HAR §16-17-11. Additional deposit requirement

(a) Whenever the commissioner deems the financial condition or change in business plan of a captive warrants additional security, the commissioner may require the captive to deposit with the commissioner, in trust for the captive, cash, securities approved by the commissioner, or an irrevocable letter of credit issued by a bank chartered by the State of Hawaii or a member bank of the Federal Reserve System. (b) The commissioner shall return the captive insurance company's deposit or letter of credit if the captive ceases doing any business, provided the commissioner is satisfied that all obligations of the company have been discharged. [Eff 5/13/91; am and comp 3/12/01; am and comp 08/17/19] (Auth: HRS §§431:19-114, 431:19-115) (Imp: HRS §§431:19-104, 431:19-105, 431:19-115) §16-17-11.1 Risk-based capital regulatory action guidelines for risk retention captives. Risk retention captives subject to the risk-based capital requirements pursuant to sections 431:3-401 to 431:3- 408, Hawaii Revised Statutes, may petition the commissioner to waive any risk-based capital regulatory action requirement if the risk retention captive can demonstrate, by filing five years of §16-17-12 17-7 projected pro forma financial statements of the risk retention captive, that any of the following exists: (1) The financial condition and support of the risk retention captive members or sponsoring organization or both is evidenced by the members or sponsoring organization or both maintaining: (A) An investment grade rating from a nationally recognized statistical rating organization, or an A.M. Best rating A- or higher; or (B) Equity equal to or greater than $100 million, or equity equal to or greater than twenty times the risk retention captive’s largest net retained per occurrence limit, as evidenced by the filing of at least the five most recent years of audited financial statements of the members or sponsoring organization, or both. (2) The risk retention captive’s certificate of authority is dated prior to January 1, 2011, and based upon review of the risk retention captive’s five most recent years of successful operating history, the commissioner issues a written exemption from the mandatory risk-based capital action requirements. [Eff and comp 08/18/16; am and comp 08/17/19] (Auth: HRS §§ 431:19-107, 431:19-114, 431:19-115) (Imp: HRS §431:19-107) §16-17-12 Availability and retention of work papers of the independent certified public accountant. (a) Each captive shall require its independent certified public accountant to make available for review by the commissioner or appointed agent work papers prepared in the conduct of the annual statement and the audit of the captive. The captive shall require that the independent certified public §16-17-12 17-8 accountant retain the audit work papers for a period of not less than seven years after the period being reported. (b) The review conducted in subsection (a) shall be considered an investigation, and all work papers obtained during the course of that investigation shall be confidential in accordance with the captive insurance code. The captive shall require that the independent certified public accountant provide photocopies of any and all work papers that the commissioner deems relevant. The commissioner may retain these copies. (c) As used in this section, "work papers" include, but are not limited to, schedules, analyses, reconciliations, abstracts, memoranda, narratives, flow charts, copies of company records, or other documents prepared or obtained by the independent certified public accountant in the conduct of the examination of the captive. [Eff 5/13/91; am and comp 3/12/01; am and comp 08/18/16; am and comp08/17/19] (Auth: HRS §§431:19-114, 431:19-115) (Imp: HRS §§431:19-102.5, 431:19-107, 431:19-108, 431:19-115) §16-17-13 Documentation required to be held by captives in Hawaii. (a) The captive shall maintain accurate, legible, and complete original, photocopied, or electronic records of the captive's operations in its principal office in Hawaii or another Hawaii location designated by the captive and approved by the commissioner. Upon the request of the commissioner to review the captive's records, the captive shall provide the commissioner timely access to the requested documents. If any document is in a foreign language, a translation under oath of the translator shall accompany the document. (b) Each captive shall designate in writing one of its service providers to serve as the captive's representative with respect to the maintenance and §16-17-13 17-9 production of the captive's records. The captive's designated representative shall be: (1) Physically present in Hawaii; and (2) Able to respond to questions about the captive, including matters related to the captive's operation, management, financial condition, investments, and insurance and reinsurance programs. (c) All captives licensed by the State shall maintain and make ready for inspection, investigation, financial surveillance, and examination by the commissioner or the commissioner’s agents any and all documents pertaining to the formation, operation, management, finances, investments, insurance, and reinsurance of each captive. These documents shall include: (1) The captive's corporate records, including all organizational documents, resolutions, and minutes of the captive's governing body; (2) Verification of the captive's principal place of business; (3) Records relative to the captive's capital, surplus, assets, and liabilities, including actuarial opinions, reports of independent certified public accountants, and supporting documentation; (4) The captive's business plan and plan of operation, including changes in management, ownership, qualifications of officers and directors, service providers, and strategic investment policy; (5) The captive's correspondence and filings with the commissioner and insurance division staff and with other jurisdictions; (6) All executed agreements materially affecting the captive's business, including insurance policies and reinsurance bordereau; and (7) Any other information the commissioner deems necessary. [Eff 5/13/91; am and comp 3/12/01; am and comp 08/18/16; am and comp 08/17/19] (Auth: HRS §16-17-13 17-10 §§431:19-114, 431:19-115) (Imp: HRS §§431:19-108, 431:19-115)