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MARSH CAPTIVE SOLUTIONS

Americas Domiciles

Arizona

Head of Office Julie Boucher
Senior Team Rae Brown
Office & Mailing
Address
Marsh Management Services, Inc.
Captive Solutions
2325 E. Camelback Rd., Suite 600
Phoenix, AZ 85016
Telephone +1 (602) 337-6247
Facsimile +1 (602) 337-6399

 

Basic Information

Location Arizona is located in the southwestern area of the United States.
Accessibility Direct flights are available to Phoenix, Arizona from most U.S. cities.
Applicable Legislation ARS Title 20, Chapter 4, Article 14, effective August 31, 2012; subsequently revised effective September 2003 and August 2005.
Number of Captives There are 111 active captives as of year end 2014.
Regulatory Agency Arizona Department of Insurance, 2910 North 44th Street, Suite 210, Phoenix, AZ 85018

 

REGULATORY ISSUES

Acceptable Insurance Subsidiaries Pure captives, association captives, agency captives, branch captives, group captives, protected cell captives, and risk retention groups
Acceptable Corporate Forms Stock, mutual, reciprocal, nonprofit, or limited liability company
Permitted Business All property and casualty lines; other lines under certain circumstances upon approval of the insurance commissioner
Direct Insurance Permitted All permitted business
Reinsurance Permitted Most lines of insurance, upon approval of the insurance commissioner
Policy Form and Rate Approval Not required (but submitted in business plan)
Local Office Requirement Permissible lines of business with underwriting authority Payment of fees
At least one Director meeting annually in Arizona
Maintain principal place of business in Arizona
Arizona captive manager
Books and records in Arizona
Minimum capital and surplus
Resident statutory agent
Financial reporting requirements

 

CAPITALISATION & SOLVENCY REQUIREMENTS

 
Entity Minimum cash or letter of credit:
Pure Captive $250,000
Group Captive $500,000
Risk Retentions Group $500,000
Agency Captive $500,000
Protected Cell Captive $500,000
Reciprocals $500,000
Pure or Group Reinsurers One half of the the above-indicated amounts
Solvency No formal requirements
Premium Taxes No premium taxes, direct or assumed
Intercompany Loans Only a pure captive insurer may make loans to its parent on written approval by the director.
Investment Restrictions Group, agency, and protected cell captives must comply with the investment requirements prescribed in Chapter 3, Article 2 of Title 20. A pure captive insurer is not subject to restrictions on allowable investments. Only a pure captive insurer may make loans to its parent on written approval by the director.
Taxation Income generated by the captive will be subject to the federal tax rate of the captive parent (assuming the parent is U.S.-based) otherwise, the captive income will initially be subject to the U.S. federal rate and consolidated at the rate of the foreign parent. Zero state income tax on profits is earned by the captive.

 

Barbados

Head of Office Nicholas Crichlow
Senior Team Nicholas Crichlow
Margaret Howard
Office Address Building No. 1
Chelston Park
Collymore Rock
St. Michaels, Barbados
Mailing Address P.O. Box 1274
Bridgetown, Barbados
West Indies
Telephone +1 (246) 436-9929
Facsimile +1 (246) 436-9932

General Information

Location Barbados is the eastern-most of the Caribbean islands and is located approximately 270 miles north of Venezuela. Barbados has a population of approximately 280,000 and a land area of 166 square miles.
Accessibility The island is easily accessible on frequently scheduled flights from Miami, New York, Toronto and London.
Applicable Legislation The Insurance Act or The Exempt Insurance Act
Number of Captives Approximately 261 as of 11-March-2013
Regulatory Agency Financial Services Commission

REGULATORY ISSUES

Acceptable Insurance Subsidiaries Single Parent or Association Captives
Acceptable Corporate Forms Stock or Mutual
Permitted Business All commercial lines, personal lines and unrelated business permitted except local Barbados risk.
Direct Insurance Permitted All Lines
Reinsurance Permitted All Lines
Policy Form and Rate Approval Not required
Local Office Requirement Registered office unless self-managed.
Licensed management company unless self-managed.

 

CAPITALISATION & SOLVENCY REQUIREMENTS

 
Stock Company Minimum Paid-In Capital (Cash or Letter of Credit) $125,000
Mutual Company Solvency Margin for General Business Minimum Contributed Reserves $125,000

During the first year, assets must exceed liabilities (solvency margin) by at least $125,000. After the first year, the company must maintain a solvency margin such that it is at least equal to:
a) 20 percent of premium income for the preceding financial year for the premium income up to US$5 million, plus
b) 10 percent of premium income for the preceding financial year for premium income in excess of US$5 million.
Solvency Margin for Long-Term (Life) Business Assets must exceed liabilities.
Premium Taxes No local premium tax is imposed. Premium for U.S. risk may be subject to Federal Excise Tax of 4 percent on direct policies and 1percent on reinsurance policies if captive is viewed as an insurance company for U.S. federal tax purposes.
Intercompany Loans Require approval by the Supervisor to be included as an admitted asset for solvency margin calculation. Interest earned may be subject to 30 percent federal withholding tax.
Investment Restrictions No specific restrictions.
Taxation If the Company is licensed under the Exempt Insurance Act, no income tax, capital gains tax, withholding tax, or other direct tax is levied in Barbados. Barbados will guarantee these exemptions for a period of 15 years from the date of the company's incorporation. Thereafter, a tax rate of 8.00 percent will be applied on the first $125,000 of taxable income only. The current license fee of $10,000 is not payable when the 8.00 percent is payable.

In addition to its treaty with the United States, Barbados has a network of tax treaties with many countries including Canada, Denmark, Norway, Switzerland, and the United Kingdom.
Reporting Requirements Auditors Certificate of Solvency

Certified Loss Reserves-required for long-term business and where loss reserves exceed 200 percent of its capital and surplus accounts.

