§ 58-10-90. Use and operation of protected cells.
§ 58‑10‑90. Useand operation of protected cells.
(a) The protected cellassets of a protected cell may not be charged with liabilities arising out ofany other business the protected cell company may conduct. All contracts orother documentation reflecting protected cell liabilities shall clearlyindicate that only the protected cell assets are available for the satisfactionof those protected cell liabilities.
(b) The income, gainsand losses, realized or unrealized, from protected cell assets and protectedcell liabilities must be credited to or charged against the protected cellwithout regard to other income, gains or losses of the protected cell company,including income, gains or losses of other protected cells. Amounts attributedto any protected cell and accumulations on the attributed amounts may beinvested and reinvested without regard to any requirements or limitations ofthis Chapter and the investments in a protected cell or cells may not be takeninto account in applying the investment limitations otherwise applicable to theinvestments of the protected cell company.
(c) Assets attributedto a protected cell must be valued at their fair value on the date ofvaluation.
(d) A protected cellcompany, with respect to any of its protected cells, shall engage in fullyfunded indemnity triggered insurance securitization to support in full theprotected cell exposures attributable to that protected cell. A protected cellcompany insurance securitization that is nonindemnity triggered shall qualifyas an insurance securitization under the terms of this Chapter only after theCommissioner adopts rules addressing the methods of funding of the portion ofthis risk that is not indemnity based and addressing accounting, disclosure,risk‑based capital treatment, and assessing risks associated with thesecuritizations. A protected cell company insurance securitization that is notfully funded, whether indemnity triggered or nonindemnity triggered, isprohibited. Protected cell assets may be used to pay interest or otherconsideration on any outstanding debt or other obligation attributable to thatprotected cell, and nothing in this subsection may be construed or interpretedto prevent a protected cell company from entering into a swap agreement orother transaction for the account of the protected cell that has the effect ofguaranteeing interest or other consideration.
(e) In all protectedcell company insurance securitizations, the contracts or other documentationeffecting the transaction shall contain provisions identifying the protectedcell to which the transaction will be attributed. In addition, the contracts orother documentation shall clearly disclose that the assets of that protectedcell, and only those assets, are available to pay the obligations of thatprotected cell. Notwithstanding the provisions of this subsection and subjectto the provisions of this Chapter and any other applicable law or rule, thefailure to include such language in the contracts or other documentation maynot be used as the sole basis by creditors, reinsurers, or other claimants tocircumvent the provisions of this Part.
(f) A protected cellcompany shall only be authorized to attribute to a protected cell account theinsurance obligations relating to the protected cell company's general account.Under no circumstances may a protected cell be authorized to issue insurance orreinsurance contracts directly to policyholders or reinsureds or have anyobligation to the policyholders or reinsureds of the protected cell company's generalaccount.
(g) At the cessation ofbusiness of a protected cell in accordance with the plan approved by theCommissioner, the protected cell company voluntarily shall close out theprotected cell account. (2001‑223, s. 25.)