| (a) An applicant seeking to redomesticate an existing
captive insurance company or to form a new captive insurance company
must provide the following information to the department:
(1) the name of the entity, the entity's federal employer
identification number, and the location and means of contacting the
entity;
(2) the physical location of the books and records
and means of maintaining the books and records;
(3) the registered agent for service;
(4) a list of the service providers that the captive
insurance company will use, including qualified accountants, qualified
actuaries, and licensed attorneys;
(5) biographical affidavits for the individuals described
in §6.303 of this title who provide necessary functions to operate
and govern the captive insurance company;
(6) the name of the ultimate controlling person;
(7) the organizational documents for the captive insurance
company, other than a captive insurance company formed as a captive
exchange, including:
(A) a certificate of filing from the Texas Secretary
of State indicating that the entity has been formed or redomesticated
to Texas as an entity under the Business Organizations Code, other
than a risk retention group or general partnership, for the purpose
of providing captive insurance;
(B) an affidavit satisfactory to the Commissioner from
the incorporators, organizers, or officers of the captive insurance
company stating that:
(i) the capital and surplus are the bona fide property
of the company; and
(ii) the certificate of filing is true and correct;
and
(C) if necessary, an affidavit by the incorporators,
organizers, or officers of the captive insurance company stating:
(i) the number of shares or other type of equity instrument
without par value that are subscribed; and
(ii) the actual consideration received by the captive
insurance company for those shares or other type of equity instrument;
(8) a description of how the captive insurance company
fits into the affiliated group's risk management plan and the group's
significant operations in the State of Texas;
(9) if the application is for the redomestication of
a captive insurance company, information listed in subsection (b)
of this section;
(10) if the applicant proposes to insure controlled
unaffiliated business, the information listed in subsection (c) of
this section;
(11) a plan of operation, including:
(A) the asset page; liability, capital, and surplus
page; income statement page; and cash flow page for the applicant
from the Texas Captive Annual Report that are certified by two principal
officers who have submitted biographical affidavits and:
(i) four years of financial projections, with a disclosure
of the assumptions the applicant is using to develop the projected
financial statements; and
(ii) if applicable, the most recent three years of
operational results, in United States dollars; however, if the applicant
has not been in operation for three or more years, the applicant must
submit operational results, in United States dollars, for each year
it has been in operation;
(B) a description of the lines of business and perils
that the captive insurance company proposes to cover and the limits
of coverage;
(C) a list of the affiliates that the applicant proposes
to insure;
(D) a description of the reinsurance programs proposed
including the lines of business that are affected, limits of reinsurance
coverage, and the counterparties that will be involved;
(E) an organizational chart listing all affiliates
of the applicant's affiliated group;
(F) agreements with any captive management companies
the applicant proposes to use;
(G) a copy of the applicant's investment strategy;
(H) an explanation of how the applicant intends to
handle profits, including a statement about how dividends will be
evaluated;
(I) an independent actuarial report that evaluates
the feasibility of the applicant's plan of operation;
(J) details of how the parent entity will maintain
and support the captive insurance company, including ensuring compliance
with Texas statutes and rules; and
(K) evidence of the financial wherewithal of the affiliate
group, including affiliated persons, to retain the risk using the
captive insurance company; and
(12) an affidavit by two principal officers or members
of the governing committee who have submitted biographical affidavits
that the information provided in paragraphs (1) - (11) of this subsection
is true and correct.
(b) An application for a redomestication must include:
(1) the applicant's current domicile jurisdiction;
(2) if the applicant has been examined:
(A) the date of the most recent examination; and
(B) a copy of the most recent examination report;
(3) information required in §6.407 and §6.408
of this title for existing loans to affiliates; and
(4) a letter of no objection or release from the captive
insurance company's current domicile.
(c) If the applicant proposes to insure a controlled
unaffiliated business, the following documentation must be provided
with the application:
(1) copies of the agreement(s) that evidence an existing
contractual relationship between the parties, one of which must be
a captive insurance company affiliate;
(2) a description and any supporting documentation
that evidences that the captive insurance company affiliate bears
the risk of a potential financial loss associated with the contract
beyond the affiliate having to pay a fee; and
(3) a description and any supporting policies that
document that a captive insurance company affiliate controls the risk
management function of the controlled unaffiliated business.
(d) If the applicant proposes to form as a captive
exchange under Insurance Code Chapter 964, Subchapter C, the applicant
must provide the following information:
(1) A copy of the power of attorney executed by each
subscriber appointing the attorney in fact;
(2) A copy of the subscriber declaration meeting the
requirements of Insurance Code §964.101(a)(2) and §964.106;
(3) A copy of the attorney in fact's articles of incorporation,
or other governing document, that details the composition of the governing
body and what constitutes a quorum;
(4) a certificate of filing from the Texas Secretary
of State indicating that the attorney in fact has been formed or redomesticated
to Texas as an entity under the Business Organizations Code, other
than a risk retention group or general partnership, for the purpose
of providing captive insurance;
(e) The department may accept similar information prepared
in a similar format for a nonaffiliated third party, including a regulator,
bank, or similar user, to the extent that the information satisfies
one or more of the requirements in subsections (a) - (d) of this section
to the satisfaction of the Commissioner.
(f) The applicant may submit a written request for
the Commissioner to waive or grant a conditional exception to any
portion of the application or information required under this section.
At the Commissioner's sole discretion, the Commissioner may grant
the waiver in writing, if the Commissioner determines the requirement
or information is not applicable or provides no additional value in
reviewing the application. At the Commissioner's sole discretion,
the Commissioner may grant a conditional exception that will be listed
in the certificate of authority issued as described in §6.203(b)
of this title.
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