Category Archives: licensed captive

The Results Are In

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You all saw it coming. The number of captives licensed in Vermont last year eclipsed 2020 – already a banner year. Sure, almost every captive domicile had a good year, but even with over 40 states establishing captive laws, Vermont stands head and shoulders above.

Here are the hard numbers: Forty-five new captive insurance companies were licensed this past year in Vermont, making 2021 Vermont’s 4th highest year of growth in its 40-year history. Vermont is now home to 620 licensed captives, consisting of 589 active and 31 dormant captives. Vermont’s 52 sponsored cell captives currently host nearly 500 cells and separate accounts, in addition to the licensed captive companies.

The new captives were licensed in 17 different industries, the main industries being healthcare, real estate, manufacturing, insurance, and transportation. At least 5 of Vermont’s new captives in 2021 were formed by companies with international roots, including Japan, Germany, Russia, the United Kingdom, and Australia. Vermont has been experiencing growth in the number of new cells within sponsored captives, at a similar pace as new company licenses, with nine of the 45 new companies formed this year being sponsored cell companies.

Vermont has licensed a total of 1,242 captive insurance companies since 1981 and remains, by far, the largest U.S. domicile for captive insurance and third largest in the world. With an active pipeline of prospective new captive insurance companies already underway for 2022, the state expects continued growth in the coming year.

Thank you and I look forward to hearing from you.

Rich Smith
VCIA President

Hail to 40 Years!

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Vermont’s 40th anniversary year of the inception of its captive industry is drawing to a close. Since 1981, Vermont has worked hard to be the top U.S. domicile and continues to strive for excellence. Currently, VCIA is working with Dave Provost and Sandy Bigglestone and their team at DFR to build another captive bill to be introduced into Vermont’s General Assembly.

Over the past two years of COVID challenges, the Gold Standard has never been so apropos as Vermont lead the captive insurance industry in incredible growth and resiliency. I could not be prouder to be a part of this great work.

Brittany Nevins, in her role as Captive Insurance Economic Development Director, has put together a terrific short film highlighting relationships, accomplishments, future goals—and really what it means to be part of the Vermont captive family. I hope you will watch and encourage you to share.

Stay well and see you soon!

Rich Smith,
VCIA President

COP 26

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As the world’s leaders conclude their two-week summit in Scotland it is good to see some of the leadership in the insurance industry involved in the most critical issue facing all of us today. Many in the insurance industry are working positively to promote policies that will help mitigate climate change – or at least don’t add to the problem – such as new ESG guidelines for the company, looking at the impact of placing climate risks in their portfolios, new modeling, and reassessing where to invest the huge assets the insurance industry has under management. Reinsurers rank climate change as the top risk facing the global insurance industry, according to PwC’s latest survey.

Climate policy is a risk management system, and the industry needs to provide a comprehensive vision for risk sharing going forward. There are many complex issues to be worked out for both the insurers and their insured for sure, however, a cleared-eyed approach by all parties can get us there.

Innovations like from AXA XL which has launched a tool that maps current and future flood hazards resulting from climate change and integrates the protective benefits of coastal ecosystems into insurance risk models, is a great example of where the industry can lead.

There is a theory in the risk management world, however, that insurance can be seen as a barrier to the kind of innovation needed to tackle the hard nut that is climate change. Providing P&C insurance, or D&O insurance, to a client without concern for the long-term impacts climate change can bring can remove the responsibility from the clients. Adding to this, innovative changes to infrastructure, along with the recent technologies used to build resilience, can be hard to insure as they rarely have claims history. This makes it difficult for the insurance sector to price the risk.

I think the basic principle behind captive insurance will accelerate solutions. With captives, organizations take direct responsibility for their risks – they now own it. The data on how to mitigate climate risk comes from their captive which allows them to be more focused on pursuing resilience at all levels. No longer is there a large, anonymous insurance company obscuring leaders from understanding and acting to better protect their own properties, employees, supply chains, and ultimately shareholders. And captives are innovative. They have the ability to take specific risks for an organization that might be looking at pioneering ways to use new technologies to protect from the impacts of climate change.

