US state goes offshore

The US state of South Carolina has moved to extend its captive legislation, which it passed last year. Under proposals currently before legislators, reinsurers would be allowed to form captives allowing them to discount their loss reserves. South Carolina would be the first state to implement the offshore structure should the legislation pass. With a minimum capitalisation of US$300mn, the state would be aiming for the top end of the market. But the regime could prove popular if insurers decide that using an offshore structure onshore is inherently less risky; it will be one of the states new alternative risk transfer divisions biggest selling points.