33-28-105. Formation of captive insurance companies. (1) A pure captive insurance company or a sponsored captive insurance company must be incorporated as a stock insurer with its capital divided into shares and held by the stockholders.
     (2) An association captive insurance company or an industrial insured captive insurance company may be:
     (a) incorporated as a stock insurer with its capital divided into shares and held by the stockholders;
     (b) incorporated as a mutual insurer without capital stock, the governing body of which is elected by the member organizations of its association or associations; or
     (c) organized as a reciprocal insurer under Title 33, chapter 5.
     (3) A captive insurance company incorporated or organized in this state may not have less than three incorporators, at least one of whom must be a resident of this state.
     (4) (a) In the case of a captive insurance company formed as a corporation and before the articles of incorporation are transmitted to the secretary of state, the incorporators shall file a copy of the proposed articles of incorporation and a petition with the commissioner requesting the commissioner to issue a certificate that finds that the establishment and maintenance of the proposed corporation will promote the general good of the state. In reviewing the petition, the commissioner shall consider:
     (i) the character, reputation, financial standing, and purposes of the incorporators;
     (ii) the character, reputation, financial responsibility, insurance experience, and business qualifications of the officers and directors; and
     (iii) any other factors that the commissioner considers appropriate.
     (b) If the commissioner does not issue a certificate or finds that the proposed articles of incorporation of the captive insurance company do not meet the requirements of the applicable laws, including but not limited to 33-2-112, the commissioner shall refuse to approve the draft of the articles of incorporation and shall return the draft to the proposed incorporators, together with a written statement explaining the refusal.
     (c) If the commissioner issues a certificate and approves the draft articles of incorporation, the commissioner shall forward the certificate and an approved draft of articles of incorporation to the proposed incorporators. The incorporators shall prepare two sets of the approved articles of incorporation and shall file one set of articles of incorporation with the secretary of state as required by the applicable law and one set with the commissioner.
     (5) The capital stock of a captive insurance company incorporated as a stock insurer may be authorized with no par value.
     (6) At least one of the members of the board of directors of a captive insurance company must be a resident of this state.
     (7) (a) A captive insurance company formed as a corporation has the privileges and is subject to the provisions of general corporation law, as well as the applicable provisions contained in this chapter.
     (b) In the event of conflict between the provisions of general corporation law and this chapter, the provisions of this chapter control.
     (8) (a) With respect to a captive insurance company formed as a reciprocal insurer, the organizers shall petition and request that the commissioner issue a certificate that finds that the establishment and maintenance of the proposed association will promote the general good of the state. In reviewing the petition, the commissioner shall consider:
     (i) the character, reputation, financial standing, and purposes of the organizers;
     (ii) the character, reputation, financial responsibility, insurance experience, and business qualifications of the attorney-in-fact; and
     (iii) any other factors that the commissioner considers appropriate.
     (b) The commissioner may either approve the petition and issue the certificate or reject the petition in a written statement of the reasons for the rejection.
     (c) A captive insurance company formed as a reciprocal insurer has the privileges and is subject to the provisions of Title 33, chapter 5, in addition to the applicable provisions of this chapter. If there is a conflict between Title 33, chapter 5, and this chapter, the provisions of this chapter control. If a reciprocal insurer is determined to be subject to other provisions of Title 33, chapter 5, the other provisions of chapter 5 are not applicable to a reciprocal captive insurance company formed under this chapter unless those provisions of chapter 5 are expressly made applicable to captive insurance companies.
     (d) The subscribers' agreement or other organizing document of a captive insurance company formed as a reciprocal insurer may authorize a quorum of a subscribers' advisory committee to consist of at least one-third of the number of its members.
     (9) Except as provided in 33-28-306, the provisions of Title 33 pertaining to mergers, consolidations, conversions, mutualizations, and redomestications apply in determining the procedures to be followed by captive insurance companies in carrying out any of those transactions.
     (10) With respect to a branch captive insurance company, the foreign captive insurance company shall petition and request that the commissioner issue a certificate that finds that, after considering the character, reputation, financial responsibility, insurance experience, and business qualifications of the officers and directors of the foreign captive insurance company, the licensing and maintenance of the branch operation will promote the general good of the state. The foreign captive insurance company may apply to the secretary of state for a certificate of authority to transact business in this state after the commissioner's certificate is issued.

     History: En. Sec. 5, Ch. 298, L. 2001; amd. Sec. 11, Ch. 383, L. 2003.