance vehicle authorized under this subchapter 
has the powers to enter into contracts and to conduct other commercial activities 
necessary to fulfill the purposes of this subchapter. These activities may include, but are 
not limited to, entering into contracts, issuing securities of the special purpose reinsurance 
vehicle and complying with the terms of the contracts, entering into trust agreements, 
swap agreements and any other agreements necessary to effectuate an insurance 
securitization in compliance with the limitations and pursuant to the authorities granted to 
the reinsurance vehicle under this subchapter or the plan of operation approved by the 
superintendent. 
Other than a special purpose reinsurance vehicle contract, a special 
purpose reinsurance vehicle may not assume risk or indemnifY loss, except that the 
special purpose reinsurance vehicle may cede risks assumed through a contract to 3rd-
party reinsurers through the purchase of reinsurance or retrocession protection on terms 
approved by the superintendent. A special purpose reinsurance vehicle may discount its 
reserves at discount rates as approved by the superintendent. 
Sec. 16. 24-A MRSA §786, as enacted by PL 2003, c. 249, §2, is amended to 
read: 
§786. Affiliation 
Notwithstanding the prOVISIOns of section 222, the special purpose reinsurance 
vehicle, the special purpose reinsurance vehicle organizer or subsequent debt or equity 
investors in special purpose reinsurance vehicle securities are not deemed affiliates of the 
ceding insurer by virtue of the special purpose reinsurance vehicle contract between the 
ceding insurer and the reinsurance vehicle, the securities of the reinsurance vehicle or 
related agreements necessary to implement the special purpose reinsurance vehicle 
insurance securitization. The FeiAStlffiACe yehicle may AOt be cOAtFOlied b)', may AOt 
contFol aAd may AOt be tlAdeF commOA cOAtFol with aAY cediAg iAstlFeF that is a part)' to a 
cOAtFact. 
Sec. 17. 24-A MRSA §787-A is enacted to read: 
§787-A. Establishment of protected cell accounts 
1. Use of protected cells. This section and section 787-B provide a basis for the 
creation and use of protected cells by a special purpose reinsurance vehicle as a means of 
accessing alternative sources of capital, lowering formation and administrative expenses 
and generally making insurance securitizations more efficient. 
If a conflict occurs 
Page !O - 123LR1688(Ol)-1 
between a provIsion of this chapter and either this section or section 787-B, the 
provisions of this section and section 787-B control. 
2. 
Conditions for establishing protected cells. 
A special purpose reinsurance 
. vehicle may establish and maintain one or more protected cells with prior written 
approval of the superintendent and subject to compliance with the applicable provisions 
of this subchapter and the following conditions. 
A. A protected cell must be established only for the purpose of insuring or reinsuring 
risks of one or more special purpose reinsurance vehicle contracts with a counterparty 
with the intent of facilitating an insurance securitization. 
B. Each protected cell must be accounted for separately on the books and records of 
the special purpose reinsurance vehicle to reflect the financial condition and results of 
operations of the protected cell, net income or loss, dividends or other distributions to 
the counterparty for the special purpose reinsurance vehicle contract with each cell, 
and other factors as may be provided in the special purpose reinsurance vehicle 
contract, insurance securitization transaction documents, plan of operation or 
business plan or as required by the superintendent. 
C. 
Amounts attributed to a protected cell under this subchapter, including assets 
transferred to a protected cell account, are owned by the special purpose reinsurance 
vehicle, and the special purpose reinsurance vehicle may not be, or hold itself out to 
be, a trustee with respect to those protected cell assets of that protected cell account. 
D. All attributions of assets and liabilities between a protected cell and the general 
account must be in accordance with the plan of operation approved by the 
superintendent. No other attribution of assets or liabilities may be made by a special 
purpose reinsurance vehicle between the special purpose reinsurance vehicle's general 
account and its protected cell or cells. The special purpose reinsurance vehicle must 
attribute all insurance obligations, assets and liabilities relating to a special purpose 
reinsurance vehicle contract and the related insurance securitization transaction, 
including any securities issued by the special purpose reinsurance vehicle as part of 
the insurance securitization, to a particular protected cell. 