 

Bermuda

Head of Office Jill Husbands - Head of Office & Managing Director
David Ezekiel - Chairman & Managing Director
Senior Team Lawrence Bird
Stephen Drake
Paul Gatutha
Nicholas (Nick) Warren
Gregory Tyers
Nicola Hallett
Office Address Victoria Hall
11 Victoria Street
Hamilton HM11, Bermuda
Mailing Address Victoria Hall
P.O. Box HM 1826
Hamilton HMHX, Bermuda
Telephone +1 (441) 292-4402
Facsimile +1 (441) 292-1563

General Information

Location Bermuda consists of a group of small islands located off the Mid-Atlantic coast of the United States approximately 770 miles from North Carolina. The population of Bermuda is approximately 64,000.
Accessibility The Island is easily accessible on frequently scheduled flights from New York, New Jersey, Boston, Atlanta, Toronto, London, Miami and Philadelphia.
Applicable Legislation The Companies Act of 1981 and The Insurance Act of 1978 (amended in 1985 and subsequent years) govern the formation of insurance companies. Bermuda Monetary Authority is the regulatory jurisdiction responsible for the supervision of captive operations in Bermuda.
Number of Captives 831 as of 31-Dec-2013.
Regulatory Agency The Registrar of Companies

REGULATORY ISSUES

Acceptable Insurance Subsidiaries Single Parent, Group or Association Captives, Segregated Cell Companies, Special Purpose Insurers and Life Insurance – all in the form of both insurance and reinsurance companies.
Acceptable Corporate Forms Stock or Mutual
Permitted Business All commercial lines, personal lines and unrelated business permitted
Direct Insurance Permitted All commercial lines except where restricted in insured jurisdiction, i.e. statutory coverages such as Workers' Compensation and Automobile Liability
Reinsurance Permitted May assume and cede any reinsurance other than from or to non-exempt domestic Bermuda sources
Policy Form and Rate Approval Not required
Local Office Requirement Registered office and a resident representative, together with a principal representative and a local licensed insurance manage.
A local director must always be maintained if a resident representative is not used.
One shareholders' meeting annually anywhere in the world, may be done by proxy.

 

Capitalisation & Solvency Requirements

  Class 1
Class 2
Class 3,3A,3B
Class 4
Type of Company Pure single parent captives Group or single parent captives Any insurance or reinsurance company Any insurance or reinsurance company
Maximum Unrelated (1) Risk Permitted 0% 20% 3 - 20 to 50%
3A/B(d) - over 50%
 
Minimum Capital (2) & Surplus $120,000 $250,000 $1,000,000 $100,000,000
Solvency Margin Premium Test 20% of Net Written Premiums for the First $6,000,000

10% of Net Written Premiums in Excess of $6,000,000
20% of Net Written Premiums for the First $6,000,000

10% of Net Written Premiums in Excess of $6,000,000
20% of Net Written Premiums for the First $6,000,000

15% of Net Written Premiums in Excess of $6,000,000
20% of Net Written Premiums

A Maximum Deduction of 25% of Gross Premium for Reinsurance
Solvency Margin Loss Reserve Test 10% of loss reserves 10% of loss reserves 15% of loss reserves 15% of loss reserves
Actuarial Opinion (3)
None required Required every three years Required every year Required every year
(a) The term "unrelated" has not been defined for regulatory purposes. Sources indicate however that entities with which
the captive parent has an existing non-insurance relationship may not be considered an unrelated risk under the new
regulations.
(b) All classes require $120,000 of Cash Capitalisation, except for Class 4 which is $1 million.
(c) Captives whose products and professional liability writings total 30% of gross written premiums are required to obtain
certification from a loss reserve specialist.
(d) Class 3B insurers are those that write over 50% of unrelated business and premiums in excess of US$50M.
Premium Taxes No local premium tax is imposed.
Premium for U.S. risk may be subject to Federal Excise Tax of 4% on direct policies and 1% on reinsurance policies if captive is viewed as an insurance company for U.S. federal tax purposes.
Intercompany Loans Allowable but does not qualify as an admitted asset for solvency purposes, unless
approved by the regulator, which requires a review of the related entity financial
financial position. The interest on the loan earned by the captive may be
subject to 30% federal withholding tax, unless 953D election is taken.
Investment Restrictions The captive must comply with the Minimum Liquidity Ratio for General Business
requirements which states that the value of relevant (liquid) assets of the insurer
conducting general business may not be less that 75% of the amount of its relevant
liabilities, unless the Bermuda Monetary Authority consents to waive this
requirement. Certain assets may be considered "non-relevant" (usually non-liquid)
and therefore would not be considered in calculating the liquidity ratio.
Taxation Bermuda has no income, profit or capital gains tax. Bermuda will enter into an agreement with the captive to levy no new taxes until 2016.

 

Reporting Requirements

Class 1 Audited solvency certificate and declaration of ratios
Audited financials required annually
Certified loss reserves not required unless discounting to meet solvency margin, or professional liability premium is greater than 30% of the total gross written premium

Class 2 Audited solvency certificate and declaration of ratios
Statutory financial statements
Audited financials required annually
Triennial (or annual if discounting to meet solvency margin or if professional liability premium is greater than 30% of the total net premium)

Class 3 Audited solvency certificate and declaration of ratios
Statutory financial statements
Audited financials required annually
Certified loss reserves required annually

Class 4 Audited financials required annually
Certified loss reserves required annually
Audited solvency certificate and declaration of ratios

 

British Columbia

Marsh Canada Limited  
Office & Mailing
Address
Marsh Canada Limited
550 Burrard Street, Suite 800
Vancouver, British Columbia
Canada
Telephone +1 (604) 685-3765
Facsimile +1 (604) 685-3112

General Information

Location British Columbia is the western-most province of Canada (Pacific Standard Time).
Accessibility Vancouver is serviced by regular daily flights from all parts of North America, Europe and the Far East.
Applicable Legislation The Insurance (Captive Company) Act was passed in 1987.
Number of Captives 17 as of 31-Dec-2008
Regulatory Agency Ministry of Finance & Corporate Relations
Superintendent of Insurance and International Financial Business

REGULATORY ISSUES

Acceptable Insurance Subsidiaries Single Parent and Association Captives
Acceptable Corporate Forms Stock Corporation
Permitted Business Property, Casualty and Liability lines of business. No personal lines.
Direct Insurance Permitted Yes - However, B.C. captives are not admitted in other Canadian provinces, so generally the only direct premiums will be for local B.C. risk. Premiums from other parts of Canada are generally fronted.
Reinsurance Permitted Yes
Policy Form and Rate Approval Not required
Local Office Requirement Registered office

