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House Calendar

THURSDAY, APRIL 12, 2007

100th DAY OF BIENNIAL SESSION

House Convenes at 1:00 PM

TABLE OF CONTENTS

                                                                                                               Page No.

Third Reading

S. 120  Relating to Wine Tastings and Farmers’ Markets................................ 814

Committee Bill for Second Reading

H. 541  Repeal Alternative Regulation / Small Communications Carriers.......... 814

               Rep. Marcotte for Commerce

Favorable with Amendment

H. 523  Re Moving Families Out of Poverty................................................... 814

               Rep. Haas for Human Services

               Rep. Larson for Appropriations

NOTICE CALENDAR

Favorable with Amendment

S. 91  Banking, Insurance, Securities & Health Care Administration................ 815

               Rep. Kitzmiller for Commerce

Senate Proposal of Amendment

H. 157  Home-Fermented Beverage Competitions......................................... 832

 

CONSENT CALENDAR

(See Addendum to House and Senate Calendar)

H.C.R. 101  Congratulating Katie Sullivan Teacher of the Year...................... 833

H.C.R. 102  Congratulating UVM Catamounts Men’s Basketball Team......... 833

H.C.R. 103  Honoring Former Speaker of the House Stephan Morse............ 833

H.C.R. 104  In Memory of USA Sgt. Carlton A. Clark of Sharon.................. 833

H.C.R. 105  In Memory of Donald Maley..................................................... 833

H.C.R. 106  Honoring Gary Palmer St. Albans City Fire Chief....................... 833

H.C.R. 107  Congratulating Burr & Burton Boys’ Ice Hockey Team.............. 833

H.C.R. 108  Commending Act 133 Technical Advisory Committee................ 833

H.C.R. 109  Congratulating Crossett Brook ‘Odyssey of the Mind’ Team...... 833

H.C.R. 110  In Memory of Windsor Town Clerk Gloria Tansey..................... 833

H.C.R. 111  Congratulating Windsor HS Girls’ Basketball Team,................... 833

H.C.R. 112  Congratulating Mt. Abraham UHS Eagles Baseball Team........... 834

H.C.R. 113  Congratulating Mt.Abraham UHS Girls’ Field Hockey Team...... 834

H.C.R. 114  Congratulating Carol Eckels 2007 Principal of the Year.............. 834

H.C.R. 115  Woodstock UHS Boys’ and Girls’ Nordic Ski Teams................ 834

H.C.R. 116  Congratulating Taylor Horn VT Nat’l Geographic Bee............... 834

S.C.R.   18  Honoring Robert R.J. George Newport Fire Chief...................... 834

S.C.R.   19  Reeve Lindbergh & Nathaniel Tripp NE Kingdom Citizens......... 834


 

ORDERS OF THE DAY

ACTION CALENDAR

     Third Reading

S. 120

An act relating to wine tastings and farmers’ markets.

Committee Bill for Second Reading

H. 541

     An act relating to extending the repeal of alternative regulation election by small eligible telecommunications carriers.

(Rep. Marcotte of Coventry will speak for the Committee on Commerce.)

Favorable with Amendment

H. 523

An act relating to moving families out of poverty.

(Rep. Haas of Rochester will speak for the Committee on Human Services.)

Rep. Larson of Burlington, for the Committee on Appropriations, recommends the bill be amended as follows:

First:  In Sec. 4, 33 V.S.A. § 1103(c)(5), on page 29, lines 14–17, by striking the last sentence

Second:  By striking Secs. 14 (Earned Income Tax Credit), 23 (child care subsidy), and 28 (appropriations) in their entirety

Third:  By striking Sec. 22 (child care study) and inserting a new Sec. 22 to read:

Sec. 22.  CHILD CARE REPORT

(a)  No later than January 31, 2008, the department for children and families shall report to the house committees on human services and on appropriations and the senate committees on health and welfare and on appropriations with an estimate of the funding needed to bring income eligibility guidelines to current levels; an estimate of the funding needed to bring Vermont into compliance with federal guidelines, suggesting that subsidies should be at least 75 percent of the market rate; an assessment of the positive and negative outcomes from modifying the current statewide subsidy rate to differential rates based on the market rate for the area; and an analysis of possible inflation factors with a recommendation on which factors to use once target funding levels have been met.

(b)  No later than January 31, 2008, the legislative council and joint fiscal offices shall provide a summary of innovative ideas from other states for funding investments in quality child care and of any available cost‑benefit analyses of such investments.

