TITLE 23 -- PUBLIC UTILITIES AND REGULATED INDUSTRIES...Subtitle 3. Insurance...Chapter 63 -- INSURANCE COMPANIES GENERALLY...Subchapter 16. Licensing and Regulation of Captive Insurers

23-63-1606

Incorporation

(a) A producer reinsurance captive insurance company, pure captive insurance company, or a sponsored captive insurance company must be incorporated as a stock insurer with its capital divided into shares and held by the stockholders.

(b) An association captive insurance company or an industrial insured captive insurance company may be:

(1) Incorporated as a stock insurer with its capital divided into shares and held by the stockholders;

(2) Incorporated as a mutual insurer without capital stock, the governing body of which is elected by the member organizations of its association; or

(3) Organized as a reciprocal insurer under s 23-70-101 et seq.

(c) A captive insurance company may not have fewer than three (3) incorporators of whom not fewer than two (2) must be residents of this state.

(d) Before the articles of incorporation of a captive insurance company formed as a corporation are transmitted to the Insurance Commissioner, the incorporators shall petition the commissioner to issue a certificate setting forth a finding that the establishment and maintenance of the proposed corporation will promote the general good of the state. In arriving at this finding, the commissioner shall consider:

(1) The character, reputation, financial standing, and purposes of the incorporators;

(2) The character, reputation, financial responsibility, insurance experience, and business qualifications of the officers and directors; and

(3) Other aspects as the commissioner considers advisable.

(e) The articles of incorporation, the certificate issued under subsection (d) of this section, and the organization fees required by s 23-63-1602(d), must be transmitted to the commissioner, who shall record both the articles of incorporation and the certificate.

(f) The organizers of a captive insurance company formed as a reciprocal insurer shall petition the commissioner to issue a certificate setting forth the commissioner's finding that the establishment and maintenance of the proposed association will promote the general good of the state. In arriving at this finding the commissioner shall consider:

(1) The character, reputation, financial standing, and purposes of the organizers;

(2) The character, reputation, financial responsibility, insurance experience, and business qualifications of the attorney in fact; and

(3) Other aspects the commissioner considers advisable.

(g)(1) The alien captive insurance company of a captive insurance company licensed as a branch captive insurance company shall petition the commissioner to issue a certificate setting forth the commissioner's finding that, after considering the character, reputation, financial responsibility, insurance experience, and business qualifications of the officers and directors of the alien captive insurance company, the licensing and maintenance of the branch operations will promote the general good of the state.

(2) The alien captive insurance company may register to do business in this state after the commissioner's certificate has been issued.

(h) The capital stock of a captive insurance company incorporated as a stock insurer must be issued at not less than par value.

(i) At least one (1) of the members of the board of directors of a captive insurance company formed as a corporation in this state must be a resident of this state.

(j) At least one (1) of the members of the subscribers' advisory committee of a captive insurance company formed as a reciprocal insurer must be a resident of this state.

(k)(1) A captive insurance company formed as a corporation under this subchapter has the privileges of and is subject to the general corporation law of this state and applicable provisions of this subchapter.

(2) If a conflict occurs between general corporation law and this subchapter, the latter controls.

(3)(A) The Arkansas Insurance Code concerning mergers, consolidations, conversions, mutualizations, and redomestications apply in determining the procedures to be followed by a captive insurance company in carrying out any of those transactions.

(B) The commissioner may waive or modify the requirements for public notice and hearing in accordance with regulations which the commissioner may promulgate addressing categories of transactions.

(C) If a notice of public hearing is required but no one requests a hearing, the commissioner may cancel the hearing.

(l)(1)(A) A captive insurance company formed as a reciprocal insurer under this subchapter is subject to s 23-70-101 et seq. and applicable provisions of this subchapter.

(B) If a conflict occurs between s 23-70-101 et seq. and this subchapter, the latter controls.

(C) To the extent a reciprocal insurer is made subject to the Arkansas Insurance Code, s 23-60-101 et seq., under s 23-70-101 et seq., the Arkansas Insurance Code, is not applicable to a reciprocal insurer formed under this subchapter, unless expressly made applicable to a captive insurance company by this subchapter.

(2) In addition to subdivision (l)(1) of this section, a captive insurance company organized as a reciprocal insurer that is an industrial insured group is subject to s 23-70-101 et seq. and applicable provisions of the Arkansas Insurance Code.

(m) The articles of incorporation or bylaws of a captive insurance company may authorize a quorum of a board of directors to consist of no fewer than one-third ( 1/3) of the fixed or prescribed number of directors under s 4-27-824(B).

(n) The subscribers' agreement or other organizing document of a captive insurance company formed as a reciprocal insurer may authorize a quorum of a subscribers' advisory committee to consist of no fewer than one-third ( 1/3) of the number of its members.