Branch Captive Insurance Companies

V.S.A. tit. 8, ch. 141, subch. 3

in effect

8 V.S.A. § 6041 Establishment of a branch captive insurance company

6041. Establishment of a branch captive insurance company (a) A branch captive insurance company may be established in this State in accordance with the provisions of this chapter, including subdivision 6002(c)(3) of this chapter. In addition to the general provisions of this chapter, the provisions of this subchapter shall apply to branch captive insurance companies. (b) No branch captive insurance company shall do any insurance business in this State unless it: (1) maintains the principal place of business for its branch operations in this State; (2) appoints a principal representative in this State who is a resident of this State; and (3) designates the Commissioner as its agent of such branch captive insurance company upon whom any process, notice, or demand may be served. (c) As used in this section, “principal representative” shall mean a person designated as such by the branch captive insurance company as its principal representative on such forms and with such information as required by the Commissioner. (d) The provisions of subsection 6006(f) of this title shall not apply to branch captive insurance companies formed in this State. Added 2003, No. 55, § 9; amended 2013, No. 29, § 51, eff. May 13, 2013; 2017, No. 90 (Adj. Sess.), § 4, eff. March 8, 2018; 2023, No. 110 (Adj. Sess.), § 14, eff. July 1, 2024.

8 V.S.A. § 6042 Definitions

6042. Definitions As used in this subchapter, unless the context requires otherwise: (1) “Alien captive insurance company” means any insurance company formed to write insurance business for its parents and affiliates and licensed pursuant to the laws of an alien jurisdiction that imposes statutory or regulatory standards in a form acceptable to the Commissioner on companies transacting the business of insurance in such jurisdiction. (2) “Branch business” means any insurance business transacted by a branch captive insurance company in this State. (3) “Branch captive insurance company” means any alien captive insurance company licensed by the Commissioner to transact the business of insurance in this State through a business unit with a principal place of business in this State. (4) “Branch operations” means any business operations of a branch captive insurance company in this State. Added 2003, No. 55, § 9.

8 V.S.A. § 6043 (version 1) Security required

6043v1. Security required [Section 6043 shall apply to branch captive companies formed before January 1, 2009.] In the case of a branch captive insurance company, as security for the payment of liabilities attributable to the branch operations, the Commissioner shall require that either a trust fund funded by assets acceptable to the Commissioner or an irrevocable letter of credit be established and maintained in the United States for the benefit of U.S. policyholders and U.S. ceding insurers under insurance policies issued or reinsurance contracts issued or assumed by the branch captive insurance company through its branch operations. The amount of such security may be no less than the amount set forth in subdivision 6004(a)(1) of this title and the reserves on such insurance policies or such reinsurance contracts, including reserves for losses, allocated loss adjustment expenses, incurred but not reported losses, and unearned premiums with regard to business written through the branch operations; provided, however, the Commissioner may permit a branch captive insurance company that is required to post security for loss reserves on branch business by its reinsurer to reduce the funds in the trust account or the amount payable under the irrevocable letter of credit required by this section by the same amount so long as the security remains posted with the reinsurer. If the form of security selected is a letter of credit, the letter of credit must be established by, or issued or confirmed by, a bank chartered in this State or a member bank of the Federal Reserve System. Added 2003, No. 55, § 9; amended 2005, No. 36, § 15, eff. June 1, 2005; 2009, No. 42, § 25, eff. May 27, 2009.

8 V.S.A. § 6043 (version 2) Security required

6043v2. Security required [Section 6043 shall apply only to branch captive companies formed on and after January 1, 2009.] (a) No branch captive insurance company shall be issued a license unless it shall possess and thereafter maintain, as security for the payment of liabilities attributable to the branch operations: (1) an amount equal to the amount set forth in subdivision 6004(a)(1) of this title as the minimum capital requirement for a pure captive; and in addition (2) reserves on such insurance policies or such reinsurance contracts as may be issued or assumed by the branch captive insurance company through its branch operations, including reserves for losses, allocated loss adjustment expenses, incurred but not reported losses, and unearned premiums with regard to business written through the branch operations; provided, however, the Commissioner may permit a branch captive insurance company to credit against any such reserve requirement any security for loss reserves that the branch captive insurance company may post with a ceding insurer or that may be posted by a reinsurer with the branch captive insurance company, in either case so long as such security remains posted. (b) Subject to the prior approval of the Commissioner, the amounts required in subsection (a) of this section may be held in the form of: (1) a trust formed under a trust agreement and funded by assets acceptable to the Commissioner; (2) an irrevocable letter of credit issued or confirmed by a bank approved by the Commissioner; (3) with respect to the amounts required in subdivision (a)(1) of this section only, cash on deposit with the Commissioner; or (4) any combination thereof. Added 2003, No. 55, § 9; amended 2005, No. 36, § 15, eff. June 1, 2005; 2009, No. 42, § 25, eff. May 27, 2009.

8 V.S.A. § 6045 Branch captive reports

6045. Branch captive reports Prior to March 15 of each year, or with the approval of the Commissioner within 75 days after its fiscal year-end, a branch captive insurance company shall file with the Commissioner a copy of all reports and statements required to be filed under the laws of the jurisdiction in which the alien captive insurance company is formed, verified by oath of two of its executive officers or, in the case of a branch captive insurance company formed as a limited liability company or as a reciprocal insurer, of two individuals authorized by the governing board. If the Commissioner is satisfied that the annual report filed by the alien captive insurance company in its domiciliary jurisdiction provides adequate information concerning the financial condition of the alien captive insurance company, the Commissioner may waive the requirement for completion of the captive annual statement for business written in the alien jurisdiction. Added 2003, No. 55, § 9; amended 2023, No. 12, § 1, eff. May 8, 2023; 2025, No. 23, § 12, eff. July 1, 2025.

8 V.S.A. § 6046 Examination of branch captives

6046. Examination of branch captives (a) The examination of a branch captive insurance company pursuant to section 6008 of this title shall be of branch business and branch operations only, so long as the branch captive insurance company provides annually to the Commissioner a certificate of compliance, or its equivalent, issued by or filed with the licensing authority of the jurisdiction in which the branch captive insurance company is formed, and demonstrates to the Commissioner’s satisfaction that it is operating in sound financial condition in accordance with all applicable laws and regulations of such jurisdiction. (b) As a condition of licensure, the alien captive insurance company shall grant authority to the Commissioner for examination of the affairs of the alien captive insurance company in the jurisdiction in which the alien captive insurance company is formed. Added 2003, No. 55, § 9.

8 V.S.A. § 6047 Taxation of branch captives

6047. Taxation of branch captives In the case of a branch captive insurance company, the tax provided for in section 6014 of this title shall apply only to the branch business of such company. Added 2003, No. 55, § 9.

8 V.S.A. § 6047a Confidentiality

6047a. Confidentiality (a) Subdivision 6002(c)(3) and subsection 6008(c) of this title shall apply to all documents, materials, or other information, including confidential and privileged documents, examination reports, preliminary examination reports or results, working papers, recorded information, and copies thereof that are produced by, obtained by, or disclosed to the Commissioner or any other person in the course of an examination made under this subchapter. (b) In furtherance of the Commissioner’s duties, the Commissioner may share and receive documents, materials, or other information pursuant to section 22 of this title. Added 2023, No. 110 (Adj. Sess.), § 15, eff. July 1, 2024.

Source: Vermont General Assembly (legislature.vermont.gov)URL: https://legislature.vermont.gov/statutes/chapter/08/141Fetched: 10/21/2026