{"data":{"id":"us-ky/krs-304.49-040","jurisdiction":"us-ky","citation":"KRS 304.49-040","heading":"Financial security requirements.","body":"(1) No captive insurer shall be issued a certificate of authority unless it shall possess\nand thereafter maintain unimpaired paid-in capital and surplus of:\n(a) In the case of a pure captive insurer, not less than two hundred fifty thousand\ndollars ($250,000);\n(b) In the case of a consortium, sponsored, agency, or an industrial insured\ncaptive insurer, not less than five hundred thousand dollars ($500,000); and\n(c) In the case of a special purpose captive insurer, not less than two hundred fifty\nthousand dollar s ($250,000), or another amount determined by the\ncommissioner.\n(2) Notwithstanding the requirements of subsection (1) of this section, no captive\ninsurer organized as a reciprocal insurer under KRS 304.49-010 to 304.49-230 shall\nbe issued a certificate of  authority unless it shall possess and thereafter maintain\nfree surplus of not less than five hundred thousand dollars ($500,000).\n(3) The commissioner may prescribe additional capital and surplus based upon the type,\nvolume, and nature of insurance business transacted.\n(4) Capital and surplus shall be in the form of cash, an irrevocable letter of credit issued\nby a bank approved by the commissioner and chartered by the Commonwealth of\nKentucky or a member bank of the Federal Reserve System, a surplus note\napproved by the commissioner, or other assets as may be approved by the\ncommissioner. A surplus note shall not be used for the initial minimum capital and\nsurplus of a non-mutual captive insurer.\n(5) In the case of a branch captive insurer, as security for  the payment of liabilities\nattributable to the branch operations, the commissioner shall require that a separate\ntrust fund, funded by an irrevocable letter of credit or other acceptable asset, be\nestablished and maintained in the United States for the be nefit of United States\npolicyholders and United States ceding insurers under insurance policies issued or\nreinsurance contracts issued or assumed, by the branch captive insurer through its\nbranch operations. The amount of this security may be no less than the capital and\nsurplus required in this section and the reserves on the insurance policies or the\nreinsurance contracts, including reserves for losses, allocated loss adjustment\nexpenses, incurred but not reported losses, and unearned premiums with regard  to\nbusiness written through the branch operations; provided, however, the\ncommissioner may permit a branch captive insurer that is required to post security\nfor loss reserves on branch business by its reinsurer to reduce the funds in the trust\naccount required by this section by the same amount so long as the security remains\nposted with the reinsurer. If the form of security selected is a letter of credit, the\nletter of credit must be established by, or issued or confirmed by, a bank chartered\nin Kentucky or a member bank of the Federal Reserve System.","path":[],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=30221","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:57:59Z","sha256":"7c321b455fa80e12337eae63d355dfe3f51125b8dedef460084f911f9f2e56e7","source_id":"us-ky","stale":false,"prev":"us-ky/krs-304.49-030","next":"us-ky/krs-304.49-050"},"notice":"GroundRules: Original legal text. Not legal advice."}