I remain hopeful that with a comprehensive and coordinated effort from all facets of society and industry we can turn the corner on climate change. Captive insurance will be part of that solution.

Stay well and see you soon!

Rich Smith,
VCIA President

The People of Washington Have Spoken!

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Captive Review reported that Washington State voters rejected a recent law that imposes premium taxes on captive insurance companies licensed in other states that are doing business in Washington State this past Tuesday! When asked to give their views on introducing the 2% premium tax, voters opposed it by a 19 point margin. It was just one of a number of new taxes rejected by voters under the advisory votes on tax increases that must be held under state law.

As you all have heard me say in an earlier post, the Washington State captive law passed earlier this year sets a terrible precedent whereby acquiescing some regulatory oversight by the Washington State insurance commissioner on captives domiciled in other states. Under the legislation, S.B. 5315, captives licensed elsewhere and operating in Washington would be required to pay an initial registration fee of $2,500 and be assessed an annual two percent premium tax on insurance provided to their parents or affiliates for Washington risks.

The reality is that the non-binding vote is unlikely to have an impact – the law will remain in effect unless state legislators vote to repeal the measure, which is unlikely to happen. I don’t think Washington State citizens delved into the issue of the captive tax and, after weighing the strong evidence of its inappropriateness, decided to reject it. No, this was a broad anti-tax vote on several taxation measures in the state, and the captive tax was dumped into a bunch of other unpopular taxes.

That being said, the vote did give me a moment of hope!

Stay well and see you soon!

Rich Smith,
VCIA President

Member Mixer

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Thank you to all our members who joined us this past Wednesday evening for VCIA’s open board meeting, DFR Q & A, and Mixer. It was so nice to see people gathering once again, even if somewhat cautiously, for VCIA’s first in-person event since the beginning of COVID.

Besides hearing the litany on how many legislative items we are watching down in DC that will likely not move this Congress due to the continued gridlock, members got to hear Dave Provost and Dan Petterson from Vermont’s Department of Financial Regulation provide an update on their work and changes in the future that they will see.  Brittany Nevins , Vermont’s Director of Captive Marketing, screened a new video she produced extolling the virtues as Vermont as a captive domicile for members. It was a terrific piece that will be used in the State’s marketing efforts going forward. One of the “stars” of the video was VCIA new board member, Joe Carter, from United Educators, who did a super job outlining what makes Vermont so special for captive owners.

Dave provided an update on the number of captives being licensed this year and it sounds like its going to be a record breaker. Over 40 have been approved to date and we usually see a wave of applications toward the end of the year as organizations scramble to get their captives licensed. That said, we could easily hit 50 new captives this year. A good year for new captives licensed in Vermont is usually around 25. Another interesting note, DFR is seeing far fewer dissolutions and redomestications out of Vermont then normal, meaning that current captives are not only happy but thriving. Dan reported that DFR was fully staffed and ready to take on the workload that these new captives promise.

The reception was a terrific way to cap off the day with an opportunity to see and say “hi” to many of our old and new friends alike. A special shoutout to former board member, and good friend, Ed Koral who traveled all the way from New York City to joins us that evening. I think the prize for the greatest distance traveled for the event was by Andrew Zoller, the new Head of International & Captive Solutions – US Commercial Insurance for Zurich North America, who flew in from Dallas.  Welcome to the family, Andrew!

Rich Smith,
VCIA President

Stay well and see you soon!

Is Gridlock Good for Captives?

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Not surprising news that Capitol Hill continues to be the most dysfunctional place in the United States. Even must-pass bills or bills where there is broad consensus around the priorities, such as the debt ceiling or infrastructure support, are being held hostage by more acrimonious politics than ever before. I spent three years on Capitol Hill and loved my time there. Not that it wasn’t political and sometimes rancorous, but there was a general feeling that we were all there for the greater good.

Enough gloom on the situation – the question remains is this dysfunction in any way good for the captive industry? Since insurance policy is primarily state driven, it might seem not to matter. However, as we have seen in the not too distant past, actions in Washington can have an effect on our industry, usually as collateral damage. The passage of the Nonadmitted and Reinsurance Reform Act (NRRA) is one good example. NRRA was not intended to pertain to captives, but because it was poorly drafted and tacked onto a bill barreling through Congress (Dodd-Frank) it is now interpreted that way.

