Nevada


With more than a decade of captive experience under its belt, Nevada is one of the more flexible locations in the captive industry. This is best demonstrated by the Nevada Division of Insurance, which offers a dedicated captive team, low captive application expenses, simplified annual financial reporting for pure captives, and a 24-hour verbal approval for a completed pure captive application.

Ellen Charnley, global sales and marketing leader of the captive solutions division at Marsh, adds: “The dedicated captive team work closely with captive managers and parent companies during the application process to ensure the formation goes as smoothly and efficiently as possible.”

“Finally, the division has established a captive advisory council consisting of owners and service providers that meet formally two times per year to discuss the Nevada captive environment.”

Where the captive division has demonstrated its flexibility is the licensing of risk retention groups (RRGs). Neveda initially, during the early 2000s, focused on pure captives, though it introduced a number of agency captives and then eventually RRGs.

Nevada is currently the biggest RRG domicile outside of Vermont and has more than 25 registered RRGs, which account for a 15-percent share of its total captive base.

Despite the state’s strong performance in RRGs, it took the surprise decision to suspend licensing of RRGs to give the captive division time to catch up with growth rates and build what it referred to as an “appropriate” infrastructure.

At the 2014 captive advisory council meeting, the captive division said the domicile was again ready for RRGs and would welcome any applications that may see fit to domicile in the state.

Robert Vogel, vice president at Pro Group, says: “Nevada has developed a seasoned regulatory staff that is business friendly. Sound experienced regulation is paramount in the captive industry and Nevada offers that.”

“The captive industry is supported by all levels of the state government including the governor’s office. Additionally, travel to and from Nevada is very convenient and is an obviously popular destination location.”

The presence of experienced regulators is a testament to the way in which Nevada is determined to make waves in the captive industry, despite its age and competition. A key facet of this is its focus on regulation.

Mike Lynch, the deputy commissioner at the Nevada Division of Insurance, says: “Nevada’s refined corporate laws allow for optimal use of a captive programme. It is a priority to take a progressive approach and revolutionise our regulatory framework to meet the needs of the growing captive insurance market.”

“Nevada is working with the National Association of Insurance Commissioners (NAIC) on the recently proposed amendment to the accreditation standards preamble that could have unintended consequences for captive insurers. Nevada is also working with the NAIC and our congressional delegation to draft proposals for the bill which may eliminate the 831(b) tax exemption for traditionally structured captive insurers.”

Nevada’s captive insurance programme outperformed its growth and speed expectations by approving 26 captives in 2014, resulting in a captive premium increase to $3.8 billion.

The state’s insurance commissioner Scott Kipper said, following the results, that 2014 was once again a record breaking year for the Nevada captive insurance industry. Nevada now has 160 domestic captive insurers.

“As one of our nation’s oldest and largest captive domiciles, Nevada prides itself on its ability to maintain consistent and high regulatory standards, while also providing good service and a business friendly regulatory environment,” said Kipper.

Nevada now offers regulatory options for captive formations including series limited liability companies (LLCs) and segregated cell captive programmes.

In recent times, the state has seen rapid growth in captive utilisation by new segments, including biotech, alternative energy, transportation and manufacturing, as well as growth in captives for financial institutions.

“We saw a lot of companies choose to take advantage of Nevada’s efficient application approval and series LLC legislation,” said deputy commissioner Michael Lynch. “After another record breaking year, it is obvious that business owners worldwide consider Nevada to be a leader as a captive domicile.”

Nevada has licensed more than 200 captive insurers since the inception of its captive insurance programme in 1999.

Charnley continues: “For Nevada, their ease and flexibility of doing business has led to their increased growth rates and I would anticipate these rates continue as Nevada builds credibility and experience over some of the newer domiciles.”

“Remember that Nevada has been a captive domicile for more than a decade, so it’s now more established as a domicile when compared with some of the newer jurisdictions like Texas, North Carolina and Connecticut.”

For the US, continued growth in the small captive segment seems almost essential, as organisations start to really get their arms around funding for risks that they actively choose to retain.

Charnley adds: “Worldwide, we anticipate growth in some of the new markets in Asia such as China and also Latin America. Captive growth in 2014 was over 7 percent over 2013 and the total captives worldwide was more than 6,870.

This industry continues to evolve and adapt to an ever changing environment and we will likely see continued growth into the future.”

While captives as an alternative risk transfer mechanism have been around for centuries, in the last several decades, US onshore domiciles have embraced the benefits of captive insurance.

Charnley adds: “From multibillion dollar companies to smaller mid-market companies and non-profits, they are thriving onshore with their captive.”

“The expansion of domiciles in the US provides companies more options depending on the type of captive wherein they can gauge regulator specialties and make informed decisions on which domicile is best for them and their business. Nevada’s doors are open and have been for many years.”
Domicile profiles
The latest domicile profiles from Captive Insurance Times
Debbie Walker of the North Carolina Department of Insurance tells Becky Butcher why the state is among 2017’s standout performers
Experts convene to talk to Becky Butcher about the stability that Guernsey represents in a challenging financial and political environment
Asset Servicing Times

Visit our sister site
for all the latest asset servicing news and analysis

assetservicingtimes.com
In an era of increasing uncertainty, Tamatoa Jonassen suggests that the Cook Islands can be a bridge to financial security in a captive
With a dedicated captive plan in place, the Lone Star State is on the rise, says Josh Magden of the Texas Captive Insurance Association
After 36 years of captive business, Vermont boasts a culture of legislative change, and still has a few tricks up its sleeve. Dan Towle and David Provost explain
After a successful 2016 and the licensing of its first securitisation cell company, Malta insurance industry professionals are looking ahead to 2017
Missouri’s captive programme is approaching a decade in operation. John Talley explains how the state has made it to this milestone
Less than 10 years ago, the Bahamas was a virtually forgotten player in the external insurance marketplace, according to Tanya McCartney and Michele Fields. But today, the jurisdiction has a reputation as a market leader
Features
The latest features from Captive Insurance Times
What should a captive look for when hiring a firm to manage its portfolio? Stephen Nedwicki of Comerica Bank takes a look
US captive insurance association leaders discuss the present challenges and future of the business, as federal policy confuses and SME growth continues
Join Our Newsletter

Sign up today and never
miss the latest news or an issue again

Subscribe now
Becky Butcher finds out why captive insurance is such a natural fit for financial institutions and how they will continue to dominate the market
With London’s ILS hub set for an autumn launch, Guernsey Finance’s Dominic Wheatley shares his thoughts on what to expect
Guernsey’s hard work is paying off as China looks to stretch the boundaries of its captive strategies. Becky Butcher reports
Guernsey’s ILS numbers reveal a booming market made better by regulatory innovation. Becky Butcher reports
A bigger market means an improving financial performance, perhaps even higher returns. Marsh’s annual analysis of the captive insurance market, now in its tenth year, discovers that it also means change
Attendees of the European Insurance Forum in Dublin heard how insurance and reinsurance professionals are readying for turbulent times ahead
Interviews
The latest interviews from Captive Insurance Times