Delaware Insurance Commissioner Trinidad Navarro published a Bulletin addressed to the captive insurance industry operating in Delaware, clarifying the conditions required for holding minimum capital and surplus in a brokerage account. 

Delaware Code 18 Del. C. § 6905(c) states that minimum capital and surplus requirements required in the state may be in the form of cash, an irrevocable letter of credit issued by a financial institution chartered by or licensed to do banking business in the state, or by any other financial institution approved by the Commissioner, or such other assets as may be approved by the Commissioner.

With the authority afforded by this law, the Commissioner states that a Delaware licensed captive insurance company with no third-party coverage may also hold minimum capital and surplus in a brokerage account under these conditions:

• The brokerage firm must be listed on the Federal Reserve Bank of New York List of Primary Dealers, or be an affiliate of such entity, or be separately approved by the Department
• The brokerage firm must be in, or have a branch in, Delaware
• Minimum capital and surplus held by a brokerage firm pursuant to this Bulletin may be held in cash, cash equivalents, investment-grade credit rated fixed income securities, or securities traded on a U.S. public stock exchange

The Bulletin can be found here.