S.C. Code Ann. § 38-14-40 – Application process and requirements; limited certificate of authority; approval in changes in plan of operation

(A) Within thirty days after receipt by the director, or his designee, of a complete filing by the prospective SPRV organizer for authority to form or acquire a SPRV, which SPRV must exist and operate expressly for the limited purposes set forth in this chapter, the application must be deemed approved and a limited certificate of authority must be issued, unless before the expiration of the thirty-day period the director, or his designee, approves or disapproves the application in writing. A limited certificate of authority may not be issued unless the country or state of domicile of each ceding insurer has notified the director or his designee in writing that they have not disapproved the transaction.
(B) A complete filing of the application must include the following:
1. (1) an affidavit verifying that each prospective SPRV organizer meets the requirements of this chapter;
2. (2) a representation that the prospective SPRV organizer intends to form a SPRV that must operate in accordance with the requirements set forth in this chapter;
3. (3) the proposed name of the SPRV;
4. (4) biographical affidavits of all SPRV organizers setting forth their legal names, any names under which they have or are conducting their affairs, and any affiliations with other persons as defined in Chapter 21, together with such other biographical information as the director, or his designee, may request;
5. (5) the source and form of the minimum capital to be contributed to the SPRV;
6. (6) any persons with which the SPRV is or, upon formation, will be affiliated as defined in Chapter 21;
7. (7) the names and biographical affidavits of the proposed members of the board of directors and principal officers of the SPRV, setting forth their legal names, any names under which they have or are conducting their affairs and any affiliations with other persons as defined in Chapter 21, together with such other biographical information as the director, or his designee, may request; and
8. (8) a plan of operation, consisting of a description of the contemplated insurance securitization, the SPRV contract and related transactions, which must include:
  1. (a) draft documentation or, at the discretion of the director, or his designee, a written summary of all material agreements that are entered into to effectuate the insurance securitization and the related SPRV contract, to include the names of the ceding insurers, the nature of the risks being assumed, and the maximum amounts, purpose, and nature and the interrelationships of the various transactions required to effectuate the insurance securitization;
  2. (b) the investment strategy of the SPRV and a representation that the investment strategy complies with the investment requirements set forth in this chapter and that the strategy will include investment practices or other provisions to preserve asset values, which will facilitate attainment of full funding during the term of the securitization with assets that may be monetized in response to a triggering event without a substantial loss in value;
  3. (c) a description of the method by which losses covered by the SPRV contract that may develop after the termination of the contract period are to be addressed under the provisions of the SPRV contract; and
  4. (d) a representation that the trust agreement and the trusts holding assets that secure the obligations of the SPRV under the SPRV contract and the SPRV contract with the ceding insurers in connection with the contemplated insurance securitization will be structured in accordance with the requirements set forth in this chapter.
(C) The director, or his designee, must approve the application and issue a limited certificate of authority upon a finding that:
1. (1) the proposed plan of operation provides a reasonable expectation of a successful operation;
2. (2) the terms of the SPRV contract and related transactions comply with this chapter;
3. (3) the proposed plan of operation is not hazardous to any ceding insurer or to policyholders; and
4. (4) the commissioner of the state of domicile of each ceding insurer has notified the director, or his designee, in writing that it has not disapproved the transaction. In evaluating the expectation of a successful operation, the director, or his designee, must consider, among other factors, whether the proposed SPRV organizer, directors, and officers are of known good character and not reasonably believed to be affiliated, directly or indirectly, through ownership, control, management, reinsurance transactions, or other insurance or business relations, with any person known to have been involved in the improper manipulation of assets, accounts, or reinsurance. If the director, or his designee, denies the application, he must grant the prospective SPRV organizer a hearing upon request.
(D) Upon approval by the director, or his designee, of the application and the issuance of a limited certificate of authority, the SPRV may be acquired or formed and, in accordance with the approved plan of operation, the SPRV may enter into contracts and conduct other activities within the scope of the filed plan of operation.
(E) The limited certificate of authority must state that the SPRV's authorization to be involved in the business of reinsurance must be limited only to the reinsurance activities that the SPRV is allowed to conduct pursuant to this chapter.
(F) The SPRV organizer must provide a complete set of the documentation of the insurance securitization to the director, or his designee, upon closing of the transactions, including an opinion of legal counsel with respect to compliance with this chapter and any other applicable laws as of the effective date of the transaction. Any material change of the SPRV's plan of operation described in items (1) through (8) of subsection (B) including, but not limited to, the issuance of new securities to continue the securitization activities of the SPRV pursuant to this chapter after expiration and full satisfaction of the initial securitization transactions, must require prior approval of the director, or his designee; however, the change in the counterparty to swap transactions for an existing securitization as allowed under this chapter must not be considered a material change. Any material change that is not disapproved by the director, or his designee, in writing within fifteen days after its submission must be deemed approved.