The rights, benefits, 
obligations and liabilities of any securities attributable to that protected cell and the 
performance under a special purpose reinsurance vehicle contract and the related 
securitization transaction and any tax benefits, losses, refunds or credits allocated, or 
any of them, at any point in time pursuant to a tax allocation agreement between the 
special purpose reinsurance vehicle and the special purpose reinsurance vehicle's 
counterparty, parent or company or group company, or any of them, in common 
control with them, including any payments made by or due to be made to the special 
purpose reinsurance vehicle pursuant to the terms of the agreement, must reflect the 
insurance obligations, assets and liabilities relating to the special purpose reinsurance 
vehicle contract and the insurance securitization transaction that are attributed to a 
particular protected cell. 
E. The assets of a protected cell may not be chargeable with liabilities arising out of 
a special purpose reinsurance vehicle contract related to or associated with another 
protected cell, except that one or more special purpose reinsurance vehicle contracts 
may be attributed to a protected cell so long as those special purpose reinsurance 
.. 
• 
I 
vehicle contracts are intended to be, and ultimately are, part of a single securitization 
transaction. 
F. A sale, an exchange or another transfer of assets may not be made by the special 
purpose reinsurance vehicle between or among any of its protected cells without the 
consent of the superintendent, the counterparty and each protected cell. 
G. 
Except as otherwise contemplated in the special purpose reinsurance vehicle 
contract or related insurance securitization transaction documents, or both, a sale, 
exchange, transfer of assets, dividend or distribution may not be made from a 
protected cell to a counterparty or parent without the superintendent's approval and 
may not be approved if the sale, exchange, transfer, dividend or distribution would 
I I 
result in insolvency or impairment with respect to a protected cell. 
H. 
A special purpose reinsurance vehicle may pay interest or repay principal, or 
both, and make distributions or repayments in respect of any securities attributed to a 
particular protected cell from assets or cash flows relating to or emerging from the 
special purpose reinsurance vehicle contract and the insurance securitization 
transactions that are attributable to that particular protected cell in accordance with 
the provisions of this subchapter or as otherwise approved by the superintendent. 
3. Written approval required. A special purpose reinsurance vehicle contract with 
or attributable to a protected cell does not take effect without the superintendent's prior 
written approval, and the addition of each new protected cell constitutes a change in the 
business plan requiring the superintendent's prior written approval. The superintendent 
may use internal resources to examine and investigate the application for a protected cell 
or retain legal, financial and examination services from outside the bureau to examine and 
investigate the application. 
The reasonable cost of any examination or investigation 
pursuant to this subsection may be charged to the applicant for the special purpose 
reinsurance vehicle up to a maximum of $12,000. 
4. 
Minimum capitalization. 
A special purpose reinsurance vehicle utilizing 
protected cells initially shall possess minimum capitalization separate and apart from the 
capitalization of its protected cell or cells in an amount determined by the superintendent 
after giving due consideration of the special purpose reinsurance vehicle's business plan, 
I 
feasibility study and proformas, including the nature of the risks to be insured or 
reinsured. For purposes of determining the capitalization of each protected cell, a special 
purpose reinsurance vehicle initially shall capitalize and after that time maintain 
capitalization in each protected cell in the amount and manner required for a special 
purpose reinsurance vehicle in section 787. 
5. Not fraudulent. The establishment of one or more protected cells alone does not 
constitute, and may not be construed to be, a fraudulent conveyance, an intent by the 
special purpose reinsurance vehicle to defraud creditors or the carrying out of business by 
the special purpose reinsurance vehicle for any other fraudulent purpose. 
Sec. 18. 24-A MRSA §787-B is enacted to read: 
§787-B. Protected cell does not separate from a special purpose reinsurance vehicle 
1. Not separate from special purpose reinsurance vehicle. The creation of a 
protected cell does not create, with respect to that protected cell, a legal person separate 
from the special purpose reinsurance vehicle. 
