(A) A SPFC may establish and maintain one or more protected cells to insure or reinsure risks of one or more SPFC contracts with a counterparty, subject to the following conditions:

1. (1) each protected cell must be accounted for separately on the books and records of the SPFC to reflect the financial condition and results of operations of the protected cell, net income or loss, dividends or other distributions to the counterparty for the SPFC contract with each cell, and other factors as may be provided in the SPFC contract or required by the director;
2. (2) the assets of a protected cell must not be chargeable with liabilities arising out of another SPFC contract the SPFC may enter into with the counterparty;
3. (3) a sale, an exchange, or another transfer of assets may not be made by the SPFC between or among any of its protected cells without the consent of the director and each protected cell;
4. (4) except as otherwise contemplated in the SPFC contract and related transaction documents, a sale, an exchange, a transfer of assets, a dividend, or a distribution may not be made from a protected cell to a counterparty without the director's approval and may not be approved if the sale, exchange, transfer, dividend, or distribution would result in insolvency or impairment with respect to a protected cell;
5. (5) a SPFC annually shall file with the director financial reports the director requires, which must include, but are not limited to, accounting statements detailing the financial experience of each protected cell;
6. (6) a SPFC shall notify the director in writing within ten business days of a protected cell that is insolvent or otherwise unable to meet its claims payment or expense obligations;
7. (7) a SPFC contract with a protected cell does not take effect without the director's prior written approval, and the addition of each new protected cell constitutes a change in the business plan requiring the director's prior written approval. The director may retain legal, financial, and examination services from outside the department to examine and investigate the application for a protected cell, the reasonable cost of which may be charged against the applicant, or the director may use internal resources to examine and investigate the application the reasonable cost of which may be charged against the applicant up to a maximum of twelve thousand dollars.