 

CAPITALIZATION & SOLVENCY REQUIREMENTS

 
Minimum Paid-In Capital $200,000
Solvency Margin The captive must maintain reserves of at least $100,000. In effect, the solvency requirement is Capital + Surplus of $300,000.
Premium Taxes Assets must exceed liabilities.
Premium Taxes B.C. Premium tax, generally 4%, is payable on direct written premiums on BC risks. Fronted premiums pay no B.C. premium tax but are subject to premium taxes in the jurisdiction of the fronted policy or policyholder - for other Canadian provinces this is generally 3%.
Premiums from Ontario, Quebec and Newfoundland are also subject to Provincial sales tax 8%-12%.
Reinsurance premiums from outside Canada will be subject to appropriate local taxes e.g., in the U.S. this may include premium taxes, self-procurement taxes and Federal Excise Tax.
Intercompany Loans Permitted - the Captive Act is silent.
Investment Restrictions There are no statutory restrictions on investments held by captives.
Taxation British Columbia captives are Canadian residents for tax purposes and subject to full federal and provincial income tax - generally a combined rate of 44%. As an insurance company, a captive is allowed to deduct loss reserves on a discounted basis. Income generated from outside Canada may be exempt from the provincial portion of the tax but will still pay the 28% federal tax. In addition, Canada has a network of tax treaties with many countries.
Reporting Requirements GAAP
Audited Financials
B.C. captives are required to undergo an independent audit each year and loss reserves must be substantiated by an actuarial certificate.

 

Cayman Islands

Head of Office Clayton Price
Senior Team Kieran O'Mahony
Graham Manchester
Kieran Mehigan
Office Address Governors Square
Building 4, 2nd Floor
23 Lime Tree Bay Avenue
Grand Cayman, Cayman Islands
Mailing Address P.O. Box 1051
Grand Cayman, Cayman Islands
Telephone +1 (345) 914-5722
Facsimile +1 (345) 949-7849

Basic Information

Location The Cayman Islands are a British overseas territory consisting of three small islands in the Western Caribbean, approximately 460 miles south of Miami.
Accessibility The islands are accessible on regularly scheduled flights from Miami, Houston, Charlotte, Atlanta, Tampa, Orlando, London – UK, Kingston, Jamaica, Philadelphia, New York, Detroit and Toronto, Canada.
Applicable Legislation The Insurance Law (2010 Revision); Insurance (Amendment) Bill, 2013
Number of Captives There are 759 active captives as of year end 2013
Regulatory Agency The Cayman Islands Monetary Authority (CIMA)

REGULATORY ISSUES

Acceptable Insurance Subsidiaries Pure and Association Captives, Rent-a-Captive Vehicles, Deferred Variable Annuities, Special Purpose Vehicles, Segregated Portfolio Companies (SPCs), and Portfolio Insurance Companies (PICs)
Acceptable Corporate Forms Stock or Mutual
Permitted Business Non-Cayman Parent (including member companies) and Third party risk with approval
Direct Insurance Permitted All Lines Permitted
Reinsurance Permitted All Lines Permitted
Policy Form and Rate Approval None required
Local Office Requirement Registered office and licensed management company required
Minimum of two directors required (no resident director required)

CAPITALISATION & SOLVENCY REQUIREMENTS

 
Restricted Class B insurer No requirements
Unrestricted Class B insurer For a pure captive, Class B(i), the minimum capital is US$100,000 and there is a prescribed capital requirements as per below. CIMA reserves the right to approve various classes of assets. Maintain minimum capitalisation. Letters of credit or cash are acceptable to secure any excess surplus
Class B(i) General Business

Long-Term

Composite
US$100,000

US$200,000

US$300,000


PCR = MCR

PCR = MCR

PCR = MCR
Class B(ii) General Business

Long-Term

Composite
US$150,000

US$300,000

US$450,000


General:
  • 10% of Net Earned Premium (“NEP”) to first US$5,000,000
  • 5% of additional NEP up to US$20,000,000
  • 2.5% of additional NEP in excess of US$20,000,000
Long term: PCR = MCR
Composite: amount required to support the general business plus MCR

Class B(iii) General Business

Long-Term

Composite
US$200,000

US$400,000

US $600,000


General:
  • 15% of NEP to first US$5,000,000
  • 7.5% of additional NEP up to US$20,000,000
  • 5% of additional NEP in excess of US$20,000,000
Long-term: PCR = MCR
Composite: amount required to support the general business plan MCR

Class C
General Business

Long-Term

Composite
US$500

US$500

US $500


General:PCR = MCR

Long-term:PCR = MCR

Composite:PCR = MCR
Solvency The Head of Insurance Supervision has the authority to make regulations on liquidity margins and ratios.

Premium Taxes No local premium tax is imposed.

Premium for US risk may be subject to Federal Excise Tax of 4 percent on direct policies and 1 percent on reinsurance policies/policies of life insurance if the captive is viewed as an insurance company for US federal tax purposes.

Intercompany Loans Parent loans are subject to approval of the Head of Insurance Supervision. Permission is not unreasonably withheld. Parent loans are generally permitted for large U.S. firms. Interest earned on the loan by the captive may be subject to 30 percent U.S. federal withholding tax.

Investment Restrictions There are no formal investment restrictions. However, a captive's investment programme will be subject to the Head of Insurance Supervision's approval when the business plan is submitted. Also, the Head of Insurance Supervision must be notified of any significant alterations to the investment programme.

Taxation No income tax, plus 20-year guaranteed tax-exempt status upon incorporation.

Reporting Requirements Audited financials filed within six months of fiscal year end;

IASO (Annual Statement of Operations) required within 14 days of calendar year end;

Certified loss reserves required for long-term business (life and disability) only.

