S.C. Code Ann. § 38-90-440 – License to transact business in State; contents of application; fees; foreign corporations

(A) A SPFC, when permitted by its organizational documents, may apply to the director for a license to transact insurance or reinsurance business as authorized by this article. A SPFC only may insure or reinsure the risks of its counterparty. Notwithstanding another provision of this article, a SPFC may purchase reinsurance to cede the risks assumed under the SPFC contract as approved by the director.
(B) To transact business in this State a SPFC shall:
1. (1) obtain from the director a license authorizing it to conduct insurance or reinsurance business, or both, in this State;
2. (2) hold at least one management meeting each year in this State;
3. (3) maintain its principal place of business in this State;
4. (4) appoint a resident registered agent to accept service of process and to otherwise act on its behalf in this State. If the registered agent, with reasonable diligence, is not found at the registered office of the SPFC, the director must be an agent of the SPFC upon whom any process, notice, or demand may be served;
5. (5) provide such documentation of the insurance securitization as requested by the director immediately upon closing of the transaction, including:
  1. (a) an opinion of legal counsel with respect to compliance with this article and any other applicable laws as of the effective date of the transaction; and
  2. (b) a statement under oath of its president and secretary showing its financial condition; and
6. (6) provide a complete set of the documentation of the insurance securitization to the director shortly following closing of the transaction.
(C) A complete SPFC application must include the following:
1. (1) a certified copy of its organizational documents; and
2. (2) evidence of:
  1. (a) the amount and liquidity of its assets relative to the risks to be assumed;
  2. (b) the adequacy of the expertise, experience, and character of the person or persons who manages it;
  3. (c) the overall soundness of its plan of operation;
  4. (d) other factors considered relevant by the director in ascertaining whether the proposed SPFC is able to meet its policy obligations; and
  5. (e) the applicant SPFC's financial condition, including the source and form of the minimum capitalization to be contributed to the SPFC.
3. (3) A plan of operation, consisting of a description of or statement of intent with respect to the contemplated insurance securitization, the SPFC contract, and related transactions, which must include:
  1. (a) draft documentation or, at the discretion of the director, a written summary of all material agreements that are entered into to effectuate the SPFC contract and, before effecting such, the insurance securitization, to include the names of the counterparty, the nature of the risks being assumed, the proposed use of protected cells, if any, and the maximum amounts, purpose, and nature and the interrelationships of the various transactions required to effectuate the insurance securitization;
  2. (b) the source and form of additional capitalization to be contributed to the SPFC;
  3. (c) the proposed investment strategy of the SPFC;
  4. (d) a description of the underwriting, reporting, and claims payment methods by which losses covered by the SPFC contract are reported, accounted for, and settled; and
  5. (e) a pro forma balance sheet and income statement illustrating various stress case scenarios for the performance of SPFC under the SPFC contract.
4. (4) Biographical affidavits in NAIC format of all of the prospective SPFC's officers and directors, providing 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 of this title, together with other biographical information as the director may request.
5. (5) An affidavit from the applicant SPFC verifying:
  1. (a) the applicant SPFC meets the provisions of this article;
  2. (b) the applicant SPFC operates only pursuant to the provisions in this article;
  3. (c) the applicant SPFC's investment strategy reflects and takes into account the liquidity of assets and the reasonable preservation, administration, and asset management of such assets relative to the risks associated with the SPFC contract and the insurance securitization transaction;
  4. (d) the securities proposed to be issued are valid legal obligations that are either properly registered with the Securities Commissioner or constitute an exempt security or form part of an exempt transaction pursuant to Section 35-1-310 or 35-1-320; and
  5. (e) unless otherwise exempted by the director, the trust agreement, the trusts holding assets that secure the obligations of the SPFC under the SPFC contract, and the SPFC contract with the counterparty in connection with the contemplated insurance securitization are structured pursuant to the provisions in this article.
6. (6) Any other statements or documents required by the director to evaluate and complete the licensing of the SPFC.
(D) In addition to the information required by subsection (C), and to the provisions of Section 38-90-480, if a protected cell is used, an applicant SPFC shall file with the director:
1. (1) a business plan demonstrating how the applicant accounts for the loss and expense experience of each protected cell at a level of detail found to be sufficient by the director, and how it reports the experience to the director;
2. (2) a statement acknowledging that all financial records of the SPFC, including records pertaining to any protected cells, must be made available for inspection or examination by the director;
3. (3) all contracts or sample contracts between the SPFC and any counterparty, related to each protected cell; and
4. (4) a description of the expenses allocated to each protected cell.
(E) Information submitted pursuant to this subsection is confidential and is subject to Section 38-90-610.
(F) Section 38-13-60 applies to examinations, investigations, and processing conducted pursuant to the authority of this article.
(G) To transact insurance or reinsurance business in this State, a SPFC shall pay to the department:
1. (1) a nonrefundable fee of two hundred dollars for processing its application for license. In addition, the director may retain legal, financial, and examination services from outside the department to examine and investigate the application, the reasonable cost of which may be charged against the applicant. The director also may use internal resources to examine and investigate the application based upon an hourly rate for the services performed or the usual and customary fee charged by the financial services industry for similar work subject to a minimum fee of twelve thousand dollars, six thousand dollars of which is payable upon filing of the application and the remainder upon licensure;
2. (2) a license fee for the year of registration of three hundred dollars and an annual renewal fee of five hundred dollars;
3. (3) an annual review fee of twenty-four hundred dollars or, if higher, the actual cost as determined by the director; and
4. (4) premium taxes as required by this article.
(H) The director may grant a license authorizing the SPFC to transact insurance or reinsurance business as a SPFC in this State until March first, at which time the license may be renewed, upon finding that the:
1. (1) proposed plan of operation provides a reasonable and expected successful operation;
2. (2) terms of the SPFC contract and related transactions comply with this article;
3. (3) proposed plan of operation is not hazardous to any counterparty;
4. (4) commissioner of the state of domicile of each counterparty has notified the director in writing or otherwise provided assurance satisfactory to the director that it has approved or nondisapproved the transaction; and
5. (5) the certificate of authority authorizing the SPFC to transact business is limited only to the insurance or reinsurance activities that the SPFC is allowed to conduct pursuant to this article.
(I) In evaluating the expectation of a successful operation, the director shall consider, among other factors, whether the proposed SPFC, and its management are of known good character and reasonably believed not to be affiliated, directly or indirectly, through ownership, control, management, reinsurance transactions, or other insurance or business relations, with a person known to have been involved in the improper manipulation of assets, accounts, or reinsurance.
(J) A foreign or alien corporation or limited liability company, upon approval of the director, may become a domestic SPFC by complying with all of the provisions of this article and by filing with the Secretary of State its organizational documents, together with appropriate amendments to it, as may be adopted pursuant to the provisions of this article to bring these organizational documents into compliance with this article. After this is accomplished, the foreign or alien corporation or limited liability company is entitled to the necessary or appropriate certificates or licenses to transact business as a SPFC in this State and is subject to the authority and jurisdiction of this State. In connection with this redomestication, the director may waive any requirements for public hearings. It is not necessary for a corporation or limited liability company redomesticating into this State to merge, consolidate, transfer assets, or otherwise engage in another reorganization, other than as specified in this section.