1. (a) An applicant seeking to redomesticate an existing captive insurance company or to form a new captive insurance company must provide the following information to the department:

   1. (1) the name of the entity, the entity's federal employer identification number, and the location and means of contacting the entity;
   2. (2) the physical location of the books and records and means of maintaining the books records;
   3. (3) the registered agent for service;
   4. (4) a list of the service providers that the captive insurance company will use, including qualified accountants, qualified actuaries, and licensed attorneys;
   5. (5) biographical affidavits for the individuals described in §6.303 of this title (relating to Captive Insurance Company Biographical Information) who provide necessary functions to operate and govern the captive insurance company;
   6. (6) the name of the ultimate controlling person;
   7. (7) proposed organizational documents for the captive insurance company;
   8. (8) a description of how the captive insurance company fits into the affiliated group's risk management plan and the group's significant operations in the State of Texas;
   9. (9) if the application is for the redomestication of a captive insurance company, information listed in subsection (b) of this section;
   10. (10) if the applicant proposes to insure controlled unaffiliated business, the information listed in subsection (c) of this section;

   11. (11) a plan of operation, including:

       1. (A) the asset page; liability, capital, and surplus page; income statement page; and cash flow page for the applicant from the Texas Captive Annual Report that are certified by two principal officers who have submitted biographical affidavits and:

          1. (i) four years of financial projections, with a disclosure of the assumptions the applicant is using to develop the projected financial statements; and
          2. (ii) if applicable, the most recent three years of operational results, in United States dollars; however, if the applicant has not been in operation for three or more years, the applicant must submit operational results, in United States dollars, for each year it has been in operation;
       2. (B) a description of the lines of business and perils that the captive insurance company proposes to cover and the limits of coverage;
       3. (C) a list of the affiliates that the applicant proposes to insure;
       4. (D) a description of the reinsurance programs proposed including the lines of business that are affected, limits of reinsurance coverage, and the counterparties that will be involved;
       5. (E) an organizational chart listing all affiliates of the applicant's affiliated group;
       6. (F) agreements with any captive management companies the applicant proposes to use;
       7. (G) a copy of the applicant's investment strategy;
       8. (H) an explanation of how the applicant intends to handle profits, including a statement about how dividends will be evaluated;
       9. (I) an independent actuarial report that evaluates the feasibility of the applicant's plan of operation;
       10. (J) details of how the parent entity will maintain and support the captive insurance company, including ensuring compliance with Texas statutes and rules; and
       11. (K) evidence of the financial wherewithal of the affiliate group, including affiliated persons, to retain the risk using the captive insurance company; and
   12. (12) an affidavit by two principal officers or members of the governing committee who have submitted biographical affidavits that the information provided in paragraphs (1) - (11) of this subsection is true and correct.

2. (b) An application for a redomestication must include:

   1. (1) the applicant's current domicile jurisdiction;

   2. (2) if the applicant has been examined:

      1. (A) the date of the most recent examination; and
      2. (B) a copy of the most recent examination report;
   3. (3) information required in §6.407 and §6.408 of this title (relating to Loans to Affiliates and Letters of Credit) for existing loans to affiliates; and
   4. (4) a letter of no objection or release from the captive insurance company's current domicile.

3. (c) If the applicant proposes to insure a controlled unaffiliated business, the following documentation must be provided with the application:

   1. (1) copies of the agreement(s) that evidence an existing contractual relationship between the parties, one of which must be a captive insurance company affiliate;
   2. (2) a description and any supporting documentation that evidences that the captive insurance company affiliate bears the risk of a potential financial loss associated with the contract beyond the affiliate having to pay a fee; and
   3. (3) a description and any supporting policies that document that a captive insurance company affiliate controls the risk management function of the controlled unaffiliated business.
4. (d) The department may accept similar information prepared in a similar format for a nonaffiliated third party, including a regulator, bank, or similar user, to the extent that the information satisfies one or more of the requirements in subsections (a) - (c) of this section to the satisfaction of the commissioner.

5. (e) The department will review the information submitted under subsections (a) - (d) of this section. The applicant may submit amended documents and information during the review process.

   1. (1) If the department determines that the documents and information meet the standards required for a certificate of authority under Insurance Code §964.059 and this chapter, the department will issue a certificate of general good to the applicant. The certificate of general good does not bind the Texas Secretary of State to accept any subsequent filing by the applicant, nor does it bind the department to issue a certificate of authority.
   2. (2) If the commissioner determines that the documents and information do not to meet the standards required for a certificate of authority under Insurance Code §964.059 and this chapter, the commissioner will deny the application. Following denial of the application, the applicant may proceed under Insurance Code §964.059(c).

6. (f) If the applicant receives a certificate of general good, the applicant must submit the following documentation to the department to proceed with the licensing process:

   1. (1) a certificate of filing from the Texas Secretary of State indicating that the entity has been formed or redomesticated to Texas as an entity under the Business Organizations Code, other than a risk retention group or general partnership, for the purpose of providing captive insurance;

   2. (2) an affidavit satisfactory to the commissioner from the incorporators, organizers, or officers of the captive insurance company stating that:

      1. (A) the capital and surplus are the bona fide property of the company; and
      2. (B) the certificate of filing is true and correct; and

   3. (3) if necessary, an affidavit by the incorporators, organizers, or officers of the captive insurance company stating:

      1. (A) the number of shares or other type of equity instrument without par value that are subscribed; and
      2. (B) the actual consideration received by the captive insurance company for those shares or other type of equity instrument.
7. (g) The applicant may submit a written request for the commissioner to waive or grant a conditional exception to any portion of the application or information required under this section. At the commissioner's sole discretion, the commissioner may grant the waiver in writing, if the commissioner determines the requirement or information is not applicable or provides no additional value in reviewing the application. At the commissioner's sole discretion, the commissioner may grant a conditional exception that will be listed in the certificate of authority issued as described in §6.203(b) of this title (relating to Issuance of Captive Insurance Company Certificate of Authority.)

Source Note:The provisions of this §6.202 adopted to be effective April 27, 2014, 39 TexReg 3232.