 

Colorado

Marsh USA, Inc.  
Head of Office Julie Boucher
Sales Coordinators Julie Boucher
Chris Varin
Office Address 100 Bank Street, Suite 610
Burlington, VT 05401 USA
Mailing Address P.O. Box 530
Burlington, VT 05402-0530 USA
Telephone +1 (802) 864-5912
Facsimile +1 (802) 859-3550

Basic Information

Location Colorado is located in the western United States.
Accessibility Frequent flights are available to Denver, Colorado from New York, Chicago and Los Angeles.
Applicable Legislation Colorado became the first domicile in the United States to authorise the formation of captives with the passage of the Colorado Captive Insurance Company Act in 1972.
Number of Captives 6 as of 31-Dec-2008
Regulatory Agency Colorado Division of Insurance, Department of Regulatory Agencies

REGULATORY ISSUES

Acceptable Insurance Subsidiaries Pure and Group Captives.
Acceptable Corporate Forms Any organisational structure.
Permitted Business Only parent and its affiliate's risk.
Direct Insurance Permitted All property/casualty lines include Automobile Liability and General Liability, Surety and Employee Benefits. No life, personal lines or third-party.
Reinsurance Permitted All property/casualty lines including Auto Liability and General Liability, Surety and Employee Benefits. No life, personal lines or third-party.
Policy Form and Rate Approval None required.
Local Office Requirement Principal office and records in Colorado.
Use of local manager.

 

Capitalisation & Solvency Requirements

Entity Minimum Capital
Minimum Surplus
Total Capitalisation
(Cash or Letter of Credit)
Stock
Pure
Association
    $500,000*
$500,000*
Mutual Association     $500,000*
*$300,000 of the total $500,000 capital and surplus must be under joint custody and control with the Colorado Division of Insurance. The remaining $200,000 is under sole custody and control of the captive.
Premium Taxes
Premium tax on
direct premiums

Premium tax on
reinsurance premiums

  0.500% on first $25 million

0.250% on next $25 million

0.010% thereafter

(subject to a minimum of $5,000)
0.25% on first $25 million

0.10% thereafter

(subject to a minimum of $5,000)


Intercompany Loans Pure captives may make loans to its parent if approved within its Plan of Operation. The loan amount must be within the maximum aggregate limit approved to be considered a permitted asset. Additionally the parent/recipient must:
- have current assets exceeding current liabilities, including the loan as a current liability, on a non-consolidated basis with the captive,
- provide an audited financial statement with an unqualified opinion,
- report intangible assets, on a non-consolidated basis with the captive, in excess of its net worth.

Under special conditions a departure from the above is allowed with prior written approval from the CDOI provided that the loan contain an automatic repayment schedule that is tied to a mutually agreed upon index, such as the rating of the parent.

Generally, a loan must be in the form of a formal agreement with a provision that the loan will be repaid within 90 days of a request from the CDOI and contains specific maturity and interest provisions

Investment Restrictions Admitted market restrictions apply to Group captives. No restrictions for Pure captives.

Taxation
Income generated by the captive will be subject to the federal tax rate of the captive parent (assuming the parent is U.S. based); otherwise, the captive income will initially be subject to the U.S. federal rate and consolidated at the rate of the foreign parent.

Reporting Requirements NAIC Blank and CPA audited statutory financial statements.
Pure captives may file a short form version of NAIC Blank.
A pure captive can also meet the NAIC Blank filing requirements by filing its audited financial statement no later than 60 days following the captive's fiscal year end.
Certification that the captive maintains its principal and home office, and that the office performs a significant portion of the captive's operations in the state of Colorado.
An audited financial statement must be prepared and filed no later than 150 days following the captive's fiscal year end.
Colorado captives are required to undergo an independent audit each year and loss reserves must be substantiated by an actuarial certificate no later than 60 days following the captive's fiscal year end.
Actuary's report must be filed no later than 90 days following the captive's fiscal year end.

 

Connecticut

Marsh USA, Inc.  
Head of Office Art Koritzinsky
Sales Coordinators Michael Serricchio
Office Address Captive Solutions
501 Merritt 7
Norwalk, CT 06856-6010
Telephone (203) 229-6874
Facsimile (203) 229-6510

Basic Information

Location Connecticut is located in the northeastern United States, close to both the New York and Boston metropolitan areas.
Accessibility Direct air transportation to Hartford, CT is available from most major cities in the United States and international locations, and proximate to all major New York airports.
Applicable Legislation Senate Bill 281 signed into law by Connecticut’s Gov. Jodi Rell in June 2008, effective January 1, 2008.
Regulatory Agency Connecticut Insurance Department

REGULATORY ISSUES

Acceptable Licensed Entity Types Pure captives, association captives, industrial insured captives, and risk retention groups.
Acceptable Organisational Forms Stock, Member-managed Limited Liability Company, Mutual, Non-profit and Reciprocal.
Permitted Business All commercial lines and most fronted personal lines.
Direct Insurance Permitted Related and "Controlled Unaffiliated Business" as per statute.
Reinsurance Permitted Related reinsurance permitted as well as "Controlled" Unrelated Risk on a fronted reinsurance basis.
Policy Form and Rate Approval Not required
Local Office Requirement Principal place of business.
One board of directors meeting held annually in Connecticut.
One resident director in Connecticut.

 

Capitalisation & Solvency Requirements

Entity Minimum Capital and Surplus (Cash or Letter of Credit)
Pure Captive $250,000
Industrial Insured $500,000
Association Captive $750,000
Risk Retention Group $1,000,000

 

Premium Taxes – Tax on Direct Premiums

0.380% on first $20 million
0.285% on next $20 million
0.190% on next $20 million
0.072% thereafter

Premium taxes are subject to a minimum of $7,500 per year and a maximum of $200,000 per year.
Investment Restrictions
No investment restrictions, except to the extent that such investment threaten the solvency or liquidity of the captive. Dividends require Regulator approval.
Taxation
Income generated by the captive will be subject to the federal tax rate of the captive parent (assuming the parent is U.S. based). Captive insurers are not subject to Connecticut state income tax and are excluded from Connecticut's state income tax calculations.

