Hawaii Administrative Rules
Section 16-17-17 - Surety insurance

Universal Citation: HI Admin Rules 16-17-17

Current through November, 2023

(a) A captive may provide surety insurance under a business plan approved by the commissioner, provided that the captive maintains a ratio no greater than ten to one of the total value of outstanding bond obligations to unimpaired capital and surplus. For purposes of this subsection, intercompany or affiliated loans are considered nonadmitted assets when determining unimpaired capital and surplus under sections 431:19-104, 431:6-201, and 431:19-110, Hawaii Revised Statutes, unless an irrevocable letter of credit issued by a bank chartered by this State or a member bank of the Federal Reserve System, or other collateral approved by the commissioner, fully secures the loans.

(b) Within forty-five days of the end of each calendar quarter, the approved captive manager pursuant to section 431:19-101.4, Hawaii Revised Statutes, shall submit to the commissioner the following:

(1) A listing of all outstanding surety obligations, including the purpose of each bond and its respective obligee, bond principal, outstanding bond value, and calculations of unearned premiums based upon the bond term. The listing shall also include attestations by an officer of the captive and the captive manager that the listing is complete and accurate;

(2) Quarterly unaudited financial statements of the captive insurer prepared in accordance with generally accepted accounting principles or other accounting principles prescribed or permitted under law, and attested by the captive manager and an officer of the captive;

(3) Quarterly unaudited financial statements of the bond principal, and a statement signed by an officer or other responsible person of the bond principal as to whether there has been any written claim or notice of dispute, or lawsuit received by the bond principal relating to the contract or matter for which a bond underwritten by the captive was issued involving an amount equal to or exceeding ten percent (10%) of the face amount of the bond. For construction-related bonds, the principal shall include a construction work-in-progress report for all of the principal's construction projects supported by outstanding bonds issued by the captive;

(4) Quarterly statutory compliance calculations for minimum required capital and surplus pursuant to sections 431:19-104, 431:6-201, and 431:19-110, Hawaii Revised Statutes; and

(5) Any additional information required by the commissioner.

(c) In the event a claim is reported against a bond, the captive shall provide written notification to the commissioner within five working days of the claim being reported.

(d) As used in this section, "bond principal" means the entity or affiliate of the entity for whom the bond was issued by the captive."

[Eff and comp 8/17/2019] (Auth: HRS §§ 431:19-104, 431:19-107, 431:19-109, 431:19-110, 431:19-114) (Imp: HRS §§ 431:19-107, 431:19-109)

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