TCA § 56-13-107 — Organization of captive insurance company

A pure captive insurance company may be incorporated as a stock insurer with its capital divided into shares and held by the stockholders, as a nonprofit corporation with one (1) or more members, or as a limited liability company. An association captive insurance company, an industrial insured captive insurance company, or a risk retention group may be: Incorporated as a stock insurer with its capital divided into shares and held by the stockholders; Incorporated as a mutual corporation; Organized as a reciprocal insurer in accordance with chapter 16 of this title; or Organized as a limited liability company. A captive insurance company incorporated or organized in this state shall have not less than three (3) incorporators or three (3) organizers of whom not less than one (1) shall be a resident of this state. The capital stock of a captive insurance company incorporated as a stock insurer may be authorized with no par value. In the case of a captive insurance company formed as a: Corporation, at least one (1) of the members of the board of directors shall be a resident of this state; Reciprocal insurer, at least one (1) of the members of the subscribers' advisory committee shall be a resident of this state; and Limited liability company, at least one (1) of the members or managers shall be a resident of this state. Captive insurance companies formed as corporations, limited liability companies or as nonprofit corporations under this chapter shall have the privileges provided in and be subject to title 48 and this chapter, as applicable; provided, that this chapter shall control in the event of a conflict. Captive insurance companies formed as partnerships under this chapter shall have the privileges provided in and be subject to title 61 and this chapter, as applicable; provided, that this chapter shall control in the event of a conflict. Mergers, consolidations, conversions, mutualizations, acquisitions, redomestications, or other similar transactions of captive insurance companies shall be subject to the same provisions of this title applicable to traditional insurance companies, except that: The commissioner may, upon request of an insurer party to a merger authorized under this subsection (g), waive such applicable requirements; The commissioner may waive or modify the requirements for public notice and hearing in accordance with rules which the commissioner may adopt addressing categories of transactions. If a notice of public hearing is required, but no one requests a hearing ten (10) days before the day set for the hearing, then the commissioner may cancel the hearing; and An alien insurer may be a party to a merger authorized under this subsection (g); provided, that the requirements for a merger between a captive insurance company and a foreign insurer under this title shall apply to a merger between a captive insurance company and an alien insurer under this subsection (g). For the purposes of this subdivision (g)(3), an alien insurer shall be treated as a foreign insurer under this title and the jurisdiction of the alien shall be the equivalent of a state. Captive insurance companies formed as reciprocal insurers under this chapter shall have the privileges provided in and be subject to chapter 16 of this title in addition to this chapter; provided, that this chapter shall control in the event of a conflict. To the extent a reciprocal insurer is made subject to other provisions of this title pursuant to chapter 16, such provisions shall not be applicable to a reciprocal insurer formed under this chapter unless such provisions are expressly made applicable to captive insurance companies under this chapter. The articles of incorporation or bylaws of a captive insurance company formed as a corporation may authorize a quorum of its board of directors to consist of no fewer than one-third (1/3) of the fixed or prescribed number of directors. The subscribers' agreement or other organizing document of a captive insurance company formed as a reciprocal insurer may authorize a quorum of its subscribers' advisory committee to consist of no fewer than one-third (1/3) of the number of its members. With the commissioner's approval, a captive insurance company organized as a stock insurer may convert to a nonprofit corporation with one (1) or more members by filing with the secretary of state an election for such conversion; provided, that: The election shall certify that, at the time of the company's original organization and at all times thereafter, the company has conducted its business in a manner not inconsistent with a nonprofit purpose as permitted by title 48, chapter 53; and At the time of the filing of its election, the company shall file with both the commissioner and the secretary of state amended and restated articles of incorporation consistent with this chapter and with title 48, duly authorized by the corporation. Title 48, chapter 61 shall not apply to a captive insurance company that is a nonprofit corporation in the case of any merger in which a captive insurance company merges with and into a captive insurance company organized as a nonprofit corporation under title 48 where the latter is the surviving corporation. In the case of a captive insurance company formed as a limited liability company, a reciprocal insurance company or mutual insurance company, any proxy executed by the members, subscribers, and policyholders of each shall be valid if executed and transmitted in compliance with title 48.