 

Delaware

Marsh USA, Inc.  
Head of Office Julie S. Boucher, CPA
Sales Coordinator  

General Information

Location Delaware is located in the Mid-Atlantic region of the United States.
Accessibility Flights from major US cities and international locations are available to Philadelphia International Airport or Baltimore-Washington International Airport. Clients with private jets or similar aircraft can also take advantage of the various local airports located throughout the state.
Applicable Legislation 144th General Assembly: House Bill #214 (2007); 143rd General Assembly: House Bill #218 (2005)
Regulatory Agency Delaware Department of Insurance

REGULATORY ISSUES

Acceptable Insurance Subsidiaries Pure, association, industrial insured, risk retention groups, sponsored, and special purpose vehicles.
Acceptable Corporate Forms Stock or a non-stock company, or may be formed as a limited liability company, partnership, limited partnership or statutory trust.
Permitted Business All classes except for personal motor vehicle or homeowner's insurance coverage.
Direct Insurance Permitted Related and “controlled” unrelated risks.
Reinsurance Permitted Related and “controlled” unrelated risks.
Policy Form and Rate Approval Not required.
Local Office Requirement Principal place of business in Delaware
Annual board of directors meeting in Delaware
Registered agent in Delaware

 

Capitalisation & Solvency Requirements

Pure Captive $250,000
Association Captive $750,000
Industrial Insured Captive $500,000
Risk Retention Group $1,000,000
Sponsored Captive $500,000
Special Purpose Captive $250,000 or other amount determined by the Commissioner
Special Purpose Financial Captive $500,000; if not also a sponsored captive then $250,000
Minimum capital and surplus shall be maintained in Delaware and may be in the form of cash, an irrevocable letter of credit issued by a financial institution chartered by or licensed or otherwise authorised to do banking business in Delaware, or by any other financial institution approved by the Commissioner, or such other assets as may be approved by the Commissioner.
Premium Taxes Direct Premiums: The total direct premium tax maximum is $125,000.

Reinsurance Premiums: The total direct premium tax maximum is $75,000.
Investment Restrictions Pure captives, industrial insured and special purpose financial captives are not subject to restrictions on allowable investments, as determined by the Commissioner. Association captives, special purpose captives and risk retention groups must have their investments approved by the Commissioner.
Reporting Requirements Captive insurance companies are not required to file annual reports to the Commissioner. Each captive company is required to file a report of financial condition by March 1 of each year.

 

Hawaii

Head of Office Scot Sterenberg
Senior Team Toni Kanehira
Office Address 745 Fort Street, suite 1100
Honolulu, HI 96813-3800 USA
Mailing Address P.O. Box 4238
Honolulu, HI 96812 USA
Telephone +1 (808) 585-3500
Fascimile +1 (808) 585-3513

Basic Information

Location Hawaii is a group of islands located in the Pacific Ocean approximately 2,500 miles from the West Coast of the United States mainland.
Accessibility Direct flights are available to Hawaii from many U.S. cities, including Chicago, Dallas, Detroit, Los Angeles, New York, Las Vegas, Phoenix, Portland, San Francisco and Seattle. Direct flights are also available from several major Japanese cities.
Applicable Legislation Act 253, effective July 1, 1987, subsequently revised and re-codified effective July 1, 1988 as Article 19 of Chapter 431, Hawaii Revised Statutes.
Number of Captives As of December 2014, there were 194 captives in the domicile.
Regulatory Agency Department of Commerce & Consumer Affairs – Insurance Division, Captive Administration Branch

REGULATORY ISSUES

Acceptable Insurance Subsidiaries Class 1: pure captive that only writes business as a reinsurer
Class 2: pure captive that is not a Class 1 (can write direct or reinsurance business)
Class 3: association captive or risk retention group
Class 4: leased capital facility (protected cell captive)
Class 5: reinsurance or excess insurance company
Acceptable Corporate Forms Stock, mutual, or reciprocals
Permitted Business All Property and Casualty lines; Personal Lines under certain circumstances upon approval of the Commissioner
Direct Insurance Permitted All permitted business
Reinsurance Permitted Any line of insurance, upon approval of the Commissioner
Policy Form and Rate Approval Not required
Local Office Requirement Principal place of business
At least one Board of Directors meeting held annually in Hawaii (can be by teleconference)

 

Capitalisation & Solvency Requirements

Minimum Capital Class 1: $100,000
Class 2: $250,000
Class 3: $500,000
Class 4: $1,000,000
Class 5: Not defined by Statute

Minimum capital and surplus is determined on a case-by-case basis. The Commissioner reviews the proposed captive operations and determines the appropriate level or capitalisation. The amounts listed above are the minimum statutory levels. The captive’s minimum statutory capital and surplus must be maintained in the form of cash, public obligations, irrevocable letter of credit issued by a bank chartered in the state of Hawaii or a member bank of the Federal Reserve System and approved by the Commissioner, or another investment approved by the Commissioner.
Premium Taxes Premium taxes are imposed on gross direct written premium received on risks located in Hawaii or those risks located outside of Hawaii which have not been taxed at source. Premium taxes are waived on reinsurance premium assumed. The premiums tax is in lieu of all other state taxes except real and personal property taxes.

Tax Rate
0.25% on first $25m
0.15% on next $25m
0.05% thereafter uo to $200m

Maximum premiums tax is $200,000

Premium tax is not assessed on reinsurance premiums assumed by the captive or on premiums that have been previously taxed in another jurisdiction.
Intercompany Loans Subject to the approval of the Insurance Commissioner
Investment Restrictions Funds must be invested in accordance with regulations governing all Hawaii insurers, except that pure captives may obtain approval from the Commissioner for investments not specified in the insurance code.

Pure captives may invest in accordance with a strategic investment policy approved by the captive's Board of Directors and the Insurance Commissioner.

Investment guidelines are located in Article 19 of Article 6 Chapter 431 of the Hawaii Revised Statutes.
Taxation Income generated by the captive will be subject to the federal tax rate of the captive parent (assuming the parent is U.S. based); otherwise, the captive income will initially be subject to the U.S. federal rate and consolidated at the rate of the foreign parent. The State of Hawaii does not impose an income tax or excise tax on Hawaii domiciled captives.
Reporting Requirements Audited financials

Certified loss reserves

NAIC statutory annual statement (RRG and Association Captives only)

 

Maine

Head of Office Arthur Koritzinsky
Sales Coordinator Arthur Koritzinsky
Office & Mailing Address 1166 Avenue of the Americas
39th Floor
New York, NY 10036 USA
Telephone (212) 345-3664
Fascimile (212) 345-7316

Basic Information

Location Maine is located in the Northeastern United States.
Accessibility Maine is accessible on regularly scheduled flights from many locales throughout the United States.
Applicable Legislation Sec. 1.24-A Maine Revised Statutes Annotated, Chapter 83
Regulatory Agency Superintendent of Insurance, Maine Bureau of Insurance

