Captive news

Bermuda registers 64 new re/insurers in 2015 The Bermuda Monetary Authority (the Authority) registered 64 new (re)insurers in 2015, compared with 65 registrations in 2014. Of the new companies 22 are limited purpose insurers or captives (Classes 1, 2, 3, A and B re/insurers), up from the 16 new captives registered the previous year. "Registration of captives is on the increase because they not only reduce insurance costs but are important components of the parent companies' burgeoning risk management programmes," said Shelby Weldon, Director, Licensing & Authorisations at the Authority. "Captives registered between July and December 2015 cover a diverse range of risks, from oil and natural gas drilling in Canada to drivers' insurance in Peru." He said it was encouraging to see continuing registrations from Canada and Latin America, as these regions have been targeted by Bermuda's business development efforts. However, the US remained by far the greatest source of Bermuda's captive formations during the second half of 2015.hideIn terms of new commercial general business (re)insurers, the Authority registered 13 new Class 3A, 3B and 4 (re)insurers in 2015, compared with 11 in 2014. Among the Q3- and Q4-2015 registrants is a new Class 4 insurer, Qatar Reinsurance Company Limited. A total of 20 new special purpose insurers (SPIs) were registered during 2015 - compared with 28 in 2014. South Carolina reports surge in captive registrations South Carolina's Department of Insurance issued 30 new captive licences in 2015, compared with the 20 new companies licensed during 2014. These two years represent a marked increase over 2013 when just three new captive licenses were issued, and 2012 when seven captives were licensed. Of the 30 new captives in 2015, 12 were 'pure' captives, three were sponsored captives (protected cell companies established via legislation S.909 passed in June of 2014) and 12 were Special Purpose Captives (SPCs), nine of which are incorporated cells, which the new statute treats as SPCs. The remaining three were risk retention groups. The Department reported that 19 captives were removed from the rolls last year-11 by voluntary dissolution, one by liquidation, four by outward re-domestication, two by merger and one by conversion to a traditional insurance company. South Carolina closed 2015 with 167 active captives. The Department said it has several promising prospects in the pipeline, two of which it expects to license shortly. The total gross written premium written by South Carolina captives last year was around $3.5bn. The top ten South Carolina captives measured by premium volume accounted for over $2.2bn of combined written premium. The Department said the increases in captives in the last two years has been put down to the arrival of Jay Branum in November of 2013 to assume the newly created position of Director of Captives, and the complete redesign of South Carolina's application review and licensing process "to eliminate redundancies and unreasonably or overly burdensome steps that added no value", early in 2014. In 2014 JLT, Willis, R&Q, and Somers Risk Consulting all opened offices in Charleston, joining Marsh, Aon, Kane, Strategic Risk Solutions, and the USA Risk Group to expand the ranks of reputable captive management companies in the domicile. Oklahoma adds 26 licences in 2015 Oklahoma's insurance department has reported that it currently regulates 73 captive insurers, with 26 licences issued during the last year. "The success of Oklahoma's captive insurance industry is based in the value of the regulatory environment and the service that our department provides to captive owners," Oklahoma Insurance Commissioner John D. Doak said. "As new issues and ideas emerge at both the state and federal levels, I will continue to support the protection and progression of our authority to create a fair and efficient place to do business." Oklahoma's captive insurance statutes and regulations have been updated during recent years to encompass the best of modern trends, said the Department, and the state is now able to offer flexible options for the creation and capitalisation of captive insurance companies with low tax rates and fees, it added. Vermont benefits from 'redomestication' boost Vermont licensed 33 new captive insurance companies in 2015, according to the Vermont Department of Financial Regulation. The new captives were made up of 12 pure captives, seven Risk Retention Groups (RRGs), seven sponsored captives, four special purpose financial insurers, two industrial insured captives and one association captive. There were 11 'redomestications', the largest number ever to occur in a single year in Vermont. The redomestications came from South Carolina (three), Arizona (three), Bermuda (two), Cayman Islands, Nevada, and Kentucky. Growth in 2015 was up significantly from 2014 when 16 companies were licensed. Vermont said the growth was impressive given the prolonged soft market and added competition from other US states. Seven new RRGs were licensed in Vermont, bringing the active total to 89. Vermont said it continues to hold a dominant market share with over 60% of all RRGs premium volume being written by Vermont companies. Six of the 11 redomestications to Vermont were by Risk Retention Groups. New captives were licensed in insurance, healthcare, construction, real estate, professional services, education, transportation, agriculture, retail, and other. Seven new captives were in the healthcare sector. "The continued formation of hospitals and doctors' groups setting up captives in Vermont has been a very positive trend that we expect to continue," said Dan Towle, Vermont's Director of Financial Services. "Hospitals maintain a high interest in forming their captive on-shore and in Vermont." 2015's new licensees bring Vermont's overall total licences to 1,062 with 588 active captive insurance companies. One new license has already been recorded in 2016 and three more applications are currently in process. The Vermont Department of Financial Regulation also revealed that Zurich North America has launched a new sponsored cell captive company in Vermont, called Hoplite Reinsurance Company of Vermont. Cayman feels heat from onshore rivals Despite less favourable external conditions, especially as a result of the emerging on-shore captive domiciles in the US and healthcare reforms introduced by the Patient Protection and Affordable Care Act, 23 new entities were added to the Cayman Islands' international insurance market in 2014, said Patrick Bodden, Deputy Managing Director - Operations at CIMA, at the Cayman Captive Forum 2015. "The year 2015 continued to show growth for the Cayman Islands with 62 licences granted in total so far, resulting in a 2.5% increase in the total number of licensees," he said. He went on: "Although healthcare reforms in the US have posed some challenges to the healthcare captive industry, CIMA believes that the changing landscape could present opportunities for captive growth. As examples, it is possible that hospitals acquiring physician practices will expand existing captives. There is also a possibility for physicians and practices to team up to form large provider groups and establish captive insurance companies for professional liability and other risks." On the issue of Solvency II, he said CIMA would continue to monitor the progress of the directive and its potential impact on captives. "Given that over 90% of the Cayman captives underwrite North American risks and the North American regulators are not expected to follow the Solvency II model for capital regulation, CIMA has not taken a decision to achieve equivalence under Solvency II. In fact, we have seen a few new captive re-domestications in the Cayman Islands as a result of some other jurisdictions deciding to pursue this method," he said.

Captive news

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