Oklahoma § 36-1695 - Assets and liabilities of protected cells – Protected

§ 36-1695. Assets and liabilities of protected cells – Protected

cell income – Insurance securitization.

A. The protected cell assets of any protected cell shall not be

charged with liabilities arising out of any other business the

protected cell company may conduct. All contracts or other

documentation reflecting protected cell liabilities shall clearly

indicate that only the protected cell assets are available for the

satisfaction of those protected cell liabilities.

B. Unless otherwise approved by the Insurance Commissioner,

assets attributed to a protected cell shall be valued at their fair

value on the date of valuation.

C. The income, gains and losses, realized or unrealized, from

protected cell assets and protected cell liabilities shall be

credited to or charged against the protected cell without regard to

other income, gains or losses of the protected cell company,

including income, gains or losses of other protected cells. Amounts

attributed to any protected cell and accumulations on the attributed

amounts may be invested and reinvested without regard to any

requirements or limitations imposed on investments of insurance

companies domiciled in this state and the investments in any

protected cell or cells may not be taken into account in applying

the investment limitations otherwise applicable to the investments

of the protected cell company, subject to any restrictions that may

Oklahoma Statutes - Title 36. Insurance

be imposed by the Commissioner in accordance with Section 9 of this

act.

D. As permitted by the Commissioner, a protected cell company

may, in respect of any of its protected cells, engage in fully

funded indemnity triggered and/or fully funded nonindemnity

triggered insurance securitization to support in full the protected

cell exposures attributable to that protected cell. A protected

cell company insurance securitization that is nonindemnity triggered

shall qualify as an insurance securitization under the terms of this

section only after the Commissioner, in accordance with the

authority granted under Section 9 of this act, adopts regulations

addressing the methods of funding of the portion of the risk that is

not indemnity-based, accounting, disclosure, risk-based capital

treatment, and assessing risks associated with those

securitizations. A protected cell company insurance securitization

that is not fully funded, whether indemnity triggered or

nonindemnity triggered, is prohibited. Protected cell assets may be

used to pay interest or other consideration on any outstanding debt

or other obligation attributable to that protected cell, and nothing

in this section shall be construed or interpreted as preventing a

protected cell company from entering into a swap agreement or other

transaction for the account of the protected cell that has the

effect of guaranteeing that interest or other consideration.

E. In all protected cell company insurance securitizations, the

contracts or other documentation effecting the transaction shall

contain provisions identifying the protected cell to which the

transaction will be attributed. In addition, the contracts or other

documentation shall clearly disclose that the assets of that

protected cell, and only those assets, are available to pay the

obligations of that protected cell. Notwithstanding the foregoing,

and subject to the provisions of this title and any other applicable

law or rules, the failure to include that language in the contracts

or other documentation shall not be used as the sole basis by

creditors, reinsurers or other claimants to circumvent the

provisions of this section.

F. At the cessation of business of a protected cell, and in

absence of any placement under administrative supervision or order

of conservation, rehabilitation or liquidation attributable to that

protected cell or the protected cell company, the protected cell

company shall voluntarily close out the protected cell account in

accordance with a plan approved by the Commissioner.

G. A protected cell company shall only be authorized to

attribute to a protected cell account the insurance obligations

relating to the protected cell company's general account. Under no

circumstances shall a protected cell be authorized to issue

insurance or reinsurance contracts directly to policyholders or

Oklahoma Statutes - Title 36. Insurance

reinsureds or have any obligation to the policyholders or reinsureds

of the protected cell company's general account.

Added by Laws 2019, c. 362, § 5, eff. Nov. 1, 2019.