Fourth:  In Sec. 26(a), on page 85, line 18, by striking “April 1, 2008” and inserting in lieu thereof “July 1, 2008

Fifth:  In Sec. 27(b) on page 87, lines 2–3, by striking “April 1, 2008” and inserting in lieu thereof “July 1, 2008

Sixth:  In Sec. 27, on page 87, by striking (f) in its entirety

and by renumbering the sections to be in numerical order

(Committee vote: 9-0-2)

NOTICE CALENDAR

Favorable with Amendment

S. 91

An act relating to the department of banking, insurance, securities and health care administration.

Rep. Kitzmiller of Montpelier, for the Committee on Commerce, recommends that the House propose to the Senate that the bill be amended as follows:

First:  In Sec. 5., in the first sentence, after “directors” by striking “and approved by the commissioner” and inserting in lieu thereof “and approved by the commissioner”

Second:  After Sec. 13, by inserting four new sections to be Secs. 14, 15, 16, and 17 to read as follows:

Sec. 14.  8 V.S.A. § 6001(4) is amended to read:

(4)  “Captive insurance company” means any pure captive insurance company, association captive insurance company, sponsored captive insurance company, industrial insured captive insurance company, or risk retention group, or special purpose financial captive insurance company formed or licensed under the provisions of this chapter.  For purposes of this chapter, a branch captive insurance company shall be a pure captive insurance company with respect to operations in this state, unless otherwise permitted by the commissioner.

Sec. 15.  8 V.S.A. § 6014(c) and (e) are amended to read:

(c)  The annual minimum aggregate tax to be paid by a captive insurance company calculated under subsections (a) and (b) of this section shall be $7,500.00, and the annual maximum aggregate tax shall be $200,000.00.  The maximum aggregate tax to be paid by a sponsored captive insurance company shall apply to each protected cell only and not to the sponsored captive insurance company as a whole.  If a captive insurance company is a special purpose financial captive organized and licensed under subchapter 4 of this chapter and if such captive insurance company is subject to subsection (e) of this section as a captive insurance company under common ownership and control with one or more other captive insurance companies (collectively, the “consolidated group”), the premium tax calculated with respect to the consolidated group under subsections (a) and (b) of this section shall be allocated to each member of the consolidated group in the same proportion that the premium allocable to such member bears to the total premium of all members.  The consolidated group shall pay an aggregate premium tax equal to the greater of the sum of the premium tax allocated to the members and $7,500.00; provided: 

(1)  If the premium tax allocated to a member that is a special purpose financial captive exceeds $200,000.00, the premium tax allocated to such member shall be $200,000.00; and

(2)  If the total of premium tax allocated to all members of the consolidated group that are not special purpose financial captive insurance companies exceeds $200,000.00, the total of premium tax allocated to such members shall be $200,000.00.

* * *

(e)  Two Subject to the provisions of subsection (c) of this section, two or more captive insurance companies under common ownership and control shall be taxed, as though they were a single captive insurance company.    

Sec. 16.  8 V.S.A. § 6035 is amended to read:

§ 6035.  QUALIFICATION OF SPONSORS

A sponsor of a sponsored captive insurance company shall be an insurer licensed under the laws of any state, a reinsurer authorized or approved under the laws of any state, a captive insurance company formed or licensed under this chapter, a broker‑dealer registered with the department pursuant to chapter 150 of title 9, a financial institution as defined under subdivision 11101(32) of this title, or a financial institution holding company as defined under subdivision 11101(33) of this title, including any affiliate or subsidiary of such financial institution holding company, or any other person approved by the commissioner in the exercise of his or her discretion, after finding that the approval of a person as a sponsor is not inconsistent with the purposes of this chapterA risk retention group shall not be either a sponsor or a participant of a sponsored captive insurance company.

Sec. 17.  Subchapter 4 of chapter 141 of Title 8 is added to read:

Subchapter 4.  Special Purpose Financial Captive Insurance Companies

§ 6048a.  Applicable Law

(a)  A special purpose financial captive insurance company shall be subject to the provisions of this subchapter and to the provisions of subchapter 1 of this chapter.  In the event of any conflict between the provisions of this subchapter and the provisions of subchapter 1 of this chapter, the provisions of this subchapter shall control.

(b)  A special purpose financial captive insurance company shall be subject to all applicable rules adopted pursuant to section 6015 of this chapter that are in effect as of the effective date of this subchapter and that are promulgated after the effective date of this subchapter.

(c)  The commissioner may, by order, exempt a special purpose financial captive insurance company from any provision of this chapter or from any rule adopted pursuant to section 6015 of this chapter if the commissioner determines such provision to be inappropriate based on the special purpose financial captive insurance company’s plan of operation. 