The positive effect of Congressional dysfunction is that almost nothing will pass in the near term. That’s not to say that there aren’t bills of interest to our industry, such as PRIA (a government-backed pandemic reinsurance program similar to TRIA), updates to the LRRA, or the cannabis bill that creates a safe harbor for financial services to provide products where pot is legal.

My take on it is that Washington gridlock is not good for captive insurance. Risk management is increasingly important, and taking more of a center stage in broader policy discussions at the national level. So it would benefit everyone (captive owners, the industry and the country) if Congress were a place where one could work with both sides of the aisle to move a good piece of legislation forward. Presently, nothing is likely to pass – unless it is tacked on to a bill that finally gets dislodged. And that is not the best way for good policy to take place.

Two bits of news regarding captive people: First, VCIA board member Lawrence Cook has joined Somers Risk Services as director of client services, where he will be responsible for enhancing client relations and services as well as special project work, marketing support, and partner company relations. Prior to joining Somers Risk, Lawrence was the director, program management, for Sedgwick. Congratulations, Lawrence!

Second, Jay Branum resigned from his position as the director of captives in the South Carolina Department of Insurance (SCDOI). Jay joined the SCDOI in late 2013 as captive director, a newly created position, and in his time there South Carolina experienced tremendous captive insurance growth. Even though Vermont and South Carolina are competitors in the captive insurance arena, Jay has always been helpful and willing to share his many years of wisdom with me. He is truly a class act, and VCIA wishes him all the best in his new endeavors.

I look forward to seeing many of you at our Member Mixer next Wednesday, October 20th at the Hilton Burlington Lake Champlain! Register here.

Stay well, and see you soon!
Rich Smith,
VCIA President

The Long Goodbye… or If Daniel Can Do It, So Can I

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As some of you have heard by now, I am stepping down as President of VCIA at the end of January 2022. Now, as many of us hear when a politician or business exec. gets in trouble and must step down, they often mention it is to “spend more time with their family” or to “pursue new opportunities and challenges” and we roll our eyes knowing they were getting booted out. It’s just with me it happens to be the truth – really!

It has been an amazing twelve years at the helm of this wonderful association and in this terrific industry. And to meet and work with such a great group of people who have become my friends beats all. But it seems right for me and the association for a refresh. There is never a perfect time to step aside, but I think this is as good as it can be. I will be here until the end of January providing a smooth transition to the next President. And by that time, you will probably be sick of me saying goodbye (my wife is already tired of hearing about it!).  Like Daniel Craig (who many compare me to) you realize it’s time to leave a terrific franchise and let a new 007 takeover.

I will be seeing many of you and talking to many of you over the course of the next few months so will have a chance to say a proper goodbye. But in the meantime, thank you for the wonderful opportunity to work with you and, more importantly, get to know you.

I look forward to seeing many of you at our in-person VCIA Mixer later this month.  Until then, stay well!

Rich Smith
VCIA President

It’s a Wrap – Thank You!

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Just a quick thank you to all of you who supported VCIA this past week helping and attending our annual captive conference. By all accounts it was a terrific success, and we could have not done it without the brains, sweat, and time of our volunteer members who made it all happen.

Tina Bukow from KBRA was our indefatigable 2021 Conference Chair, and she kept upbeat and enthusiastic no matter what was thrown her way. She led the wonderful VCIA Conference Task Force starting way back last September to last week’s triumph –  thank you, Tina!

VCIA’s Board of Directors rolled up their sleeves and jumped right into the fray as well. Thank you to Andrew Baillie from AES Global Insurance Company, Jason Palmer of Willis, Donna Blair, Dennis Silvia from Davies Captive Management, Lawrence Cook, Anne Marie Towle from Hylant, Tracy Hassett from EdHealth, Derick White from SRS, Jan Klodowski from Agrisurance Inc., and Board Chair Stephanie Mapes from Paul Frank + Collins.

