Captive Insurance Company

News & Analysis as of

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

Captive Insurance Carve-Out: Illinois SB 1573 Amendment Proposed

Members of the Illinois General Assembly continue to make efforts to ameliorate the impact of Illinois’ new self-procurement tax on captive insurance. On March 10, 2015, Sen. William Haine (D-Alton) filed an amendment to...more

Senate Bill 1573 Would Repeal Illinois Self-Procurement Tax

On February 20, 2015, Sen. William Haine introduced Senate Bill 1573, which would repeal the self-procurement tax that came into effect January 1, 2015. As we have previously covered in detail, at the end of its 2014 regular...more

IRS Scrutinizes Captive Insurance

Every year the IRS issues a list of tax scams pertinent to that filing season. This list is commonly referred to as the (“Dirty Dozen”). The Dirty Dozen warns taxpayers of illegal tax avoidance schemes that can lead to...more

Illinois Supreme Court Debates Scope of Tort Duty for Insurance Agents

Last week, the Illinois Supreme Court began hearing arguments from its civil docket with Skaperdas v. Country Casualty Insurance Company. Skaperdas poses a major question for the insurance industry: does a “captive”...more

Illinois Industrial Insured Self-Procurement Tax Guidance Announced

As we have previously covered in detail, at the end of its 2014 regular legislative session, the Illinois General Assembly enacted a multimillion dollar tax on Illinois companies using captive insurance arrangements. The law...more

District Of Columbia Approves Amendments To Captive Insurance Company Act Of 2004

The Council and Mayor of the District of Columbia have approved enacting amendments to the Captive Insurance Company Act of 2004 to, in part, strike references to segregated accounts; clarify certain statutory requirements...more

Religious Institutions Update: December 2014

Every year, religious institutions spend millions purchasing insurance of various types from insurance companies. Many will never make claims on the policies remotely equal to their annual investment in premiums. In these...more

United States Tax Court Rules On Captive Insurance Arrangement

In 2003 and 2004, the Internal Revenue Service disallowed deductions taken by SHI Group, a subsidiary of the Swedish company Securitas AB, for insurance expenses related to a captive insurance arrangement established by...more

Captive Insurance: What is it and how might it work for you?

WHAT IS A CAPTIVE? A captive insurer is a legal entity formed primarily to insure the risks of one corporate parent or a number of similar corporations (e.g., trade associations) thereby contributing to a reduction in...more

RESPA Class Action Alleging “Captive Reinsurance Scheme” Allowed To Proceed

A Pennsylvania federal court recently denied a motion to dismiss a putative class action lawsuit in which homeowners claim violations of the Real Estate Settlement Procedures Act of 1974 based on an alleged “captive...more

Class Action Alleging Mortgage Kickback Captive Reinsurance Survives Dismissal Pending Discovery On Tolling Of Limitations

A court denied dismissal of a putative class action involving claims against Suntrust Bank subsidiaries and a captive reinsurer for an alleged illegal kickback scheme arising out of captive reinsurance covering Suntrust’s...more

Captive Insurance: Feds Promote Tax Benefits, but Pay Attention to the Details

Recent IRS rulings and a U.S. Tax Court decision continue to lay a solid foundation for captive insurance companies. However, the tax requirements must be strictly followed. Below we provide an update to assist captives in...more

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