Notwithstanding this subsection, a 
protected cell must have its own distinct name or designation that includes the words 
"protected cell." 
The special purpose reinsurance vehicle shall transfer all assets 
attributable to the protected cell to one or more separately established and identified 
protected cell accounts bearing the name or designation of that protected cell. Although 
it is not a separate legal person, the property of a special purpose reinsurance vehicle in a 
protected cell is subject to orders of a court by name as it would have been if the 
protected cell were a separate legal person. The property of a special purpose reinsurance 
vehicle in a protected cell must be served in its own name with process in all civil actions 
or proceedings involving or relating to the activities of that protected cell or a breach by 
the special purpose reinsurance vehicle of a duty to the protected cell or to a counterparty 
IS 
to a transaction linked or attributed to it. A protected cell exists only at the pleasure of 
the special purpose reinsurance vehicle. At the cessation of business of a protected cell in 
accordance with the plan approved by the superintendent, the special purpose reinsurance 
vehicle voluntarily shall close out the protected cell account. 
2. Management of protected cell assets. This section may not be construed to 
prohibit a special purpose reinsurance vehicle from contracting with, or arranging for, an 
investment advisor, commodity trading advisor or other 3rd party to manage the assets of 
a protected cell, if all remuneration, expenses and other compensation of the 3rd-party 
advisor or manager are payable from the assets of that protected cell and not from the 
assets of other protected cells or the assets of the special purpose reinsurance vehicle's 
general account, unless approved by the superintendent. 
3. No recourse for creditors. Creditors with respect to a protected cell are not 
entitled to have recourse against the protected cell assets of other protected cells or the 
assets of the special purpose reinsurance vehicle's general account. If an obligation of a 
special purpose reinsurance vehicle relates only to the general account, the obligation of 
the special purpose reinsurance vehicle extends only to that creditor, with respect to that 
obligation, and is entitled to have recourse only to the assets of the special purpose 
reinsurance vehicle's general account. 
4. Use of assets. The assets of the protected cell may not be used to pay expenses or 
claims other than those attributable to the protected cell. 
Protected cell assets are 
available only to the special purpose reinsurance vehicle contract counterparty and other 
creditors of the special purpose reinsurance vehicle that are creditors only with respect to 
that protected cell and, accordingly, are entitled, in conformity with this subchapter, to 
have recourse to the protected cell assets attributable to that protected cell and absolutely 
are protected from the creditors of the special purpose reinsurance vehicle that are not 
creditors with respect to that protected cell and who, accordingly, are not entitled to have 
recourse to the protected cell assets attributable to that protected cell. If an obligation of 
a special purpose reinsurance vehicle to a person or counterparty arises from a special 
purpose reinsurance vehicle contract or related insurance securitization transaction, or is 
otherwise incurred, with respect to a protected cell: 
I 
A. That obligation of the special purpose reinsurance vehicle extends only to the 
protected cell assets attributable to that protected cell, and the person or counterparty, 
with respect to that obligation, is entitled to have recourse only to the protected cell 
assets attributable to that protected cell; and 
B. That obligation of the special purpose reinsurance vehicle does not extend to the 
protected cell assets of another protected cell or the assets of the special purpose 
reinsurance vehicle's general account, and that person, with respect to that obligation, 
is not entitled to have recourse to the protected cell assets of another protected cell or 
the assets of the special purpose reinsurance vehicle's general account. The special 
purpose reinsurance vehicle's capitalization held separate and apart from the 
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capitalization of its protected cell or cells as required by subsection 6 must be 
available at all times to pay expenses of or claims against the special purpose 
reinsurance vehicle and may not be used to pay expenses or claims attributable to any 
protected cell. 
5. Security interest permitted. Notwithstanding any other provIsIon of law, a 
special purpose reinsurance vehicle may allow for a security interest in accordance with 
applicable law to attach to protected cell assets or a protected cell account when in favor 
of a creditor of the protected cell or to facilitate the insurance securitization, including, 
without limitation, the issuance of the special purpose reinsurance vehicle contract, to the 
extent those protected cell assets are not required at all times to support the risk, but 
without otherwise affecting the discharge of liabilities under the special purpose 
reinsurance vehicle contract, or as otherwise approved by the superintendent. 
