KRS 304.49-226: Change that materially impacts financial condition or management --

Notification to and approval of commissioner to take material action -- Loans

to parent company or affiliates.

(1) If there is any change in the current operations or condition of a captive insurer that

materially impacts the financial condition or management of the captive insurer, the

captive insurer or captive manager shall notify the commissioner, in writing, within

ten (10) business days of the change or event.

(2) No captive i nsurer shall voluntarily take any of the following material actions

without providing the commissioner at least thirty (30) days' prior written notice

and receiving the commissioner's approval of the action within the thirty (30) day

period:

(a) The dissolution of the captive insurer;

(b) Any sale, exchange, lease, mortgage, assignment, pledge, or other transfer of,

or granting of a security interest in, all or substantially all of the assets of the

captive insurer;

(c) Any incurrence of material indebtedness by the captive insurer;

(d) Any making of a material loan or other material extension of credit by the

captive insurer;

(e) Any payment or distribution that materially reduces capital and surplus;

(f) Any merger or consolidation to which the captive ins urer is a constituent

party;

(g) Any conversion of the captive insurer to another business form;

(h) Any transfer to or domestication in any jurisdiction by the captive insurer; or

(i) Any material amendment of the organizational documents of the captive

insurer, including changes in the officers, directors, owners, captive manager,

actuary, or auditor.

(3) A captive insurer may make loans to its parent company or affiliates; however, no

loans to a parent company or any affiliate shall be permitted without prior written

approval of the commissioner and shall be evidenced by a note in a form approved

by the commissioner. The loans shall be evaluated with regard to creditworthiness

and collateral.