REGULATORY ISSUES

Acceptable Insurance Subsidiaries Pure, Association & Risk Retention Groups
Acceptable Corporate Forms Stock or Mutual
Permitted Business Direct & Reinsurance
Direct Insurance Permitted Casualty (Excluding WC) Marine P&I, Property, Surety, Title & Affiliated Credit Life and Credit Health
New Amendments Allowance of Pure Non-Profit Captive Insurance Companies
Policy Form and Rate Approval Not required
Local Office Requirement Principal office in Maine
Annual Directors meeting in Maine
Use of local managers required
One director must be a Maine resident

 

Capitalisation & Solvency Requirements

  Minimum Capital
Minimum Surplus
Total Capitalisation
Stock - Pure
$100,000 $150,000 $250,000
Stock - Industrial Insured
$200,000 $300,000 $500,000
Stock - Association
$400,000 $350,000 $750,000
Mutual - Industrial Insured
  $500,000 $500,000
Mutual - Association
  $750,000 $750,000

 

Premium Taxes Premium tax on direct premiums

0.375% on first $20 million
0.275% on next $20 million
0.175% on next $20 million
0.075% thereafter

(subject to a minimum of $4,000)


Premium tax on reinsurance premiums

0.215% on first $20 million
0.125% on next $20 million
0.050% on next $20 million
0.025% thereafter

(subject to a minimum of $4,000)
Investment Restrictions None, unless solvency is threatened
Taxation Income generated by the captive will be subject to the federal tax rate of the captive parent (assuming the parent is U.S. based); otherwise, the captive income will initially be subject to the U.S. federal rate and consolidated at the rate of the foreign parent.
Reporting Requirements GAAP

Annual NAIC convention statement

Audited Financials (Prior to 7/1)

Certified Loss Reserves
Regulatory & Incorporation
Expenses
$1,000 Filing Fee

$500 Maine Redomestication Fee

$100 Issuance Annual Fee

 

Nevada

Marsh Management Services Inc.  
Head of Office Ellen Charnley
Sales Coordinator Rae Brown
Office & Mailing Address 7251 W Lake Mead Blvd Ste 401
Las Vegas NV 89128 USA
Telephone (602)-337-6247
Fascimile (602)-337-6399

Basic Information

Location Nevada is located in the southwestern area of the United States.
Accessibility Direct flights are available to Reno, Nevada and Las Vegas, Nevada from most U.S. cities
Applicable Legislation NAC 694C.010
Number of Captives There are 160+ active captives as of year-end 2014. There are 160+ active captives as of year-end 2014
Regulatory Agency Nevada Division of Insurance
Captive Program
1818 E. College Parkway, Ste-103
Carson, City, NV 89706

REGULATORY ISSUES

Acceptable Insurance Subsidiaries Agency captives, alien captive insurers, branch, association, pure/single parent, rental, sponsored/series LLC, protected cell, risk retention group
Acceptable Corporate Forms Stock, mutual, reciprocal, nonprofit, or limited liability company
Permitted Business A captive insurer shall not directly provide personal motor vehicle or homeowners' insurance coverage, or any part thereof, shall not accept or cede reinsurance, may provide workers' comp insurance provided pursuant to a programme of self-funded insurance of its parent and affiliated companies if: (1) the parent or affiliated company which is providing the self-funded insurance is certified by the commissioner, or (2) the programme of self-funded insurance is otherwise qualified pursuant to, if being written in the state, or in compliance with, the laws of the state in which the insurance is transacted
Direct Insurance Permitted All permitted business
Reinsurance Permitted A captive may provide reinsurance on risks ceded by any other insurer
Policy Form and Rate Approval Not required
Local Office Requirement Permissible lines of business with underwriting authority Payment of fees At least one Director meeting annually in Nevada Maintain principal place of business in Nevada Nevada captive manager Books and records in Nevada Minimum capital and surplus Resident statutory agent Financial reporting requirements

 

Capitalisation & Solvency Requirements

Entity Required minimum capital and surplus in cash or letter of credit:
Pure Captive $200,000
Association Captive $500,000
Agency Captive $600,000
Rental Captive $800,000
Sponsored Captive $500,000
Solvency
No formal requirement
 
Tax on Direct Net Premium: .4% on 1st $20mm;
.2% on next $20mm;
.075% thereafter
Reinsurance premium is subject to tax of: .225% on 1st $20mm;
.0150% on next $20mm;
.025% thereafter
Intercompany Loans A pure captive insurer may make a loan to its parent or affiliated company if the loan:
(a) Is first approved in writing by the Commissioner;
(b) Is evidenced by a note that is in a form that is approved by the Commissioner; and
(c) Does not include any money that has been set aside as capital or surplus as required by subsection 1 of NRS 694C.250.
Investment Restrictions A pure captive insurance company or industrial insured captive insurance company is not subject to any restrictions on allowable investments contained in the Insurance Code. The commissioner may prohibit or limit an investment that threatens the solvency or liquidity of the company.
Taxation Income generated by the captive will be subject to the federal tax rate of the captive parent (assuming the parent is U.S. based); otherwise, the captive income will initially be subject to the US federal rate and consolidated at the rate of the foreign parent. No Nevada State Income tax applies to captive profits.

 

New York

Head of Office Nisala Weerasooriya
Senior Team Gemma Mah
Office & Mailing Address 48 South Service Road
Suite 310
Melville, NY 11747-2335
Telephone +1 (631) 577-0500
Fascimile +1 (212) 948-4192

General Information

Location New York is located in the northeastern United States.
Accessibility New York is accessible on frequent flights from numerous global locales.
Applicable Legislation Article 70 of the New York Insurance Law
Number of Captives 64 as of March 31, 2015
Regulatory Agency Superintendent of Financial Services, New York State Department of Financial Services

REGULATORY ISSUES

Acceptable Insurance Subsidiaries Pure and Group Captives
Acceptable Corporate Forms Stock or Mutual Insurer
Permitted Business Direct and Reinsurance
Direct Insurance Permitted Related and "Controlled" Unrelated Risk
Reinsurance Permitted Related and "Controlled" Unrelated risks. Third party business not exceeding 50% of Gross Written Premium with approval of Superintendent.
Policy Form and Rate Approval Not required
Local Office Requirement Principal office in New York
Annual Directors meeting in New York
Minimum of three Directors (two must be New York residents)
Use of local manager required

 

Capitalisation & Solvency Requirements

  Minimum Stock
Minimum Surplus
Minimum Capitalisation
Stock      
Pure
Group
$100,000
$200,000
$150,000
$300,000
$250,000
$500,000
Mutual      
Pure
Group
  $250,000
$500,000
$250,000
$500,000

The above needs to be in cash, letter of credit, or in investments such as U.S. Government or New York State bonds.