6. 
Administrative and accounting procedures. A special purpose reinsurance 
vehicle shall establish administrative and accounting procedures necessary to properly 
identify the one or more protected cells of the special purpose reinsurance vehicle and the 
protected cell assets and protected cell liabilities to each protected cell. 
The 
superintendents of a special purpose reinsurance vehicle shall keep protected cell assets 
and protected cell liabilities: 
A. Separate and separately identifiable from the assets and liabilities of the special 
purpose reinsurance vehicle's general account; and 
B. 
Attributable to one protected cell separate and separately identifiable from 
protected cell assets and protected cell liabilities attributable to other protected cells. 
7. 
Protected cell liabilities. 
All contracts or other documentation reflecting 
protected cell liabilities clearly must indicate that only the protected cell assets are 
available for the satisfaction of those protected cell liabilities. In all special purpose 
reinsurance vehicle insurance securitizations involving a protected cell, the contracts or 
other documentation effecting the transaction must contain provisions identifying the 
protected cell to which the transaction is attributed. In addition, the contracts or other 
documentation clearly must disclose that the assets of that protected cell, and only those 
assets, are available to pay the obligations of that protected cell. Notwithstanding the 
provisions of this subsection and subject to the provisions of this subchapter and 
applicable law or rule, the failure to include this language in the contracts or other 
documentation may not be used as the sole basis by creditors, insureds or reinsureds, 
insurers or reinsurers or other claimants to circumvent the provisions of this subsection. 
Pag¢ 14 - 123LR1688(Ol)-1 
8. 
Annual filing. 
A special purpose reinsurance vehicle with protected cells 
annually shall file with the bureau accounting statements and financial reports detailing 
the financial experience of each protected cell and the special purpose reinsurance vehicle 
separately and providing the combined financial experience of the special purpose 
reinsurance vehicle and all protected cells. 
9. Notice of insolvency. A special purpose reinsurance vehicle with protected cells 
shall notifY the superintendent in writing within 10 business days of a protected cell's 
becoming insolvent. 
Sec. 19. 24-A MRSA §787-C is enacted to read: 
§787-C. Issuance of securities and surplus notes 
The following provisions apply to the issuance of securities and surplus notes by a 
special purpose reinsurance vehicle. 
1. Securities and surplus notes. A special purpose reinsurance vehicle mav issue 
securities, including surplus notes and other forms of financial instruments, subject to and 
in accordance with applicable law, its approved plan of operation and its organizational 
documents. 
2. 
Contracts. 
A special purpose reinsurance vehicle, in connection with the 
issuance of securities, may enter into and perform all of its obligations under any required 
contracts to facilitate the issuance of these securities. 
3. Accounting as surplus not debt. Subject to the approval of the superintendent, a 
special purpose reinsurance vehicle may lawfully account for the proceeds of surplus 
notes as surplus and not as debt for purposes of statutory accounting and submit for prior 
approval of the superintendent periodic written requests for payments of interest on and 
repayments of principal of surplus notes. 
4. 
Surplus or contribution notes. 
Surplus notes issued by a special purpose 
reinsurance vehicle constitute surplus or contribution notes of the type defined in section 
781, subsection 18-A. 
5. Authoritv to approve formulas for payments. The superintendent, without 
otherwise prejudicing the superintendent'S authority, may approve formulas for an 
ongoing plan of interest payments or principal repayments, or both, to provide guidance 
ill connection with the superintendent's ongoing reviews of requests to approve the 
payments on and principal repayments of the surplus notes. 
6. Obligation to repay; reflection of risk. The obligation to repay principal or 
interest, or both, on the securities issued by the special purpose reinsurance vehicle must 
reflect the risk associated with the obligations of the special purpose reinsurance vehicle 
to the counterparty under the contract. 
