Captive Insurance Company

News & Analysis as of

Standing in the Shoes or Freeing Evil Zombies? The Public Policy of Applying the In Pari Delicto Defense to Actions Brought by a...

In pari delicto is an equitable defense asserted when a defendant claims that a plaintiff is equally at fault for the wrong that has befallen him. The doctrine is “rooted in the common-law notion that a plaintiff’s recovery...more

CFPB Enforces RESPA in its First Appellate Decision of the Director

In the first appeal of an administrative enforcement proceeding before the Consumer Financial Protection Bureau (“Bureau”), the administrative law judge (ALJ) concluded that PHH Corporation, a mortgage lender, referred...more

Legislation Reintroduced to Clarify Application of NRRA to Captives

In an attempt to add clarity to the issue, Senators Lindsey Graham (R-SC) and Patrick Leahy (D-VT) have reintroduced proposed legislation that would exclude captive insurance companies from the coverage of the relevant...more

IRS Targets Captive Insurance Companies Owned by Closely-Held and Middle Market Companies

In February 2015, the IRS added certain small or “micro” captive insurance companies to its “Dirty Dozen” list of abusive tax scams for the 2015 filing season. In response to what it sees as an abuse involving a...more

Special Focus: What The Insurance Industry Should Know About The IRS’s Campaign Against “Abusive” Micro Captives

Though in the midst of a stifling budget and personnel reduction, the United States Internal Revenue Service (“IRS”) recently announced an increased effort to curb what it sees as widespread abusive applications of so-called...more

Expect Focus - ONLINE HEALTH CARE: NOT SO FAST Telemedicine Hits A Few Speed Bumps, Volume II, Spring 2015

In This Issue: - IN THE SPOTLIGHT • Risky Business: Common Cyber Security Risks, Expensive Consequences - LIFE INSURANCE • Ninth Circuit Finds Bonus Indexed Annuity Delivers Exactly...more

Stretched for Resources, the IRS Sets Its Sights on Small Captive Insurers

A "captive" insurance company is an insurer formed for the limited purpose of insuring the risks of its non-insurer owner or owners. A captive can be an effective risk-management tool, especially for costly or unconventional...more

Focus on Tax Strategies & Developments - June 2015

In This Issue: - Distinguishing Between Captive Insurance and Related Party Derivatives: Chief Counsel Advice Memorandum 201511021 - Achieving Tax-Free ‘Rollover’ Treatment for Certain Shareholders in Acquisition of...more

Statutory Accounting Fraud Under RICO

Echoing New York’s regulatory criticism concerning the use of captive reinsurers and similar allegations in recent class actions filed against several New York life insurers, an annuity contract owner has filed a putative...more

CFPB Issues First Appellate Ruling

In affirming its own decision, the Consumer Financial Protection Bureau (CFPB) leaves few protections for targets in its administrative enforcement proceedings. If you are subject to a CFPB administrative proceeding, or...more

NAIC Panel Approves Draft Captive Accreditation Standards

The NAIC Financial Regulation Standards and Accreditation Committee recently approved revisions that will impact some captives reinsuring XXX/AXXX reserves, variable annuities and long-term care products. The approval comes...more

CFPB Enforcement Action Appeals: Quick Resolution with Unchecked Discretion

On March 9, 2015, Consumer Financial Protection Bureau (CFPB) Director Richard Cordray presided over oral argument in the first appeal hearing of an administrative enforcement action. The appeal involves two companies that...more

Montana Law Revised To Allow Captives To Organize As Limited Liability Companies

On April 28, 2015, Montana Governor Steve Bullock signed into law amendments to Montana’s law regarding captive insurers. Significantly, the amendments make it possible for public entities in Montana to set up captives....more

CFTC Determines That Wholly Owned Securitization SPVs of Captive Finance Companies May Elect End-User Exception

In an interpretive letter published on May 4, the Commodity Futures Trading Commission’s Division of Clearing and Risk (Division) confirmed that a securitization special purpose vehicle (SPV) that is wholly owned by, and...more

You Can Always Get What You Want, or At Least What You Contract For – Fifth Circuit Affirms Vacation of Arbitration Award

On April 7, 2015, the Fifth Circuit affirmed the Southern District of Texas’ decision to vacate an arbitration award rendered in a dispute involving two separate contracts – one which was to be governed by the Commercial...more

CFTC Issues Interpretive Letter Clarifying Eligibility for End-User Exception to the Clearing Requirement

On May 4, CFTC Division of Clearing and Risk published a letter clarifying that a securitization SPV that is wholly-owned by, and consolidated with, a captive finance company under Section 2(h)(7)(C)(iii) of the Commodity...more

Corporate & Financial Weekly Digest - Volume X, Issue 18

In this issue: - SEC Proposes Rules for Security-based Swap Activity of Non-US Persons in the United States - FINRA Proposes Exemption From the TAF for Proprietary Trading Firms - SEC Approves Pilot to...more

Ohio Proposed Rule Regarding Alternative Reserve Methodology For Special Purpose Captives

The Ohio Department of Insurance has proposed a new rule, Rule 3901-11-05 (the “Proposed Rule”), to establish a process and method that allow a special purpose financial insurance company captive (a “SPFIC Captive”) to...more

One Down, One to Go: Illinois Senate Passes Captive Insurance Exemption to Illinois Self-Procurement Tax

On April 21, 2015, the Illinois Senate unanimously passed Senate Bill 1573, as amended. As we have previously covered, the amended Bill creates an exemption from the 3.5 percent self-procurement tax and 0.2 percent Surplus...more

Fifth Circuit Affirms Vacatur Of Arbitration Award Where Arbitrator Failed To Follow Provisions Governing Selection Of Arbitrator...

Organizational Strategies Inc. (OSI) had entered into an agreement with Capstone Associated Services Ltd. for the latter to form three captive insurance companies for OSI. Included in the contract was an arbitration clause...more

Focus on Tax Controversy - Spring 2015

In This Issue: - Fifth Circuit Ruling in BMC Software, Inc. v. Comm’r. Is Good News for Taxpayers - When Is a Second Inspection Not a Second Inspection? - Captive Insurance Litigation: Key 2014 Cases ...more

Illinois Supreme Court Addresses Duty of Care Owed by Insurance Agents

On March 19, 2015, in its decision in Skaperdas v. Country Cas. Ins. Co., 2015 IL 117021 (Ill. Mar. 19, 2015), the Illinois Supreme Court affirmed an appellate court decision holding that Section 2-2201 of the Illinois Code...more

Texas Legislation Looks to Enhance Captive Regulatory Environment

In 2013, Texas enacted legislation authorizing captive insurance companies to be domiciled in Texas for the first time, with the first Texas captive becoming licensed on March 17, 2014. ...more

Recent Developments on Variable Annuity Captive Reinsurance and Hedging Risk Evaluation; and Impacts on VA Issuers

In the midst of the broader discussion within the insurance regulatory community regarding the financial risks potentially posed by captive reinsurers, the National Association of Insurance Commissioners (NAIC) has recently...more

South Dakota Revises Statutes Regarding Regulation Of Captive Insurance Companies

House Bill 1180 (2015), signed into law February 27, 2015, amends Chapter 56-46 of the South Dakota Insurance Code, Captive Law, to allow the formation and regulation of agency captive insurance companies in South Dakota. As...more

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