Vermont Licenses 17 More Captives

by Leroy Baker, Tax-News.com, New York

23 July 2010

State of Vermont’s captive insurance sector has had a good first half of 2010, licensing 17 new captive insurance companies as the state approaches the 900-license milestone, officials said.

The 17 new captives this year puts Vermont three ahead of last year’s pace of new formations. In 2009, Vermont licensed 39 new captives, its 6th best year in its 29-year history.

This year’s new captive insurance companies include 15 “pure” captives – four of which are special purpose financial captives – and two risk retention groups, according to data released by the Vermont Department of Banking, Insurance, Securities and Health Care Administration (BISHCA).

“This is a very encouraging sign at a time when the national economy’s outlook is still unknown,” said Sandy Bigglestone the Director of Captive Insurance at BISHCA. “Quality companies like Procter and Gamble; PricewaterhouseCoopers; Crowe Horwath; and Towers Watson & Co. still see the value of establishing a captive as an integral part of their risk management regardless of uncertain market conditions.”

“At a time when many states are cutting back, we are still improving our processes and enhancing our regulations. In Vermont, applications are still processed in 30 days,” Bigglestone said. “Having a governor and a legislature that understands the importance and needs of the captive industry is critical in that regard.”

Professional services, insurance companies, construction, and health care continue to be growth sectors as shown by the newly formed captives for 2010.

“We have seen a lot of interest by hospital groups seeking a captive for their professional medical liabilities and by smaller and mid-cap companies,” said David Provost, Deputy Commissioner of Captive Insurance. “I expect this trend to continue.”

With 895 captive licenses, Vermont is the largest captive insurance domicile in the US and the third largest in the world, with in excess of USD77bn in gross written premium in 2009. 42 of the companies that make up the Fortune 100 and 18 of the companies that make up the Dow 30 have Vermont captives.

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