Sec. 20. 24-A MRSA §788, as enacted by PL 2003, c. 249, §2, is amended to 
read: 
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§788. Dividends 
The special purpose reinsurance vehicle may not declare or pay dividends in any 
form to its owners unless the dividends do not decrease the capital of the reinsurance 
vehicle below $5,000 and, after giving effect to the dividends, the assets of the 
reinsurance vehicle, including assets held in trust pursuant to the terms of the insurance 
securitization, must be sufficient to meet its obligations. 
Except for dividends 
specifically provided for in the approved plan of operation under section 782, subsection 
2, paragraph H or dividends that are part of an ongoing plan for the payment of dividends 
approved by the superintendent, the prior approval of the superintendent is required for 
any dividend paid during the term of coverage or while the reinsurance vehicle has 
undischarged obligations to the ceding insurer. The dividends may be declared by the 
board of directors of the reinsurance vehicle if the dividends would not violate the 
provisions of this subchapter or the approved plan of operation and would not jeopardize 
the fulfillment of the obligations of the reinsurance vehicle or the trustee pursuant to the 
special purpose reinsurance vehicle insurance securitization, the special purpose 
reinsurance vehicle contract or any related transaction. The provisions of section 222, 
subsections 11-A and II-B do not apply to such dividends. 
Sec. 21. 24-A MRSA §793, as enacted by PL 2003, c. 249, §2, is amended to 
read: 
§793. Conservation, rehabilitation or liquidation 
1. Authorized insurer. A special purpose reinsurance vehicle is considered an 
authorized insurer for purposes of section 4351, subsection 
1~ and the provisions of 
chapter 57 apply to a reinsurance vehicle or to each of the reinsurance vehicle's protected 
cells independently, or both, except to the extent modified by this section. 
2. Grounds for action. Notwithstanding the provisions of sections 4356 and 4357, 
and without causing or otherwise affecting the conservation or rehabilitation of an 
otherwise solvent protected cell of a reinsurance vehicle, the Superior Court may issue an 
order authorizing the superintendent to conserve, rehabilitate or liquidate a special 
purpose reinsurance vehicle domiciled in this State only if the superintendent proves by 
clear and convincing evidence or the reinsurance vehicle stipulates after notice and 
opportunity for hearing that: 
A. 
There has been embezzlement, wrongful sequestration, dissipation or diversion 
of the assets of the reinsurance vehicle intended to be used to pay amounts owed to 
the ceding insurer or the holders of special purpose reinsurance vehicle securities: or 
B. 
The reinsurance vehicle is insolvent and the holders of a majority in outstanding 
principal amount of each class of special purpose reinsurance vehicle securities 
request or consent to conservation, rehabilitation or liquidation under this subchapter. 
3. Receiver. Notwithstanding any contrary provision of this Title, rules adopted 
under this Title or any other applicable law, upon any order of conservation, 
rehabilitation or liquidation of the special purpose reinsurance vehicle or one or more of 
its protected cell~, a receiver is bound to deal with the reinsurance vehicle's assets and 
liabilities in accordance with the requirements under this subchapter. The receiver shalt 
ensure that the assets linked to one protected cell are not applied to the liabilities linked to 
another protected cell or to the reinsurance vehicle generally, unless an asset or liability is 
linked to more than one protected cell, in which case the receiver shall deal with the asset 
or liability in accordance with the terms of anv relevant governing instrument or contract. 
4. Recoverable amounts. 
With respect to amounts recoverable under a special 
purpose reinsurance vehicle contract, the amount recoverable by the receiver may not be 
reduced or diminished as a result of the entry of an order of conservation, rehabilitation or 
liquidation with respect to the ceding insurer, notwithstanding any provisions to the 
contrary in the contracts or other documentation governing the special purpose 
reinsurance vehicle insurance securitization. 
II 
A. 
Notwithstanding the provisions of chapter 57, an appl ication or petition in any 
delinquency proceeding relating to a ceding insurer or any temporary restraining 
order or injunction issued in any such proceeding may not prohibit the transaction of 
any business by a reinsurance vehicle, including any payment by a reinsurance 
vehicle made pursuant to a special purpose reinsuram;e vehicle security or any action 
or proceeding against a reinsurance vehicle or its assets. 
