S.C. Code Ann. § 38-90-40 – Capitalization requirements; security requirements for branch captive insurance companies; restriction on payment of dividends

(A) The director may not issue a license to a pure captive insurance company, sponsored captive insurance company, association captive insurance company incorporated as a stock insurer, or industrial insured captive insurance company incorporated as a stock insurer unless the company possesses and thereafter maintains unimpaired paid-in capital of:
1. (1) in the case of a pure captive insurance company, not less than one hundred thousand dollars;
2. (2) in the case of an association captive insurance company incorporated as a stock insurer, not less than four hundred thousand dollars;
3. (3) in the case of an industrial insured captive insurance company incorporated as a stock insurer, not less than two hundred thousand dollars;
4. (4) in the case of a sponsored captive insurance company, not less than five hundred thousand dollars.
  The capital may be in the form of cash or an irrevocable letter of credit issued by a bank chartered by this State or a member bank of the Federal Reserve System and approved by the director.
(B) The director may prescribe additional capital based upon the type, volume, and nature of insurance business transacted. This capital may be in the form of an irrevocable letter of credit issued by a bank chartered by this State or a member bank of the Federal Reserve System.
(C) In the case of a branch captive insurance company, as security for the payment of liabilities attributable to branch operations, the director shall require that a trust fund, funded by an irrevocable letter of credit or other acceptable asset, be established and maintained in the United States for the benefit of United States policyholders and United States ceding insurers under insurance policies issued or reinsurance contracts issued or assumed, by the branch captive insurance company through its branch operations. The amount of the security may be no less than the capital and surplus required by this chapter and the reserves on these insurance policies or reinsurance contracts, including reserves for losses, allocated loss adjustment expenses, incurred but not reported losses and unearned premiums with regard to business written through branch operations; however, the director may permit a branch captive insurance company that is required to post security for loss reserves on branch business by its reinsurer to reduce the funds in the trust account required by this section by the same amount so long as the security remains posted with the reinsurer . If the form of security selected is a letter of credit, the letter of credit must be established by, or issued or confirmed by, a bank chartered in this State or a member bank of the Federal Reserve System.
(D) A captive insurance company may not pay a dividend out of, or other distribution with respect to, capital or surplus, in excess of the limitations set forth in Section 38-21-250 through Section 38-21-270, without the prior approval of the director. Approval of an ongoing plan for the payment of dividends or other distributions must be conditioned upon the retention, at the time of each payment, of capital or surplus in excess of amounts specified by, or determined in accordance with formulas approved by, the director.