South Carolina sees upswing in captives

North America

Despite indications of a “softening” insurance market and slower growth in most domiciles, South Carolina has experienced higher than usual captive formations in the first eight months of this year. Seventeen new captive insurance companies have been approved by the state’s regulators, according to South Carolina’s Department of Insurance (DOI). Transactions include 11 pure or single parent captives, two special purpose captives and one risk retention group. Three securitisations have been executed using the South Carolina devised Special Purpose Financial Captive vehicle, the DOI says. Since becoming a captive insurance domicile in 2000, South Carolina had licensed 181 companies. The state claims to be the industry leader in securitisation of insurance reserves with 21 successful transactions since the regime was introduced in 2003. Despite a flurry of activity as other domiciles rush to enact legislation attempting to replicate the South Carolina programme, the DOI says the state remains the only US domicile to implement such a captive-enhanced transaction. Meanwhile, Missouri has implemented legislation which allows for the formation of captive insurance companies to bring as much as $10mn in revenue to the state over the next three years. Effective 28 August, captive insurance companies can register with the Missouri Department of Insurance, Financial Institutions & Professional Registration to do business in the state. Although the full scope of implementing this legislation will not come into effect until after rules are adopted, the department is providing interim application forms for companies to use.