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Alaska Statutes.

Title 21. Insurance

Chapter 34. Surplus Lines Insurance

Section 40. Eligible Surplus Lines Insurers Required.

AS 21.34.040. Eligible Surplus Lines Insurers Required.

(a) Coverage may be placed in a nonadmitted insurer by a surplus lines broker only if

(1) at the time of placement, the nonadmitted insurer meets all the requirements of this section; and

(2) the surplus lines broker is licensed under AS 21.27.

(b) The nonadmitted insurer must establish satisfactory evidence of good repute and financial integrity to be eligible.

(c) A nonadmitted insurer may be eligible to provide coverage in this state if it qualifies under one of the following:

(1) a foreign but nonalien stock insurer may qualify under this subsection if it has the minimum unimpaired basic capital and additional surplus equal to that required in its domiciliary jurisdiction, or maintains $10,000,000 as of December 31, 1991, $12,500,000 as of December 31, 1992, and $15,000,000 as of December 31, 1993, whichever is greater;

(2) a foreign but nonalien mutual insurer, a reciprocal insurer, or a mutual protection and indemnity association may qualify under this subsection if it has the minimum unimpaired basic surplus and additional surplus equal to that required in its domiciliary jurisdiction or maintains $10,000,000 as of December 31, 1991, $12,500,000 as of December 31, 1992, and $15,000,000 as of December 31, 1993, whichever is greater;

(3) an alien insurer other than an alien mutual protection and indemnity association may qualify under this subsection if it meets the minimum requirements in (1) or (2) of this subsection and maintains in the United States an irrevocable trust fund in an amount not less than $2,500,000 in a solvent federally insured bank acceptable to the director, as security to the full amount, for the protection of all its policyholders and creditors of each member of the mutual insurer, reciprocal insurer, or mutual protection and indemnity association in the United States; the trust fund must consist of instruments of substantially the same character and quality as those that are eligible investments for the capital and statutory reserves of admitted insurers authorized to write like kinds of insurance in this state or of irrevocable, clean, and unconditional letters of credit; the trust fund must have an expiration date that at no time is less than five years;

(4) a Lloyd's syndicate or an insurer belonging to a similar group, including incorporated and individual unincorporated insurers, may qualify if it maintains a trust fund jointly and severally with the other members of the group in an amount not less than $50,000,000, as security to the full amount, for the protection of all policyholders and creditors of each member of the group in the United States; the incorporated members may not be engaged in any business other than underwriting as a member of the group and shall be subject to the same level of solvency regulation and control by the group's domiciliary regulator as are the unincorporated members; the trust fund must consist of instruments of substantially the same character and quality as those that are eligible investments for the capital and statutory reserves of admitted insurers authorized to write like kinds of insurance in this state or of irrevocable, clean, and unconditional letters of credit; the trust fund must have an expiration date that at no time is less than five years;

(5) each syndicate or insurer belonging to an insurance exchange created by the laws of individual states may qualify if the insurance exchange maintains capital and surplus, or the substantial equivalent, of not less than $50,000,000 in the aggregate; for insurance exchanges that maintain funds for the protection of all insurance exchange policyholders, each individual syndicate shall maintain minimum capital and surplus, or the substantial equivalent, of not less than $3,000,000; in the event the insurance exchange does not maintain funds for the protection of all its policyholders, each individual syndicate shall meet the minimum requirements of (1) or (2) of this subsection;

(6) an alien mutual protection and indemnity association may qualify under this subsection if it has the minimum unimpaired basic capital and additional surplus equal to that required in its domiciliary jurisdiction or $10,000,000, whichever is greater, and maintains in the United States an irrevocable trust fund in an amount not less than $1,000,000 in a federally insured bank acceptable to the director, as security to the full amount, for the protection of all its policyholders and creditors or each member of the mutual protection and indemnity association in the United States; the trust fund must consist of instruments of substantially the same character and quality as those that are eligible investments for the capital and statutory reserves of admitted insurers authorized to write wet marine and transportation insurance in this state or of irrevocable, clean, and unconditional letters of credit; the trust fund must have an expiration date that at no time is less than five years.

(d) A nonadmitted insurer may be eligible to provide coverage in this state if it furnishes to the director a copy of its current annual statement that has been certified by the insurer. Except in the case of an alien insurer, the statement shall be provided not more than six months after the close of the period reported upon and that is either filed with and approved by the regulatory authority in the domicile of the nonadmitted insurer, or certified by an accounting or auditing firm licensed in the jurisdiction of the insurer's domicile. An alien insurer shall provide the statement not later than nine months after the close of the reporting period. In the case of an insurance exchange, the statement may be an aggregate combined statement of all underwriting syndicates operating during the period reported upon.

(e) The capital and surplus requirements of this section shall be calculated based upon generally accepted accounting practices used in the United States of America.