Vermont § 6048d - Licensing; authority

§ 6048d. Licensing; authority

• (a) A special purpose financial insurance company may reinsure the risks of a ceding insurer
  only. A special purpose financial insurance company may purchase reinsurance to cede
  the risks assumed under a reinsurance contract, subject to the prior approval of the
  Commissioner. (b) In conjunction with the issuance of a license to a special purpose financial insurance
  company, the Commissioner may issue an order that includes any provisions, terms,
  and conditions regarding the organization, licensing, and operation of the special
  purpose financial insurance company that are deemed appropriate by the Commissioner
  and that are not inconsistent with the provisions of this chapter. Except as provided
  in sections 6048l and 6048m of this subchapter, a license issued to a special purpose
  financial insurance company pursuant to this chapter and any order issued to a special
  purpose financial insurance company pursuant to this subsection shall not be revoked,
  suspended, amended, or modified other than as follows: (1) the special purpose financial insurance company consents to such revocation, suspension,
  amendment, or modification; or (2) the Commissioner makes a showing of clear and convincing evidence demonstrating that
  such revocation, suspension, amendment, or modification is necessary to avoid irreparable
  harm to the special purpose financial insurance company or to the ceding insurer. (c) To qualify for a license, a special purpose financial insurance company shall be subject,
  in addition to the requirements of subsection 6002(c) of this chapter, to the following: (1) The special purpose financial insurance company’s plan of operation shall include: (A) a complete description of all significant transactions, including reinsurance, reinsurance
  security arrangements, securitizations, related transactions or arrangements, and,
  to the extent not included in the transactions listed in this subdivision (A), a complete
  description of all parties other than the special purpose financial insurance company
  and the ceding insurer that will be involved in the issuance of special purpose financial
  insurance company securities and a description of any pledge, hypothecation, or grant
  of a security interest in any of the special purpose financial insurance company’s
  assets and in any stock or limited liability company interest in the special purpose
  financial insurance company; (B) the source and form of the special purpose financial insurance company’s capital and
  surplus; (C) the proposed investment policy of the special purpose financial insurance company; (D) a description of the underwriting, reporting, and claims payment methods by which
  losses covered by the reinsurance contract are reported, accounted for, and settled; (E) pro forma balance sheets and income statements illustrating one or more adverse case
  scenarios, as determined under criteria required by the Commissioner, for the performance
  of the special purpose financial insurance company under all reinsurance contracts;
  and (F) the proposed rate and method for discounting reserves, if the special purpose financial
  insurance company is requesting authority to discount its reserves. (2) The special purpose financial insurance company shall submit an affidavit of its president,
  a vice president, the treasurer, or the chief financial officer or, in the case of
  a special purpose financial insurance company formed as a limited liability company
  or as a reciprocal insurer, of an individual authorized by the governing board that
  includes the following statements, to the best of such person’s knowledge and belief
  after reasonable inquiry: (A) the proposed organization and operation of the special purpose financial insurance
  company comply with all applicable provisions of this chapter; (B) the special purpose financial insurance company’s investment policy reflects and takes
  into account the liquidity of assets and the reasonable preservation, administration,
  and management of such assets with respect to the risks associated with the reinsurance
  contract and the insurance securitization transaction; and (C) the reinsurance contract and any arrangement for securing the special purpose financial
  insurance company’s obligations under such reinsurance contract, including any agreements
  or other documentation to implement such arrangement, comply with the provisions of
  this subchapter. (3) The application shall include copies of all agreements and documentation described
  in subdivision (1) of this subsection (c) unless otherwise approved by the Commissioner
  and any other statements or documents required by the Commissioner to evaluate the
  special purpose financial insurance company’s application for licensure. (4) The application shall include an opinion of qualified legal counsel, in a form acceptable
  to the Commissioner, that the offer and sale of any special purpose financial insurance
  company securities complies with all applicable registration requirements or applicable
  exemptions from or exceptions to such requirements of the federal securities laws
  and that the offer and sale of securities by the special purpose financial insurance
  company itself comply with all registration requirements or applicable exemptions
  from or exceptions to such requirements of the securities laws of this State. Such
  opinions shall not be required as part of the application if the special purpose financial
  insurance company includes a specific statement in its plan of operation that such
  opinions will be provided to the Commissioner in advance of the offer or sale of any
  special purpose financial insurance company securities. (d) The Commissioner may grant a license, which shall be valid through the next April
  1 following the date of initial issuance and may be renewed annually thereafter, authorizing
  the special purpose financial insurance company to transact reinsurance business as
  a special purpose financial insurance company in this State upon finding that: (1) the proposed plan of operation provides for a reasonable and expected successful operation; (2) the terms of the reinsurance contract and related transactions comply with this subchapter; (3) the proposed plan of operation is not hazardous to any ceding insurer; and (4) the insurance regulator of the state of domicile of each ceding insurer has notified
  the Commissioner in writing or otherwise has provided assurance satisfactory to the
  Commissioner that it has approved or has not disapproved the transaction, provided
  that the Commissioner shall not be precluded from issuing a license to a special purpose
  financial insurance company in the event that the insurance regulator of the state
  of domicile of a ceding insurer has not responded with respect to all or any part
  of the transaction. (e) The special purpose financial insurance company shall provide the Commissioner with
  a copy of a complete set of executed documentation of an insurance securitization
  no later than 30 days after the closing on the transactions for such securitization. (f) Subdivision 6002(c)(3) of this chapter shall apply to all information submitted pursuant
  to subsections (c) and (e) of this section and to any order issued to the special
  purpose financial insurance company pursuant to subsection (b) of this section. (Added 2007, No. 49, § 17; amended 2013, No. 29, § 55, eff. May 13, 2013; 2025, No. 23, § 13, eff. July 1, 2025.)