Oklahoma § 36-1694 - Establishment of protected cells – Plan of operation

§ 36-1694. Establishment of protected cells – Plan of operation

A. A protected cell company may establish one or more protected

cells, with the prior written approval of the Insurance Commissioner

of a plan of operation or amendments to a plan of operation

submitted by the protected cell company with respect to each

protected cell. Upon the written approval of the Commissioner of

the plan of operation or amendments to a plan of operation, which

shall include, but not be limited to, the specific business

objectives and investment guidelines of the protected cell, the

protected cell company may, in accordance with the approved plan of

operations, attribute to the protected cell amounts both reflective

of insurance obligations with respect to its insurance business and

obligations relating to the insurance securitization and assets to

fund the obligations. Each protected cell of a protected cell

company shall have its own distinct name or designation, which shall

include the words "protected cell". The protected cell company

shall transfer all assets attributable to each protected cell to one

Oklahoma Statutes - Title 36. Insurance

or more separately established and identified protected cell

accounts bearing the name or designation of that protected cell.

Protected cell assets shall be held in the protected cell accounts

for the purpose of satisfying the obligations of that protected

cell.

B. All attributions of assets and liabilities between a

protected cell and the general account shall be in accordance with

the plan of operation approved by the Commissioner or shall be

otherwise approved by the Commissioner. Unless otherwise approved

by the Commissioner, no other attribution of assets or liabilities

shall be made by a protected cell company between the protected cell

company's general account and one or more of its protected cells.

Any attribution of assets and liabilities between the general

account and a protected cell, or from investors in the form of

principal on a debt instrument issued by a protected cell company in

connection with a protected cell company securitization, shall be in

cash or readily marketable securities with established market values

unless otherwise approved in advance in writing by the Commissioner.

C. The creation of a protected cell does not create, in respect

of that protected cell, a legal person separate from the protected

cell company. Amounts attributed to a protected cell under this

act, including assets transferred to a protected cell account, are

owned by the protected cell company and the protected cell company

may not be, nor hold itself out to be, a trustee with respect to

those protected cell assets of that protected cell account.

Notwithstanding the foregoing, the protected cell company may allow

for a security interest to attach to protected cell assets or a

protected cell account when in favor of a creditor of the protected

cell and otherwise allowed under applicable law.

D. Nothing in the Protected Cell Companies Act shall be

construed to prohibit the protected cell company from contracting

with or arranging for an investment advisor, commodity trading

advisor or other third party to manage the protected cell assets of

a protected cell, provided that all remuneration, expenses and other

compensation of the third-party advisor or manager are payable from

the protected cell assets of that protected cell and not from the

protected cell assets of other protected cells or the assets of the

protected cell company's general account. The contract shall

clearly reference the protected cell or cells for which the contract

has been arranged and shall contain a nonrecourse provision in favor

of the company that prohibits the contracting party from seeking

recourse against, or attaching the assets of the general account, or

the assets of another protected cell, to satisfy the obligations of

any one or more protected cells which are the subject of the

contract.

E. A protected cell company shall establish any administrative

and accounting procedures that are necessary to properly identify

Oklahoma Statutes - Title 36. Insurance

the one or more protected cells of the protected cell company and

the protected cell assets and protected cell liabilities

attributable to the protected cells. It shall be the duty of the

directors of a protected cell company to:

1. Keep protected cell assets and protected cell liabilities

separate and separately identifiable from the assets and liabilities

of the protected cell company's general account; and

2. Keep protected cell assets and protected cell liabilities

attributable to one protected cell separated and separately

identifiable from protected cell assets and protected cell

liabilities attributable to other protected cells.

Notwithstanding other provisions of this section, if this

section is violated, the remedy of tracing shall be applicable to

protected cell assets when commingled with protected cell assets of

other protected cells or the assets of the protected cell company's

general account. The remedy of tracing shall not be construed as an

exclusive remedy.

F. Unless otherwise approved by the Commissioner, the protected

cell company shall, when establishing a protected cell, attribute

the protected cell assets a value at least equal to the reserves and

other insurance liabilities attributed to that protected cell.

Added by Laws 2019, c. 362, § 4, eff. Nov. 1, 2019.