§ 27-64-3 - Definitions.
SECTION 27-64-3
§ 27-64-3 Definitions. – As used in this chapter:
(1) "Commissioner" means the director of the department ofbusiness regulation.
(2) "Domestic insurer" means an insurance or reinsurancecompany domiciled in the state or a captive insurance or reinsurance companydomiciled in the state.
(3) "Fair value" of an asset (or liability) means the amountat which that asset (or liability) could be bought (or incurred) or sold (orsettled) in a current transaction between willing parties, that is, other thanin a forced or liquidation sale. Quoted market prices in active markets are thebest evidence of fair value and shall be used as the basis for the measurement,if available. If a quoted market price is available, the fair value is theproduct of the number of trading units times market price. If quoted marketprices are not available, the estimate of fair value shall be based on the bestinformation available. The estimate of fair value shall consider prices forsimilar assets and liabilities and the results of valuation techniques to theextent available in the circumstances. Examples of valuation techniques includethe present value of estimated expected future cash flows using a discount ratecommensurate with the risks involved, option-pricing models, matrix pricing,option-adjusted spread models, and fundamental analysis. Valuation techniquesfor measuring financial assets and liabilities and servicing assets andliabilities shall be consistent with the objective of measuring fair value.Those techniques shall incorporate assumptions that market participants woulduse in their estimates of values, future revenues, and future expenses,including assumptions about interest rates, default, prepayment, andvolatility. In measuring financial liabilities and servicing liabilities atfair value by discounting estimated future cash flows, an objective is to usediscount rates at which those liabilities could be settled in an arm's-lengthtransaction. Estimates of expected future cash flows, if used to estimate fairvalue, shall be the best estimate based on reasonable and supportableassumptions and projections. All available evidence shall be considered indeveloping estimates of expected future cash flows. The weight given to theevidence shall be commensurate with the extent to which the evidence can beverified objectively. If a range is estimated for either the amount or timingof possible cash flows, the likelihood of possible outcomes shall be consideredin determining the best estimate of future cash flows.
(4) "Fully funded" means that, with respect to any exposureattributed to a protected cell, the fair value of the protected cell assets, onthe date on which the insurance securitization is effected, equals or exceedsthe maximum possible exposure attributable to the protected cell with respectto those exposures.
(5) "General account" means the assets and liabilities of aprotected cell company other than protected cell assets and protected cellliabilities.
(6) "Indemnity trigger" means a transaction term by whichrelief of the issuer's obligation to repay investors is triggered by itsincurring a specified level of losses under its insurance or reinsurancecontracts.
(7) "Non-indemnity trigger" means a transaction term by whichrelief of the issuer's obligation to repay investors is triggered solely bysome event or condition other than the individual protected cell companyincurring a specified level of losses under its insurance or reinsurancecontracts.
(8) "Protected cell" means an identified pool of assets andliabilities of a protected cell company segregated and insulated by means ofthis Act from the remainder of the protected cell company's assets andliabilities.
(9) "Protected cell account" means a specifically identifiedbank or custodial account established by a protected cell company for thepurpose of segregating the protected cell assets of one protected cell from theprotected cell assets of other protected cells and from the assets of theprotected cell company's general account.
(10) "Protected cell assets" means all assets, contractrights, and general intangibles, identified with and attributable to a specificprotected cell of a protected cell company.
(11) "Protected cell company" means a domestic insurer thathas one or more protected cells.
(12) "Protected cell company insurance securitization" meansthe issuance of debt instruments, the proceeds from which support the exposuresattributed to the protected cell, by a protected cell company, where repaymentof principal and/or interest to investors pursuant to the transaction terms iscontingent upon the occurrence or nonoccurrence of an event with respect towhich the protected cell company is exposed to loss under insurance orreinsurance contracts it has issued.
(13) "Protected cell liabilities" means all liabilities andother obligations identified with and attributable to a specific protected cellof a protected cell company.
(14) "Receiver" means the commissioner, where thecommissioner is acting as a rehabilitator, liquidator, or administrativesupervisor of a company, or any person appointed to carry out an order ofrehabilitation or liquidation of a company.