Section 56-13-402 - Part definitionsFor purposes of this part:
(1) "Affiliated company" means a company in the same corporate system as a parent, by virtue of common ownership, control, operation, or management;(2) "Control", "controlling", "controlled by", and "under common control with" mean the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract other than a commercial contract for goods or non-management services, or otherwise; provided, that such power is not the result of an official position with or corporate office held by the person. Control shall be presumed to exist if a person, directly or indirectly, owns, controls, holds with the power to vote, or holds proxies representing ten percent (10%) or more of the voting securities of another person. This presumption may be rebutted by a showing that control does not exist. Notwithstanding this subdivision (2), for purposes of this part, the fact that an SPFC exclusively provides reinsurance to a ceding insurer under an SPFC contract is not by itself sufficient grounds for a finding that the SPFC and ceding insurer are under common control;(3) "Counterparty" means an SPFC's parent or affiliated company, a ceding insurer to the SPFC contract, or subject to the prior approval of the commissioner, a non-affiliated company;(4) "Fair value" means: (A) As to cash, the amount of the cash; and(B) As to an asset other than cash:(i) The quoted mid-market price for the asset in active markets shall be used if available; or(ii) If the quoted mid-market price is not available:(a) A value determined using the best information available considering values of similar assets and other valuation methods, such as present value of future cash flows, historical value of the same or similar assets, or comparison to values of other asset classes, the value of which have been historically related to the subject asset; or(b) The amount at which that asset could be bought or sold in a current transaction between arms-length, willing parties;(5) "Insolvency" or "insolvent" means that the SPFC or one (1) or more of its protected cells is unable to pay its obligations when they are due, unless those obligations are the subject of a bona fide dispute, or the commissioner previously has established by order other criteria for determining the solvency of the SPFC or one (1) or more of its protected cells, in which case the SPFC is insolvent if it fails to meet that criteria;(6) "Insurance securitization" and "securitization" mean a transaction or a group of related transactions, which:(A) Include capital market offerings, that are effected through related risk transfer instruments and facilitating administrative agreements where all or part of the result of such transactions is used to fund the SPFC's obligations under a reinsurance contract with a ceding insurer and by which: (i) Proceeds are obtained by a special purpose financial captive insurance company, directly or indirectly, through the issuance of securities by the SPFC or any other person; or(ii) A person provides one (1) or more letters of credit or other assets for the benefit of the SPFC; that the commissioner authorizes the SPFC to treat such letters of credit or other assets as admitted assets for purposes of the SPFC's annual report; and all or any part of such proceeds, letters of credit, or assets, as applicable, are used to fund the SPFC's obligations under a reinsurance contract with a ceding insurer; and(B) Do not include the issuance of a letter of credit for the benefit of the commissioner to satisfy all or part of the SPFC's capital and surplus requirements under § 56-13-406;(7) "Management" means the board of directors, managing board, or other individual or individuals vested with overall responsibility for the management of the affairs of the SPFC, including the election and appointment of officers or other of those agents to act on behalf of the SPFC;(8) "Organizational document" means the SPFC's articles of incorporation, articles of charter, articles of organization, bylaws, operating agreement, or other formation documents as required by the secretary of state that establish the SPFC as a legal entity or prescribes its existence;(9) "Parent" means any corporation, limited liability company, partnership, or individual that directly or indirectly owns, controls, or holds with power to vote more than fifty percent (50%) of the outstanding voting securities of an SPFC;(10) "Protected cell" means a separate account established and maintained by an SPFC for one (1) SPFC contract and the accompanying insurance securitization with a counterparty;(11) "Securities" means those different types of debt obligations, equity, surplus certificates, surplus notes, funding agreements, derivatives, and other legal forms of financial instruments;(12) "SPFC" or "special purpose financial captive" means a captive insurance company that has received a certificate of authority from the commissioner for the limited purposes provided for in this part;(13) "SPFC contract" means a contract between the SPFC and the counterparty pursuant to which the SPFC agrees to provide insurance or reinsurance protection to the counterparty for risks associated with the counterparty's insurance or reinsurance business;(14) "SPFC securities" means the securities issued by a SPFC; and(15) "Surplus note" means an unsecured subordinated debt obligation deemed to be a surplus certificate under this title and otherwise possessing characteristics consistent with paragraph 3 of the Statement of Statutory Accounting Principles No. 41, as amended, National Association of Insurance Commissioners (NAIC).