§ 6048b.  Existing Licenses

Except as otherwise determined by the commissioner, a captive insurance company that has been licensed by the commissioner pursuant to this chapter as of the effective date of this subchapter and that is engaged in or that will be engaged in an insurance securitization shall be subject to the provisions of this subchapter as a special purpose financial captive insurance company.  The commissioner may require such captive insurance company to take any action that the commissioner determines is reasonably necessary to bring such captive insurance company into compliance with the provisions of this subchapter.  The commissioner may issue an order described in section 6048d(b) with respect to such captive insurance company.

§ 6048c.  Definitions

For purposes of this subchapter:

(1)  “Ceding insurer” means an insurance company approved by the commissioner and licensed or otherwise authorized to transact the business of insurance or reinsurance in its state or country of domicile, which cedes risk to a special purpose financial captive insurance company pursuant to a reinsurance contract.

(2)  “Insolvency” and “insolvent” for purpose of applying the provisions of chapter 145 of this title to a special purpose financial captive insurance company, mean: 

(A)  That the special purpose financial captive insurance company is unable to pay its obligations when they are due, unless those obligations are the subject of a bona fide dispute; or

(B)  The special purpose financial captive insurance company has failed to meet all criteria and conditions for solvency of the special purpose financial captive insurance company established by the commissioner by rule or order.

(3)  “Insurance securitization” and “securitization” mean a transaction or a group of related transactions, which may include capital market offerings, that are effected through related risk transfer instruments and facilitating administrative agreements where all or part of the result of such transactions is used to fund the special purpose financial captive insurance company’s obligations under a reinsurance contract with a ceding insurer and by which: 

(A)  Proceeds are obtained by a special purpose financial captive insurance company, directly or indirectly, through the issuance of securities by the special purpose financial captive insurance company or any other person; or

(B)  A person provides one or more letters of credit or other assets for the benefit of the special purpose financial captive insurance company, which the commissioner authorizes the special purpose financial captive insurance company to treat as admitted assets for purposes of the special purpose financial captive insurance company’s annual report; where all or any part of such proceeds, letters of credit, or assets, as applicable, are used to fund the special purpose financial captive insurance company’s obligations under a reinsurance contract with a ceding insurer.  The terms “insurance securitization” and “securitization” do not include the issuance of a letter of credit for the benefit of the commissioner to satisfy all or part of the special purpose financial captive insurance company’s capital and surplus requirements under section 6048g of this chapter.

(4)  “Management” means the board of directors, managing board, or other individual or individuals vested with overall responsibility for the management of the affairs of the special purpose financial captive insurance company, including but not limited to officers or other agents elected or appointed to act on behalf of the special purpose financial captive insurance company.

(5)  “Organizational document” means: 

(A)  In the case of a special purpose financial captive insurance company formed as a stock corporation, the special purpose financial captive insurance company’s articles of incorporation and bylaws; and

(B)  In the case of a special purpose financial captive insurance company formed as a limited liability company, the special purpose financial captive insurance company’s articles of organization and operating agreement. 

(6)  “Security” shall have the same meaning as defined in 9 V.S.A.

§ 5102(28), and shall also include any form of debt obligation, equity, surplus certificate, surplus note, funding agreement, derivative, or other financial instrument that the commissioner designates, by rule or order, as a “security” for purposes of this subchapter.

(7)  “Special purpose financial captive insurance company” means a captive insurance company that has received a license from the commissioner to operate as a special purpose financial captive insurance company pursuant to this subchapter.

(8)  “Reinsurance contract” means a contract between a special purpose financial captive insurance company and a ceding insurer pursuant to which the special purpose financial captive insurance company agrees to provide reinsurance to the ceding insurer for risks associated with the ceding insurer’s insurance or reinsurance business.

(9)  “Special purpose financial captive insurance company security” means:

(A)  A security issued by a special purpose financial captive insurance company; or

(B)  A security issued by a third party, the proceeds of which are obtained directly or indirectly by a special purpose financial captive insurance company. 

(10)  “Surplus note” means an unsecured subordinated debt obligation possessing characteristics consistent with paragraph 3 of the National Association of Insurance Commissioners Statement of Statutory Accounting Principals No. 41, as amended from time to time and as modified or supplemented by rule or order of the commissioner. 

§ 6048d.  Licensing; authority

(a)  A special purpose financial captive insurance company may reinsure the risks of a ceding insurer only.  A special purpose financial captive 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 captive 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 captive 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 captive insurance company pursuant to this chapter and any order issued to a special purpose financial captive insurance company pursuant to this subsection shall not be revoked, suspended, amended, or modified other than as follows: 

(1)  The special purpose financial captive 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 captive insurance company or to the ceding insurer.

