Surplus required: Amount; form; Commissioner authorized to prescribe additional requirements; letter of credit.
1. A captive insurer must not be issued a license, and shall not hold a license, unless the captive insurer has and maintains, in addition to any other surplus required to be maintained pursuant to subsection 3, an unencumbered surplus of:
(a) For a pure captive insurer, not less than $150,000;
(b) For an association captive insurer incorporated as a stock insurer, not less than $300,000;
(c) For an agency captive insurer, not less than $300,000;
(d) For a rental captive insurer, not less than $350,000; and
(e) For an association captive insurer incorporated as a mutual insurer or reciprocal insurer, not less than $500,000.
2. Except as otherwise provided in subsection 3, the surplus required to be maintained pursuant to this section must be in the form of cash or an irrevocable letter of credit.
3. The Commissioner may prescribe additional requirements relating to surplus based on the type, volume and nature of the insurance business that is transacted by the captive insurer and requirements regarding which surplus, if any, may be in the form of an irrevocable letter of credit.
4. A letter of credit used by a captive insurer as evidence of required surplus pursuant to this section must:
(a) Be issued by a bank chartered by this state or a bank that is a member of the United States Federal Reserve System and has been approved by the Commissioner; and
(b) Include a provision pursuant to which the letter of credit is automatically renewable each year, unless the issuer gives written notice to the Commissioner and the captive insurer at least 90 days before the expiration date.
Last modified: February 27, 2006