(a) One or more sponsors may form a protected cell captive insurance company under this chapter.
(b) A protected cell captive insurance company formed or licensed under this chapter may establish and maintain one or more protected cells to insure risks of one or more participants, subject to all of the following conditions:
(1) Each protected cell shall be accounted for separately on the books and records of the protected cell captive insurance company to reflect the financial condition and results of operations of the protected cell, net income or loss, dividends or other distributions to participants, and other factors as may be provided in the participant contract or required by the commissioner.
(2) The assets of a protected cell shall not be chargeable with liabilities arising out of any other insurance business the protected cell captive insurance company may conduct.
(3) No sale, exchange, or other transfer of assets may be made by the protected cell captive insurance company between or among any of its protected cells without the consent of the protected cells.
(4) No sale, exchange, transfer of assets, dividend, or distribution may be made from a protected cell to a sponsor or participant without the commissioner's approval and in no event shall the approval be given if the sale, exchange, transfer, dividend, or distribution would result in insolvency or impairment with respect to a protected cell.
(5) Each protected cell captive insurance company shall annually file with the commissioner all financial reports as the commissioner shall require, which shall include, without limitation, accounting statements detailing the financial experience of each protected cell.
(6) Each protected cell captive insurance company shall notify the commissioner in writing within 10 business days of any protected cell that is insolvent or otherwise unable to meet its claim or expense obligations.
(7) No participant contract shall take effect without the commissioner's prior written approval, and the addition of each new protected cell and withdrawal of any participant of any existing protected cell shall constitute a change in the business plan requiring the commissioner's prior written approval.
(8) The commissioner, based on the type, nature, and volume of insurance business transacted, may require that the business written by a protected cell captive insurance company, with respect to each cell, be one of the following:
a. Fronted by an insurance company licensed under the laws of any state.
b. Reinsured by a reinsurer authorized or approved by the state.
c. Secured by a trust fund in the United States for the benefit of policyholders and claimants funded by an irrevocable letter of credit or other asset that is acceptable to the commissioner. The amount of security provided by a trust fund shall be no less than the reserves associated with those liabilities, including reserves for losses, allocated loss adjustment expenses, incurred but not reported losses, and unearned premiums for business written through the participant's protected cell. The commissioner may require the protected cell captive insurance company to increase the funding of any trust as established under this subdivision. If the form of security in the trust is a letter of credit, the letter of credit must be clean, irrevocable, and unconditional and must be issued or confirmed by a bank chartered in this state, a member of the federal reserve system, or a bank chartered by another state if the state chartered bank is acceptable to the commissioner. A trust and trust instrument maintained pursuant to this subdivision shall be established in a form and upon terms approved by the commissioner.