(c)  To qualify for a license, a special purpose financial captive 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 captive 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 captive insurance company and the ceding insurer that will be involved in the issuance of special purpose financial captive insurance company securities and a description of any pledge, hypothecation, or grant of a security interest in any of the special purpose financial captive insurance company’s assets and in any stock or limited liability company interest in the special purpose financial captive insurance company;

(B)  the source and form of the special purpose financial captive insurance company’s capital and surplus;

(C)  the proposed investment policy of the special purpose financial captive 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 captive insurance company under all reinsurance contracts; and

(F)  the proposed rate and method for discounting reserves, if the special purpose financial captive insurance company is requesting authority to discount its reserves. 

(2)  The special purpose financial captive insurance company shall submit an affidavit of its president, a vice‑president, the treasurer, or the chief financial officer 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 captive insurance company comply with all applicable provisions of this chapter;

(B)  the special purpose financial captive 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 captive insurance company’s obligations under such reinsurance contract, including but not limited to 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 (c)(1) unless otherwise approved by the commissioner and any other statements or documents required by the commissioner to evaluate the special purpose financial captive 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 captive 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 captive 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 captive 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 captive insurance company securities.

(d)  The commissioner may grant a license, that 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 captive insurance company to transact reinsurance business as a special purpose financial captive 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 captive 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 captive 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 captive insurance company pursuant to subsection (b) of this section.

§ 6048e.  Changes in plan of operation; voluntary
     dissolution or cessation of business

(a)  Any change in the special purpose financial captive insurance company’s plan of operation shall require prior approval of the commissioner. 

(b)  Any transaction or series of transactions shall be subject to the prior approval of the commissioner if such transaction or series of transactions:

(1)  Is undertaken to dissolve a special purpose financial captive insurance company; or

(2)  Results in the termination of all or any part of a special purpose financial captive insurance company’s business; but no prior approval of the commissioner shall be required for any transaction or series of transactions described in this subdivision (2) if such transaction or series of transactions is done in accordance with a document or agreement described in the special purpose financial captive insurance company’s plan of operation and if the commissioner is notified in advance of such transaction or series of transactions.

(c)  A special purpose financial captive insurance company shall notify the commissioner in advance of any change in the legal ownership of any security issued by the special purpose financial captive insurance company.

§ 6048f.  Formation

(a)  A special purpose financial captive insurance company may be incorporated as a stock insurer with its capital divided into shares and held by its stockholders, or it may be organized as a manager‑managed limited liability company. 

(b)  A special purpose financial captive insurance company’s organizational documents shall limit the special purpose financial captive insurance company’s authority to transact the business of insurance or reinsurance to those activities that the special purpose financial captive insurance company conducts to accomplish its purposes as expressed in this subchapter.

§ 6048g.  Minimum Capital and Surplus

A special purpose financial captive insurance company shall not be issued a license unless it shall possess and thereafter maintain unimpaired paid‑in capital and surplus of not less than $250,000.00.

§ 6048h.  Securities

(a)  A special purpose financial captive insurance company may:

(1)  subject to the prior approval of the commissioner, account for the proceeds of a surplus note issued by the special purpose financial captive insurance company as surplus; and

(2)  submit for prior approval of the commissioner periodic written requests for authorization to make payments of interest on and repayments of principal of surplus notes and other debt obligations issued by the special purpose financial captive insurance company, provided that the commissioner shall not approve such payment if the commissioner determines that such payment would jeopardize the ability of the special purpose financial captive insurance company or any other person to fulfill their respective obligations pursuant to the special purpose financial captive insurance company securitization agreements, the reinsurance contract, or any related transaction.  In lieu of approval of periodic written requests for authorization to make payments of interest on and repayments of principal of surplus notes and other debt obligations issued by the special purpose financial captive insurance company, the commissioner may approve a formula or plan, which shall be included in the special purpose financial captive insurance company’s plan of operation as amended from time to time, for payment of interest, principal, or both with respect to such surplus notes and debt obligations.

(b)  In addition to the provisions of section 6005 of this chapter, no dividend or distribution may be declared or paid by a special purpose financial captive insurance company if such dividend or distribution would jeopardize the ability of the special purpose financial captive insurance company or any other person to fulfill the company’s or other person’s respective obligations pursuant to the special purpose financial captive insurance company securitization agreements, the reinsurance contract, or any related transaction.

(c)  A special purpose financial captive insurance company security shall not be subject to regulation as an insurance or reinsurance contract.  An investor in such a security or a holder of such a security shall not be considered to be transacting the business of insurance in this state solely by reason of having an interest in the security.  The underwriter’s placement or selling agents and their partners, commissioners, officers, members, managers, employees, agents, representatives, and advisors involved in an insurance securitization by a special purpose financial captive insurance company shall not be considered to be insurance producers or brokers or to be conducting business as an insurance or reinsurance company or as an insurance agency, brokerage, intermediary, advisory, or consulting business solely by virtue of their underwriting activities in connection with such securitization.

