(a) Group self-insurers shall file evidence of capitalization in an amount approved by the chair as described herein. Groups shall prepare annual financial statements in accordance with generally accepted accounting principles (GAAP). However, only assets and liabilities as defined in section 317.2 of this Part will be considered when determining the group's financial condition.

(b) Group self-insurers are required to establish and maintain trust assets, as such term is defined in section 317.2(n) of this Part, in an amount which exceeds trust liabilities, as such term is defined in section 317.2(o) of this Part. Group self-insurers who fail to comply with this capitalization standard shall be deemed under-funded and shall immediately provide the chair with an acceptable plan of action as may be appropriate in order to make up the deficiency in a time prescribed by the chair. Such under-funded groups may also be subject to any or all of the provisions set forth in section 317.9 of this Part.

(c) Upon authorization to operate as a group self-insurer, the group shall deposit into the trust an amount equal to a minimum of 40 percent of the initial security deposit held by the chair. Consistent with section 317.5(d) of this Part, the security held by the chair shall not be considered a trust asset and shall not be used to satisfy the financial obligations of a solvent trust. By the end of the first full reporting year, the group shall have deposited amounts sufficient to bring the trust assets to an amount which exceeds trust liabilities. These amounts shall be paid to the trust on a monthly, quarterly, or annual basis as required by the bylaws of the group.

(d) The provisions of this Subpart shall not apply to groups consisting exclusively of municipal corporations.