S.C. Code Ann. § 38-90-840 – Capitalization requirements

(A)
1. (1) The director may not issue a license to a South Carolina coastal captive insurance company unless the company possesses and maintains unimpaired paid-in capital of not less than one million dollars; however, in the case of a South Carolina coastal captive insurance company formed as a sponsored captive insurance company that does not assume any risk, where the risks insured by the protected cells are homogeneous, the director may reduce this amount to an amount not less than five hundred thousand dollars.
2. (2)
  1. (a) Except for a South Carolina coastal captive insurance company formed as a sponsored captive insurance company that does not assume any risk, the capital must be in the form of cash, cash equivalent, or an irrevocable letter of credit issued by a bank chartered by this State or a member bank of the Federal Reserve System with a branch office in this State or as approved by the director.
  2. (b) For a South Carolina coastal captive insurance company formed as a sponsored captive insurance company that does not assume any risk, the capital also may be in the form of other high quality securities as approved by the director.
(B) For purposes of subsection (A), the director may issue a license expressly conditioned upon the South Carolina coastal captive insurance company providing to the director satisfactory evidence of possession of the minimum required unimpaired paid-in capital. Until this evidence is provided, the captive insurance company may not issue a policy, assume any liability, or otherwise provide coverage. The director summarily may revoke the conditional license without legal recourse by the company if satisfactory evidence of the required capital is not provided within a maximum period of time, not to exceed one year, to be established by the director at the time the conditional license is issued.
(C) The director may prescribe additional capital or net assets based upon the type, volume, and nature of insurance business transacted. Contributions in connection with these prescribed additional net assets or capital must be in the form of:
1. (1) cash;
2. (2) cash equivalent;
3. (3) an irrevocable letter of credit issued by a bank chartered by this State or a member bank of the Federal Reserve System with a branch office in this State or as approved by the director.
(D) Section 38-90-100(C) does not apply and loans to its parent company and affiliates are prohibited.
(E)
1. (1) A South Carolina coastal 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.
2. (2) A captive insurance company incorporated as a nonprofit corporation may not make any distributions without the prior approval of the director.
(F) An irrevocable letter of credit, which is issued by a financial institution other than a bank chartered by this State or a member bank of the Federal Reserve System, shall meet the same standards as an irrevocable letter of credit which has been issued by either entity.