§ 6048i.  Permitted Reinsurance

(a)  A special purpose financial captive insurance company may reinsure only the risks of a ceding insurer, pursuant to a reinsurance contract.  A special purpose financial captive insurance company may not issue a contract of insurance or a contract for assumption of risk or indemnification of loss other than such reinsurance contract. 

(b)  Unless otherwise approved in advance by the commissioner, a special purpose financial captive insurance company may not assume or retain exposure to insurance or reinsurance losses for its own account that are not funded by: 

(1)  Proceeds from a special purpose financial captive insurance company securitization or letters of credit or other assets described in subdivision 6048c(3) of this chapter;

(2)  Premium and other amounts payable by the ceding insurer to the special purpose financial captive insurance company pursuant to the reinsurance contract; and

(3)  Any return on investment of the items in subdivisions (1) and (2) of this subsection.

(c)  The reinsurance contract shall contain all provisions reasonably required or approved by the commissioner, which requirements shall take into account the laws applicable to the ceding insurer regarding the ceding insurer taking credit for the reinsurance provided under such reinsurance contract. 

(d)  A special purpose financial captive insurance company may cede risks assumed through a reinsurance contract to one or more reinsurers through the purchase of reinsurance, subject to the prior approval of the commissioner.

(e)  A special purpose financial captive insurance company may enter into contracts and conduct other commercial activities related or incidental to and necessary to fulfill the purposes of the reinsurance contract, the insurance securitization, and this subchapter, provided such contracts and activities are included in the special purpose financial captive insurance company’s plan of operation or are otherwise approved in advance by the commissioner.  Such contracts and activities may include but are not limited to:  entering into reinsurance contracts; issuing special purpose financial captive insurance company securities; complying with the terms of these contracts or securities; entering into trust, guaranteed investment contract, swap, or other derivative, tax, administration, reimbursement, or fiscal agent transactions; or complying with trust indenture, reinsurance, or retrocession; and other agreements necessary or incidental to effect an insurance securitization in compliance with this subchapter and the special purpose financial captive insurance company’s plan of operation.

(f)  Unless otherwise approved in advance by the commissioner, a reinsurance contract shall not contain any provision for payment by the special purpose financial captive insurance company in discharge of its obligations under the reinsurance contract to any person other than the ceding insurer or any receiver of the ceding insurer.

(g)  A special purpose financial captive insurance company shall notify the commissioner immediately of any action by a ceding insurer or any other person to foreclose on or otherwise take possession of collateral provided by the special purpose financial captive insurance company to secure any obligation of the special purpose financial captive insurance company.

§ 6048j.  Disposition of Assets; Investments

(a)  The assets of a special purpose financial captive insurance company shall be preserved and administered by or on behalf of the special purpose financial captive insurance company to satisfy the liabilities and obligations of the special purpose financial captive insurance company incident to the reinsurance contract, the insurance securitization, and other related agreements.

(b)  In the special purpose financial captive insurance company securitization, the security offering memorandum or other document issued to prospective investors regarding the offer and sale of a surplus note or other security shall include a disclosure that all or part of the proceeds of such insurance securitization will be used to fund the special purpose financial captive insurance company’s obligations to the ceding insurer. 

(c)  A special purpose financial captive insurance company shall not be subject to any restriction on investments other than the following:

(1)  A special purpose financial captive insurance company shall not make a loan to any person other than as permitted under its plan of operation or as otherwise approved in advance by the commissioner; and

(2)  The commissioner may prohibit or limit any investment that threatens the solvency or liquidity of the special purpose financial captive insurance company unless the investment is otherwise approved in its plan of operation or in an order issued to the special purpose financial captive insurance company pursuant to subsection 6048d(b) of this chapter, as either is amended from time to time.

§ 6048k.  Annual Report; Books and Records

(a)  For purposes of subsection 6007(b) of this chapter: 

(1)  The commissioner shall, by rule or order, establish the form and content of the annual report to be filed by a special purpose financial captive insurance company; and

(2)  A special purpose financial captive insurance company shall report using statutory accounting principles, unless the commissioner requires, approves, or accepts the use of generally accepted accounting principles, in either case with any appropriate or necessary modifications or adaptations thereof required or approved or accepted by the commissioner and as supplemented by additional information required by the commissioner.   

(b)  A special purpose financial captive insurance company may make written application to file its annual report on a fiscal‑year basis.  If an alternative reporting date is granted, the commissioner shall establish the due date and content of any filing required by the special purpose financial captive insurance company in addition to its annual report.

