Section 31A-37-402 - Sponsored captive insurance companies - Certificate of authority mandatory(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 sponsor 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:(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) A risk retention group may not be either a sponsor or a participant of a sponsored captive insurance company.Amended by Chapter 244, 2015 General Session ,§ 47, eff. 5/12/2015.Amended by Chapter 297, 2011 , 2011 General Session