(a) A material change in the plan of operations involves a change in operations of the captive insurance company that results in a significant modification in the risk profile of the captive insurance company, including:

(1) adding one or more new lines of business or perils;

(2) modifying policy limit(s) or policy coverage(s);

(3) changing captive management companies;

(4) entering into new reinsurance programs including loss portfolio transfers;

(5) modifying reinsurance programs, including: (A) changing counterparties; (B) changing the attachment point or amount of business ceded or assumed; and (C) changing limits of coverage;

(6) changing the captive insurance company's ultimate controlling person;

(7) any changes to the information associated with controlled unaffiliated business submitted under §6.202(c) of this title (relating to Captive Insurance Company Certificate of Authority Application Contents and Process); and

(8) entering into a runoff mode or eliminating one or more lines of business or perils, including winding up operations.

(b) All material changes to the plan of operation require prior approval of the commissioner.

(c) The captive insurance company must provide updated financial projections if a material change in the plan of operation will result in a variation in the most recently filed projections equal to an amount greater than 15 percent of projected net equity. The updated financial projections must be submitted with the notice of a material change.

(d) The department will reassess the captive insurance company's minimum capital and surplus when there is an update to the captive insurance company's plan of operations. The captive insurance company must provide an actuarial opinion on the effect of the change in the plan of operation if requested by the department.

Source Note: The provisions of this §6.304 adopted to be effective April 27, 2014, 39 TexReg 3232