(c)  Unless otherwise approved in advance by the commissioner, a special purpose financial captive insurance company shall maintain its books, records, documents, accounts, vouchers and agreements in this state.  A special purpose financial captive insurance company shall make its books, records, documents, accounts, vouchers and agreements available for inspection by the commissioner at any time.  A special purpose financial captive insurance company shall keep its books and records in such manner that its financial condition, affairs, and operations can be readily ascertained and so that the commissioner may readily verify its financial statements and determine its compliance with this chapter.

(d)  Unless otherwise approved in advance by the commissioner, all original books, records, documents, accounts, vouchers, and agreements shall be preserved and kept available in this state for the purpose of examination and inspection and until such time as the commissioner approves the destruction or other disposition of such books, records, documents, accounts, vouchers, and agreements.  If the commissioner approves the keeping of the items listed in this subsection outside this state, the special purpose financial captive insurance company shall maintain in this state a complete and true copy of each such original.  Books, records, documents, accounts, vouchers, and agreements may be photographed, reproduced on film, or stored and reproduced electronically.

§ 6048l.  LICENSE Suspension and Revocation

(a)  The commissioner shall notify a special purpose financial captive insurance company not less than 30 days before suspending or revoking its license pursuant to section 6009 of this chapter, which notice shall state the basis for such suspension or revocation.  The special purpose financial captive insurance company shall be afforded the opportunity for a hearing pursuant to the provisions of the Vermont Administrative Procedure Act, 3 V.S.A. chapter 25. 

(b)  Notwithstanding subsection (a) of this section and 3 V.S.A. § 814(c), no prior notice or hearing shall be required if the grounds for suspension or revocation of a special purpose financial captive insurance company’s license pursuant to section 6009 of this chapter relate primarily to the financial condition or soundness of the special purpose financial captive insurance company or to a deficiency in its assets.

(c)  For purposes of this subchapter, reference to section 6004 in subdivision 6009(a)(2) shall be construed also as a reference to section 6048g. 

§ 6048m.  Delinquency

(a)  Except as otherwise provided in this section, the provisions of chapter 145 of this title shall apply in full to a special purpose financial captive insurance company.

(b)  Upon any order of supervision, rehabilitation, or liquidation of a special purpose financial captive insurance company, the receiver shall manage the assets and liabilities of the special purpose financial captive insurance company pursuant to the provisions of this subchapter. 

(c)  Amounts recoverable by the receiver of a special purpose financial captive insurance company under a reinsurance contract shall not be reduced or diminished as a result of the entry of an order of conservation, rehabilitation, or liquidation with respect to a ceding insurer, notwithstanding any provision in the contracts or other documentation governing the special purpose financial captive insurance company securitization. 

(d)  Notwithstanding the provisions of chapter 145 of this title or any other law of this state:

(1)  An application or petition or a temporary restraining order or injunction issued pursuant to the provisions of chapter 145 of this title with respect to a ceding insurer does not prohibit the transaction of business by a special purpose financial captive insurance company, including any payment by a special purpose financial captive insurance company made with respect to a special purpose financial captive insurance company security, or any action or proceeding against a special purpose financial captive insurance company or its assets;

(2)  The commencement of a summary proceeding with respect to a special purpose financial captive insurance company and any order issued by the court in such summary proceeding shall not prohibit payments by a special purpose financial captive insurance company and shall not prohibit the special purpose financial captive insurance company from taking any action required to make such payments, provided such payments are made: 

(A)  pursuant to a special purpose financial captive insurance company security or reinsurance contract; and

(B)  consistent with the special purpose financial captive insurance company’s plan of operation and any order issued to the special purpose financial captive insurance company pursuant to subsection 6048d(b), as either is amended from time to time. 

(3)  A receiver of a ceding insurer may not void a nonfraudulent transfer by a ceding insurer to a special purpose financial captive insurance company of money or other property made pursuant to a reinsurance contract; and

(4)  A receiver of a special purpose financial captive insurance company may not void a nonfraudulent transfer by the special purpose financial captive insurance company of money or other property: 

(A)  made to a ceding insurer pursuant to a reinsurance contract or made to or for the benefit of any holder of a special purpose financial captive insurance company security with respect to the special purpose financial captive insurance company security; and

(B)  made consistent with the special purpose financial captive insurance company’s plan of operation and any order issued to the special purpose financial captive insurance company pursuant to subsection 6048d(b), as either is amended from time to time.