B. 
Notwithstanding the provisions of chapter 57, subchapter 2, the commencement 
of a summary proceeding or other interim proceeding commenced prior to a formal 
delinquency proceeding with respect to a reinsurance vehicle and any order issued by 
the court in such proceeding may not prohibit a reinsurance vehicle from making a 
payment pursuant to a special purpose reinsurance vehicle security or contract or 
from taking any action required to make the payment. 
5. Nonfraudulent transfer. Notwithstanding any other provision of chapter 57 or 
other state law: 
A. 
A receiver of a ceding insurer may not av-e-te void a nonfraudulent transfer by a 
ceding insurer to a special purpose reinsurance vehicle of money or other property 
made pursuant to a special purpose reinsurance vehicle contract; attd 
B. 
A receiver of a special purpose reinsurance vehicle may not void a nonfraudulent 
transfer by the reinsurance vehicle of money or other property made to a ceding 
insurer pursuant to a special purpose reinsurance vehicle contract or made to or for 
the benefit of any holder of a special purpose reinsurance vehicle security on account 
of the special purpose reinsurance vehicle security~.;.Jlnd 
~. The superintendent may not seek to have a sRecial purpose reinsurance vehicle 
with protected cells declared insolv~nCl12jQD~s at least on~Qf the protected cells 
remains solvent, _and, in the case of such insolvencv, the receiver shall handle the 
reinsurance vehicle's assets in compliance wilD subsection 7 and other laws of thi~ 
State. 
6. 
Fulfillment of obligations. 
With the exception of the fulfiIiment of the 
obligations under a special purpose reinsurance vehicle contract and not'A'ithstanding any 
other provisions of this subchapter or other law of this State to the contrary, the assets of 
a special purpose reinsurance vehicle including assets held in trust may !lot be 
consolidated with or included in the estate of a ceding insurer in any delinquency 
I 
proceeding against the ceding insurer under this subchapter for any purpose, including, 
without limitation, distribution to creditors of the ceding insurer. 
7. Domiciliary receiver. Notwithstanding any other provision of this subchapter: 
A. 
The domiciliary receiver of a special purpose reinsurance vehicle domiciled in 
another state is vested by operation of law with the title to all of the assets, property, 
contracts and rights of action and all of the books, accounts and other records of the 
reinsurance vehicle located in this State. The domiciliary receiver has the immediate 
right to recover all such vested property, assets and causes of action of the 
reinsurance vehicle located in this State~; and 
lOB. 
An ancillary proceeding may not be commenced or prosecuted in this State 
I I 
against a special purpose reinsurance vehicle domiciled in another state. 
8. Court order; protected cells. Notwithstanding the provisions of sections 4356 
and 4357, the Superior Court may issue an order authorizing the superintendent to 
conserve, rehabilitate or liquidate one or more of a special purpose reinsurance vehicle's 
IS 
protected cells, independently, without causing or otherwise effecting a conservation, 
rehabilitation, receivership or liquidation of the special purpose reinsurance vehicle 
generally or another of its protected cells domiciled in this State only if the 
superintendent proves by clear and convincing evidence or the reinsurance vehicle's 
protected cell stipulates after notice and opportunity for hearing that: 
A. There has been embezzlement, wrongful sequestration, dissipation or diversion of 
the assets of the reinsurance vehicle attributable to the affected protected cell or cells 
intended to be used to pay amounts owed to the ceding insurer or the holders of 
special purpose reinsurance vehicle securities of the affected protected cell or cells; 
or 
B. 
The affected protected cell is insolvent and the holders of a majority in 
outstanding principal amount of each class of special purpose reinsurance vehicle 
securities attributable to that particular protected cell request or consent to 
conservation, rehabilitation or liquidation under this subchapter. 
The court's order may be made in respect of one or more protected cells by name, rather 
than the special purpose reinsurance vehicle generally. 
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9. 