And finally, to VCIA’s terrific staff! Diane Leach, Elizabeth Halpern, Peggy Companion, Janice Valgoi, Dave Rapuano, Meg Precourt, and our super intern Morgan McCuin. I can’t tell you how proud I am to be associated with such good people!  As Mike Meehan from Milliman and VCIA’s 2021 Industry Service Awardee said in his acceptance speech: it’s amazing that such a small staff can do so much.

Thank you and I look forward to seeing you in a couple of weeks at the October 20th Member Mixer!

Rich Smith,
VCIA President  

Remembrance

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With Memorial Day coming up this weekend I wanted to give pause for time to do something I do not do as often as I should: remembrance.

Usually, I am busy planning a BBQ or a bike ride or a trip to Lake Champlain this weekend, as Vermont explodes with spring blossoms, sunshine, and greenery. Like many of us, I treat Memorial Day as time off with friends and family. However, I do believe remembering those who have left us, and honoring those who put their lives on the line for the benefit of our country, our communities, and each one of us individually is important.

My father was one of those from the Greatest Generation – a vet from World War II who never really spoke of his time in the service, and if asked just said serving was what one had to do. Luckily for him, he was one of those who joined the war effort just as the hostilities were subsiding and was shipped out to the South Pacific after most of the Japanese forces had been pushed out. I remember him saying he was fresh out of high school and there was a sense of commitment – of doing the right thing – that permeated Americans back then, no matter their place in socie ty.

I do believe we owe a debt of gratitude to those who have served or are currently serving in the  armed forces. Their sacrifices, courage and commitment must never be overlooked. This year we also owe our respect and gratitude to those  who have been on the front lines saving lives during  the pandemic this past year plus. They have given so much for all of us, many times putting their own safety and security on the line to help others. Perhaps if there could be a silver lining from the COVID pandemic, it would be a renewed sense of the concept of the greater good, service to others, and recognition of true selflessness when the chips are down.

So, please have a safe and happy Memorial Day weekend with all your loved ones but also take extra time to  remember and appreciate.  Thank you and I look forward to seeing you soon.  

Rich Smith
VCIA President

Captive Review Recognition

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Captive Review hosted its annual Power 50 awards yesterday and I wanted to highlight some of the winners with strong connections to VCIA and Vermont.

First, they gave a shoutout to leaders in the captive owner category, two of VCIA’s board members were recognized: Andrew Baillie of AES and Tracy Hassett of EdHealth. Also recognized in this category were VCIA members Deyna Feng from Cummins and Julie Bordo of PCH Mutual Insurance Company (RRG).

New entrants to Captive Review’s Hall of Fame were former VCIA board member Steve McElhiney with Artex, former VCIA finance committee chair Michael Corbett with Pinnacle Financial Partners, and recent VCIA Industry Service awardee Mike Zuckerman of Temple University.  Also recognized were Captive Professionals to Watch including Alicia Miller of Crowe and Molly Hengtes of Gallagher Bassett.

Finally, congratulations to our colleagues who were named in the Power 50, including Greg Agnone of Midwest Employers Casualty (50), Mike Raybshteyn of EY (45), Rob Walling of Pinnacle Actuarial Services (39), John Prescott of Johnson Lambert (38), Nick Frost of Davies Captive Management (36), Paul Corver of R&Q (32), Renea Louie of Pro Group (31), Amy O’Brien of Gallagher Bassett (30), Phil Giles of MSL Captive Solutions (29), Mike Serricchio of Marsh Captive Solutions (25), Steve Bauman of AXA XL (24), Anj Fowler of Madison Scottsdale (23), Bob Gagliardi of AIG (21), Dan Kusaila of Crowe (19), Karin Landry of Spring Consulting (17), Mike Meehan of Milliman (13), Pete Kranz of Beecher Carlson (11), Anne Marie Towle of Hylant Global Captive Solutions (8), Sandy Bigglestone of Vermont’s Department of Financial Regulation (7), Nancy Gray of Aon (3), and Brady Young of SRS (1).

Congratulations to you all… and even to you Dan Towle of CICA (9)!

Thank you and I look forward to seeing you soon.  

Rich Smith
VCIA