(e)  With the exception of the fulfillment of the obligations under a reinsurance contract and notwithstanding another provision of this subchapter or other laws of this state, the assets of a special purpose financial captive insurance company, including assets held in trust, on a funds‑withheld basis, or in any other arrangement to secure the special purpose financial captive insurance company’s obligations under a reinsurance contract, shall not be consolidated with or included in the estate of a ceding insurer in any delinquency proceeding against the ceding insurer pursuant to the provisions of this subchapter for any purpose including, without limitation, distribution to creditors of the ceding insurer. 

§ 6048n.  Sponsored Captives

In addition to the provisions of sections 6048a–6048m of this subchapter, the provisions of this section shall apply to any sponsored captive insurance company licensed as a special purpose financial captive insurance company pursuant to this subchapter.

(1)  A sponsored captive insurance company may be licensed as a special purpose financial captive insurance company pursuant to the provisions of this subchapter.

(2)  The special purpose financial captive insurance company shall be subject to the provisions of subchapter 2 of this chapter.  In the event of any conflict between the provisions of this subchapter and the provisions of subchapter 2 of this chapter, the provisions of this subchapter shall control.

(3)  Unless otherwise approved in advance by the commissioner, a participant in a special purpose financial captive insurance company shall be a ceding insurer.  Any change in a participant shall be subject to prior approval by the commissioner.

(4)  Notwithstanding subdivision 6034(1) of this chapter, the special purpose financial captive insurance company may issue securities to any person approved in advance by the commissioner.

(5)  Notwithstanding section 6048g of this subchapter, the special purpose financial captive insurance company shall possess and thereafter maintain unimpaired paid‑in capital and surplus of not less than $500,000.00. 

(6)  The “general account” of a sponsored captive insurance company licensed as a special purpose financial captive insurance company shall mean all assets and liabilities of the sponsored captive insurance company not attributable to a protected cell.

(7)  Any security issued by a special purpose financial captive insurance company with respect to a protected cell and any other contract or obligation of the special purpose financial captive insurance company with respect to a protected cell shall include the designation of such protected cell and shall include a disclosure in a form and content satisfactory to the commissioner to the effect that the holder of such security and any counterparty to such contract or obligation have no right or recourse against the special purpose financial captive insurance company and its assets other than against assets properly attributable to such protected cell.  Notwithstanding the requirements of this subdivision (7) and subject to the provisions of this chapter and other applicable law or regulation, the failure to include such disclosure, in whole or part, in such security, contract, or obligation with respect to a protected cell shall not serve as the sole basis for a creditor, ceding insurer, or any other person to have recourse against the general account of the special purpose financial captive insurance company or against the assets of any other protected cell.

(8)  In addition to the provisions of section 6034 of this chapter, the special purpose financial captive insurance company shall be subject to the following with respect to its protected cells:

(A)  The special purpose financial captive insurance company shall establish a protected cell only for the purpose of insuring or reinsuring risks of one or more reinsurance contracts with a ceding insurer with the intent of facilitating an insurance securitization.  A separate protected cell shall be established with respect to each such ceding insurer, provided that a separate protected cell shall be established with respect to each reinsurance contract or contracts that are funded in whole or in part by a separate securitization transaction; and

(B)  A sale, an exchange, or another transfer of assets may not be made by the special purpose financial captive between or among any of its protected cells without the prior approval of the commissioner.

(9)  All attributions of assets and liabilities to the protected cells and the general account shall be in accordance with the plan of operation approved by the commissioner.  No other attribution of assets or liabilities may be made by a special purpose financial captive insurance company between its general account and any protected cell or between any protected cells.  The special purpose financial captive insurance company shall attribute all insurance obligations, assets, and liabilities relating to a reinsurance contract entered into with respect to a protected cell and shall attribute the related insurance securitization transaction, including any securities issued by the special purpose financial captive insurance company as part of the insurance securitization, to such protected cell. The rights, benefits, obligations, and liabilities of any securities attributable to such protected cell and the performance under such reinsurance contract and the related securitization transaction and any tax benefits, losses, refunds, or credits allocated pursuant to a tax allocation agreement to which the special purpose financial captive insurance company is a party, including any payments made by or due to be made to the special purpose financial captive insurance company pursuant to the terms of such agreement, shall reflect the insurance obligations, assets, and liabilities relating to the reinsurance contract and the insurance securitization transaction that are attributed to such protected cell.

(10)  For purposes of applying the provisions of chapter 145 of this title to a sponsored captive insurance company licensed as a special purpose financial captive insurance company, the definition of “insolvency” and “insolvent” in subdivision 6048c(2) shall be applied separately to each protected cell and to the special purpose financial captive insurance company’s general account.   