 
Solvency Margin No formal solvency margin exists, however a general benchmark is minimum of $1 surplus for every $5 of net written premium. The parent (owner) of a New York captive must have a minimum net worth of $100 million.
   
Premium Taxes Annual Assessment (Sec.206 of New York State Financial Services Law) – based upon direct premiums for risks located in New York only (non-New York & reinsurance premiums are not used in calculating the assessment). The estimated rate is approximately .89% of New York direct premiums written.
Premium tax on direct premiums
0.400% on first $20 million
0.300% on next $20 million
0.200% on next $20 million
0.075% thereafter
(subject to a minimum of $5,000 combined direct and reinsurance)

Premium tax on reinsurance premiums 0.225% on first $20 million
0.150% on next $20 million
0.050% on next $20 million
0.025% thereafter
(subject to a minimum of $5,000 combined direct and reinsurance)

Intercompany Loans  The captive may lend funds in excess of the minimum capitalisation requirements subject to regulatory approval. 
Investment Restrictions  None, unless solvency is threatened 
Taxation  Income generated by the captive will be subject to the federal tax rate of the captive parent (assuming the parent is U.S. based); otherwise, the captive income will initially be subject to the US federal rate and consolidated at the rate of the foreign parent. No New York State Income tax applies to captive profits if the captive is an “insurance company for federal income tax purposes.”
Reporting Requirements  New York Captive Insurance Company Annual Statement

Audited GAAP Financials

 

South Carolina

Head of Office Gavin Foggon
Senior Team Linda Dana
Office Address 151 Meeting Street
Suite 301
Charleston, SC 29401 USA
Mailing Address Marsh Management Services Inc.
151 Meeting Street
Suite No. 301
Charleston, SC 29401 USA
Telephone +1 (843) 577-1026
Fascimile +1 (843) 577-1027

General Information

Location South Carolina is located in the southeastern United States.
Accessibility Frequent direct air transportation to Charleston, South Carolina is available by direct flight from Atlanta, Baltimore, Charlotte, Chicago, Dallas, Detroit, Houston, Miami, Nashville, Newark, New York, Orlando, Philadelphia, and Washington, D.C.
Applicable Legislation The South Carolina Code of Laws, Title 38-90
Number of Captives 149 as of year-end 2012
Regulatory Agency South Carolina Department of Insurance, Alternative Risk Transfer Services Division

REGULATORY ISSUES

Acceptable Insurance Subsidiaries Pure, Industrial Insured (including Risk Retention Groups), Special Purpose Captive, Special Purpose Financial Captive, Association, Sponsored and Branch
Acceptable Corporate Forms Stock, Mutual, Reciprocal and Limited Liability Company
Permitted Business All Commercial Lines
Direct Insurance Permitted Related and "Controlled" Unrelated Risk
Reinsurance Permitted Related and "Controlled" Unrelated Risk
Policy Form and Rate Approval Not required
Local Office Requirement Principal Place of Business
One Board of Directors Meeting Annually in South Carolina
One Resident Director

 

Capitalisation & Solvency Requirements

Entity Minimum Capital
Minimum Surplus
Total Capitalisation
(Cash or Letter of Credit)
Stock
Pure Industrial Insured and RRG's
$100,000
$200,000
$150,000
$300,000
$250,000
$500,000
Association $400,000 $350,000 $750,000
Mutual
Industrial Insured
Association
  $500,000
$750,000
$500,000
$750,000
Reciprocal   $1,000,000 $1,000,000
Solvency
No formal solvency requirements exist, however a general benchmark is minimum of $1 of surplus for every $3-$5 of net written premium, depending on financial strength of, and risk retained by, the captive. Also, Risk Retention Groups are subject to minimum capitalisation of $500,000.

 

Premium Taxes

Premium tax on direct premiums 0.400% on first $20 million
0.300% on next $20 million
0.200% on next $20 million
0.075% thereafter
(subject to a minimum of $5,000 combined direct and reinsurance premiums)
(subject to a maximum of $100,000 combined direct and reinsurance premiums)
Premium tax on reinsurance premiums 0.225% on first $20 million
0.150% on next $20 million
0.050% on next $20 million
0.025% thereafter
(subject to a minimum of $5,000 combined direct and reinsurance premiums)
(subject to a maximum of $100,000 combined direct and reinsurance premiums)
 
Intercompany Loans Captives may lend funds in excess of the minimum capitalisation requirements subject to regulatory approval.
Investment Restrictions Admitted market restrictions apply to Association captives and RRG's. No restrictions for Pure or non-RRG Industrial Insureds.
Taxation Income generated by the captive will be subject to the federal tax rate of the captive parent (assuming the parent is U.S. based); otherwise, the captive income will initially be subject to the US federal rate and consolidated at the rate of the foreign parent. No South Carolina State Income tax applies to captive profits.
Reporting Requirements Pure and Industrial Insured – GAAP Financial Statements, South Carolina Annual Statement

Association and RRG – NAIC Blank

Audited Financials

Certified Loss Reserves

 

Utah

Head of Office Arthur Koritzinsky
Sales Coordinator Brandy Alderson
Office Address Marsh Management Services Inc.
Captive Solutions
15 W. South Temple
Gateway Tower West
Salt Lake City, UT 84101
Telephone (801) 533-3646
Fascimile (801) 533-3610

General Information

Location Utah is located in the western United States, west of Colorado and east of Nevada.
Accessibility Direct flights are available to Salt Lake City from most U.S. cities.
Applicable Legislation Title 31A Chapter 37 – Captive Insurance Companies Act
Number of Captives There are 395 captives as of year-end 2014. (495 if counting cell captives)
Regulatory Agency Utah Insurance Department, Captive Insurance Division
3110 State Office Building Room
Salt Lake City, UT 84114-6901