Superintendent action; insolvency. 
Subsection 8 does not prohibit the 
superintendent from taking any action permitted under this section or another provision of 
this Title with respect only to the conservation or rehabilitation of a special purpose 
reinsurance vehicle with a protected cell or cells, if the superintendent would have had 
sufficient grounds to seek to declare the special purpose reinsurance vehicle insolvent. 
With respect to any solvent protected cell or cells, the superintendent may not prohibit 
payments made by the special purpose reinsurance vehicle pursuant to the reinsurance 
vehicle security or contract or otherwise made under the insurance securitization 
transaction that are attributable to the protected cell or cells or prohibit the reinsurance 
vehicle from taking any action required to make these payments. 
Sec. 22. 24-A MRSA §795, sub-§2, as enacted by PL 2003, c. 249, §2, IS 
amended to read: 
I 
2. Investment practices. In addition, the special purpose reinsurance vehicle may 
enter into swap agreements or other transactions, including guaranteed investment 
contracts, that have the objective of leveling timing differences in funding of upfront or 
ongoing transaction expenses or managing credit or interest rate risk of the investments in 
the trust to ensure that the investments are sufficient to ensure payment or repayment of 
the securities and related interest or principal payments issued pursuant to a special 
purpose reinsurance vehicle insurance securitization transaction or the reinsurance 
vehicle's obligations under the special purpose reinsurance vehicle contract, or for any 
other purpose approved by the superintendent. 
Sec. 23. 24-A MRSA §796, as enacted by PL 2003, c. 249, §2, is amended to 
II 
read: 
§796. No transaction of insurance business by investors in securities 
The securities issued by the special purpose reinsurance vehicle pursuant to a special 
purpose reinsurance vehicle insurance securitization are not deemed to be insurance or 
reinsurance contracts. 
An investor in such securities issued pursuant to insurance 
securitization or any holder of such securities may not by sole means of this investment 
or holding be deemed to be transacting an insurance business in this State. 
The 
underwriters or selling agents and their partners, directors, officers, members, managers, 
employees, agents, representatives and advisors involved in an insurance securitization 
are not deemed to be acting as insurance producers or brokers or conducting an insurance 
or reinsurance agency, brokerage, intermediary, advisory or consulting business by virtue 
of their activities in connection with the special purpose reinsurance vehicle or with the 
insurance securitization. 
Sec. 24. 24-A MRSA §798, sub-§3 is enacted to read: 
3. Exemptions. The superintendent may by rule or written order exempt a special 
purpose reinsurance vehicle or its protected cells, on a case-by-case basis, from 
provisions of this subchapter that the superintendent determines to be inappropriate given 
the nature of the risks to be insured. 
Sec. 25. 24-A MRSA §799 is enacted to read: 
§799. Confidentiality of information submitted 
Information submitted pursuant to the provisions of this subchapter is confidential 
and may not be disclosed by the superintendent or an agent or employee of the 
superintendent without the prior written consent of the special purpose reinsurance 
vehicle, except that: 
1. 
Information subject to discovery. 
Information submitted pursuant to the 
provisions of this subchapter is discoverable by a party in a civil action or contested case 
to which the submitting special purpose reinsurance vehicle is a party, upon a specific 
finding by the court that: 
I 
A. The special purpose reinsurance vehicle is a necessary party to the action and not 
joined only for the purposes of evading the confidentiality provisions of this 
subchapter; 
B. 
The party seeking the information demonstrates by a clear and convincing 
standard that the information sought is relevant to, material to and necessary for the 
prosecution or defense of the claim asserted in the action; and 
C. The information sought is unavailable from other non confidential sources. 
2. Disclosure to other states. The superintendent may disclose the information to 
the public official having jurisdiction over the regulation of insurance in another state if: 
A. 
The public official agrees in writing to maintain the confidentiality of the 
II 
information; and 
B. The laws of the state in which the public official serves require the information to 
be confidential. 
SUMMARY 
This bill allows the establishment of special purpose reinsurance vehicles to facilitate 
the securitization of insurance risks.