1. (1) A captive insurance company desiring to utilize a captive manager shall ensure that the captive manager has submitted to the director for approval a complete captive manager application in a form prescribed by the director.

2. (2) A captive insurance company may utilize only a captive manager whose captive manager application has been approved by the director. A captive insurance company shall do both of the following:

   1. (a) Submit a copy of the captive manager contract to the director.
   2. (b) Ensure that the captive manager contract states that a captive manager is subject to the control of the captive insurance company’s board of directors or other supervisory management body.
3. (3) Captive manager contracts in effect prior to the effective date of these rules shall not be subject to prior approval by the director until such time as they are renewed by the captive manager and the captive insurance company. All new captive manager contracts and captive manager contracts renewed on or after the effective date of these rules are subject to subrules
4. (1) and (2) of this rule.

5. (4) The director may withdraw or suspend approval of a captive manager if any of the following occur:

   1. (a) The captive manager knows or should know the officers or directors of the company are or were engaged in any conduct that, in connection with the captive entity, violates state or federal laws, rules, or regulations.
   2. (b) The captive manager engages in conduct that would otherwise threaten the solvency of the captive insurer and fails to report such conduct to the director in a timely manner.
   3. (c) The captive manager knows or should know of actions of a captive under management that may lead to revocation or suspension of the limited certificate of authority under the act and fails to inform the captive board of directors and the director in a timely manner.
   4. (d) The captive manager fails to perform the basic manager responsibilities or reporting requirements required under the act and these rules.
   5. (e) The captive manager engages in conduct detrimental to the interests of the captive insurer, including but is not limited to, a conflict of interest or conduct that constitutes a breach of the fiduciary duty owed to the captive insurer.

History: 2015 AACS.