REGULATORY ISSUES

Acceptable Licensed Entity Types Single parent/pure, branch, special purpose captive, association, sponsored/segregated cell/protected cell, industrial insured, risk retention group, reinsurance captive.
Acceptable Organisational Forms Stock, mutual, reciprocal, nonprofit, or limited liability company
Permitted Business When permitted by its articles of incorporation or charter, a captive insurance company may apply to the commissioner for a certificate of authority to do ALL lines of insurance allowed by the insurance code, EXCEPT punitive damages, workers compensation insurance and personal motor vehicle or homeowners insurance, or any component of these coverages. Reference Title See U.C.A Section 31A-37-202(1)(a) and (b)(iv). A pure captive may only insure the risks of its parent, affiliates, or controlled unaffiliated business. Reference Title See U.C.A Section 31A-37-202(1)(b)(i) An association captive may only insure the risks of association member organisations and affiliates of the association member organisations. Reference Title See U.C.A Section 31A-37-202(1)(b)(ii). An industrial insured may only insure risks of the industrial insureds that comprise the industrial insured group and affiliates of the industrial insureds that comprise the industrial insured group. Reference Title See U.C.A Section 31A-37-202(1)(b)(iii)
Direct Insurance Permitted All permitted business.
Reinsurance Permitted A captive insurance company may provide reinsurance on risks ceded by any other insurer
Policy Form and Rate Approval Not required
Local Office Requirement Obtain from the commissioner a valid Certificate of Authority specifying the types of insurance authorised (i.e. go through the licensing process).
Hold at least once each year in Utah a board of directors meeting, or in the case of a reciprocal insurer, a subscriber's advisory committee meeting.
Maintain the principal place of business of the captive in Utah.
Appoint a resident registered agent to accept service of process and act on behalf of the captive in Utah.
Renew the Certificate of Authority annually by July 1 of each year.
Comply with all other applicable statutes and rules.

 

Capitalisation & Solvency Requirements

Pure captive (Stock) $250,000
Association captive (Stock/Mutual) $750,000
Association captive (Reciprocal) $1,000,000
Industrial Insured (Stock/Mutual) $500,000
Industrial Insured (Reciprocal) $1,000,000
Sponsored Captive $1,000,000
Reinsurance Company At least $300,000,000 or 10% of the reserves of the reinsurance parent, whichever is greater.
Premium Taxes
Annual license fee of $5,250. No premium tax.
Intercompany Loans
A Pure Captive is the only type of captive that may make loans to the parent company or an affiliate of the captive. However, such loans by a Pure Captive may not be made from the paid-in capital or the free surplus that is required by U.C.A. Section 31A-37-204(1) and U.C.A. Section 31A-37-205(1), respectively.
Investment Restrictions
A Pure Captive has no investment restrictions, except that the Department will not allow investments that threaten the solvency of the captive. Each captive insurer must file a description of their investment strategy as part of the initial application. The captive must notify the Department of any future changes to that investment strategy.
Taxation
No Utah state income tax applies to captive profits.

 

Vermont

Head of Office Julie Boucher
Senior Team Chris Varin
Marcy Waterfall
Edward Precourt
Office Address 100 Bank Street, Suite 610
Burlington, VT 05401 USA
Mailing Address P.O. Box 530
Burlington, VT 05402-0530 USA
Telephone +1 (802) 864-5599
Fascimile +1 (802) 859-3599

General Information

Location Vermont is located in the northeastern United States.
Accessibility Direct air transportation to Burlington, Vermont is available from several major cities.
Applicable Legislation The Vermont Special Insurer Act
Number of Captives 984 licensed (588 active) as of 31 Dec 2012
Regulatory Agency Vermont Department of Financial Regulation

REGULATORY ISSUES

Acceptable Licensed Entity Types Pure, Industrial Insured, Risk Retention Group, Association, Sponsored and [ERISA benefits] Branch.
Acceptable Organisational Forms Stock, Limited Liability Company, Mutual, Non-profit and Reciprocal.
Permitted Business All Commercial Lines and most [fronted] personal lines.
Direct Insurance Permitted Related and "Controlled" Unrelated Risk
Reinsurance Permitted Related and "Controlled" Unrelated Risk.
Policy Form and Rate Approval Not required
Local Office Requirement Principal place of business
One Board of Directors meeting annually in Vermont
One resident director
Approved management company

 

Capitalisation & Solvency Requirements

  Minimum Capital and Surplus
Pure $250,000
Industrial Insured $500,000
Risk Retention Group $1,000,000
Association $500,000
Sponsored $500,000
Branch $250,000
Solvency
No formal solvency requirements exists, however a general benchmark is minimum of $1 of surplus for every $5 of net written premium and premium and surplus sufficient to pay at least one full limit loss for pure captives and two full limit losses for Group.

 

Premium Taxes

Premium tax on direct premiums 0.380% on first $20 million
0.285% on next $20 million
0.190% on next $20 million
0.072% thereafter
Premium tax on reinsurance premiums 0.214% on first $20 million
0.143% on next $20 million
0.048% on next $20 million
0.024% thereafter
1) Premium taxes are subject to an overriding minimum of $7,500 per year and an overriding maximum of $200,000 per year. 2) Premium for contracts providing direct reimbursement for losses incurred under qualified self-insured workers' compensation programmes are taxed at assumed rates.
 
Intercompany Loans Pure captives may lend funds in excess of the minimum capitalisation requirements ($250,000) subject to regulatory approval. Approval is generally granted only for parents having a minimum of $100 million in equity and an investment grade debt rating. Some rare exceptions are made to these guidelines.
Investment Restrictions Admitted market restrictions apply to RRGs unless exception granted. No specific restrictions for Pure or non-RRG Industrial Insured's.
Taxation Income generated by the captive will be subject to the federal tax rate of the captive parent (assuming the parent is U.S. based); otherwise, the captive income will initially be subject to the US federal rate and consolidated at the rate of the foreign parent. No Vermont State Income tax applies to captive profits.
Reporting Requirements Pure and Industrial Insured – GAAP Financial Statements, Vermont Annual Statement

Association and RRG – NAIC Blank

Audited Financials

Certified Loss Reserves