(11)  In addition to the provisions of section 6048m of this chapter:

(A)  The provisions of chapter 145 of this title shall apply to each protected cell of the special purpose financial captive.  Any proceeding or action taken by the commissioner pursuant to chapter 145 of this title with respect to a protected cell of a special purpose financial captive shall not be the sole basis for a proceeding pursuant to chapter 145 of this title with respect to any other protected cell of such special purpose financial captive insurance company or the special purpose financial captive insurance company’s general account.

(B)  The receiver of a special purpose financial captive insurance company shall ensure that the assets attributable to one protected cell are not applied to the liabilities attributable to another protected cell or to the special purpose financial captive insurance company’s general account unless an asset or liability is attributable to more than one protected cell, in which case the receiver shall deal with the asset or liability in accordance with the terms of any relevant governing instrument or contract.

(C)  The insolvency of a protected cell shall not be the sole basis for the commissioner to prohibit payments by the special purpose financial captive insurance company made pursuant to a special purpose financial captive insurance company security or reinsurance contract with respect to any other protected cell or to prohibit any action required to make such payments.

and by renumbering the following sections to be numerically correct.

(Committee vote: 10-0-1)

Senate Proposal of Amendment

H. 157

     An act relating to home-fermented beverage competitions.

     The Senate proposes to the House to amend the bill by adding a new Sec. 2a to read as follows:

Sec. 2a.  COMMERCIAL CATERERS: STUDY AND REPORT; DEPARTMENT OF LIQUOR CONTROL

The department of liquor control shall issue a report on or before January 15, 2008, to the general assembly.  The report shall include findings and recommendations from a study of the commercial caterers in Vermont, the existing laws that regulate them, the appropriateness of updating these laws to permit commercial caterers to acquire a first or first and third class license that would permit them to serve alcoholic beverages in conjunction with catered events without compromising alcoholic beverage enforcement issues.

 

 

 

 

CONSENT CALENDAR

Concurrent Resolutions for Notice under Joint Rule 16

     The following joint concurrent resolutions have been introduced for approval by the Senate and House and will be adopted automatically unless a Senator or Representative requests floor consideration before the end of the session of the next legislative day.  Requests for floor consideration in either chamber should be communicated to the Secretary’s office and/or the House Clerk’s office, respectively.

H.C.R.  101

House concurrent resolution congratulating Katie Sullivan on being named the 2007 Vermont Teacher of the Year

H.C.R.  102

House concurrent resolution congratulating the 2006–2007 University of Vermont Catamounts men’s basketball team on an outstanding season

H.C.R.  103

House concurrent resolution honoring former speaker of the house Stephan Morse for his outstanding leadership as president of the Windham Foundation

H.C.R.  104

House concurrent resolution in memory of U.S. Army Sgt. Carlton A. Clark of Sharon

H.C.R.  105

House concurrent resolution in memory of Donald Maley

H.C.R.  106

House concurrent resolution honoring Gary Palmer of Georgia for his exemplary public service as the St. Albans City fire chief

H.C.R.  107

House concurrent resolution congratulating the Burr and Burton Academy Bulldogs 2007 Division II championship boys’ ice hockey team

H.C.R.  108

House concurrent resolution commending the members of the Act 133 technical advisory committee for the outstanding work in response to its mandate under the act

H.C.R.  109

House concurrent resolution congratulating the 2007 Crossett Brook Middle School Odyssey of the Mind state championship team

H.C.R.  110

House concurrent resolution in memory of former Windsor town clerk Gloria Tansey

H.C.R.  111

House concurrent resolution congratulating the Windsor High School Yellow Jackets Division III championship girls’ basketball team

H.C.R.  112

House concurrent resolution congratulating the 2006 Mt. Abraham Union High School Eagles Division II championship baseball team

H.C.R.  113

House concurrent resolution congratulating the 2006 Mt. Abraham Union High School Eagles Division II championship girls’ field hockey team

H.C.R.  114

House concurrent resolution congratulating Carol Eckels on being named the 2007 Vermont Elementary Principal of the Year

H.C.R.  115

House concurrent resolution congratulating the 2007 Woodstock Union High School Wasps girls’ Nordic and boys’ alpine state championship ski teams

H.C.R.  116

House concurrent resolution congratulating Taylor Horn on winning the 2007 Vermont championship of the National Geographic Bee

S.C.R. 18. 

     Senate concurrent resolution honoring Robert “R.J.” George for his outstanding public service as the Newport City fire chief.

S.C.R. 19.

     Senate concurrent resolution congratulating Reeve Lindbergh and Nathaniel Tripp on their designation as the Northeast Kingdom Chamber of Commerce's 2007 Citizen of the Year.

PUBLIC HEARINGS

Wednesday, April 18, 2007,  Room 11 – 5:00 – 7:00 P M – House and Senate Committees on Government Operations – H. 403  Retirement Cost-of-Living Adjustment

 



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