The Alabama Legislature

This act amends Sections 27-31B-3, 27-31B-6, 27-31B-8, and 27-31B-9, Code of Alabama 1975, to: (1) further provide requirements that captive insurance companies must satisfy to conduct business in the state, including banking, employment, ownership, recordkeeping, and background requirements and submitting an operation plan detailing insurance types and limits, financial statements, and investment, underwriting, and rate making policies; (2) increase the amount of capital and surplus that pure captive insurance companies must possess from $100,00 to $250,000, that reinsurance captive insurance companies must possess from $10,000 to $1,000,000, and that protected cell captive insurance companies must possess from $100,000 to $250,000, or an amount determined by the Commissioner of Insurance; (3) require branch captive insurance companies to possess at least $250,000 of capital and surplus and risk retention groups to possess at least $1,000,000 of capital and surplus, or an amount determined by the Commissioner of Insurance; (4) provide additional criteria for the commissioner to consider when determining if captive insurance companies will promote the general good of the state, including examining the competence of contractors and legal counsels and the company's business plans; and (5) require annual audits of a captive insurers' financial conditions and annual certification of loss reserves and loss expense reserves.