MISSOURI
Positioned in the US heartland, Missouri continues to attract captive numbers, drawn by an increasingly prominent captive jurisdiction. John Rehagen of the Missouri Department of Insurance reports.
based there can gain efficiency and reduce costs by keeping their captive close to home in a stable domicile with a solid captive law that offers many benefits to owners. Captive owners experience the Midwestern work ethic while working with the regulators, and all levels of state government are supportive of continued growth because of the benefits captive insurance brings to Missouri and its businesses. Missouri is a great place to do business. I encourage everyone to take a closer look to see if Missouri may be the right place for your captive’s future.
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Several states have added captive laws in recent years. Missouri isn’t the oldest captive domicile but it certainly isn’t the newest. Missouri’s captive programme has become more beneficial to the state since its inception. Last year was Missouri’s fourth as a captive domicile and it was the best. Eight new licences were issued, raising the number of active captives from 11 to 19, a growth rate of 73 percent. Included in the captives licensed in 2011, two were redomestications from other domiciles that were completed through an efficient process. Last year’s growth follows a previous record of six licences issued in 2010, with a net increase of 83 percent from six active captives in 2009. At the time of writing two more captive licences had already been issued in 2012, bringing the current total to 21 active captives in Missouri.
The beginning of this growth trend can be traced back to the 2009 law, signed by Missouri governor Jay Nixon, that removed some of the restrictions and made it easier to form or redomesticate captives in Missouri. Since that change, active captives have increased from three to 21, an increase of 600 percent in just a few years. Based on applications under review and those in development, it’s expected that 2012 will continue the trend of record licensing numbers.
The owners of 2011’s newly licensed captive companies represented a variety of industries, including construction, insurance, manufacturing, mining and transportation/distribution. They also
issouri continues to experience record captive growth year-on-year. One of the reasons Missouri will always offer an excellent domicile option is its location at the geographic and population centre of the US. Captives
came in all sizes, from Fortune 500 companies such as Peabody Energy and other large companies such as Kansas City Southern, to smaller privately held companies. All but one of Missouri’s 21 captives are single-parent captives, with the lone group captive licensed as an association captive. There is a good balance of 13 pure captives and seven special purpose life reinsurance captives among the single- parent captives. There is even more balance in the size of the captives. One third of our captives write more than $100 million in annual premiums, followed by a third writing between $5 and 25 million and the final third writing less than $5 million. Premiums written by Missouri captives have topped $1 billion every year since 2009. Because of the excellent mix of large and small captives, the benefits provided by Missouri captives are substantial compared to the situation in other states which opt to license in numbers.
Missouri captives are providing a wide range of insurance coverages. Some of the most popular lines include deductible funding, terrorism, warranty, business interruption, life and health reinsurance and all types and layers of property and casualty coverage. They issue policies on a direct basis or use fronting carriers. They provide insurance for parents, affiliates or unaffiliated controlled entities. In some cases, they are simply used to gain direct access to the reinsurance markets. Some use their Missouri captive as a fronting company for other affiliated captive insurers, while others use their captive to gain membership to the Iowa Federal Home Loan Bank. The business plans of Missouri captives vary widely, but fit within the state’s flexible captive law that appeals to a variety of companies.
We have been increasingly successful in attracting captives, but providing a domicile that can service the captives that we have already licensed is a high priority. Missouri has a unique funding feature that helps ensure our captive sector remains responsive and has the ability to grow along with the domicile. The fees we charge for licensing and renewal are generally higher than those in other states, but the fees can be deducted annually from premium taxes. All captives enjoy this credit against premium taxes and, as a result, the first $2 million in direct premium, or $3.5 million in reinsurance premium, is basically written
CICA | Forty years of captive leadership 123
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