Captives and Debtors

bankcruptcyInteresting news about OxyContin maker Purdue Pharma seeking product liability insurance and general liability coverage by creating a captive insurer.  Purdue asked for permission to set up the captive insurer in federal court on Monday as part of the firm’s filing for bankruptcy protection, as it has been challenging for them to find a commercial solution with a third-party insurer, not surprisingly.  Purdue faces more than 2,600 lawsuits alleging that it helped fuel the U.S. opioid epidemic.

As VCIA Member (and recipient of VCIA’s 2019 Industry Service Award!), Chaz Lavelle of Bingham Greenebaum Doll LLP stated recently in a September 17 article in Business Insurance,  “We’ve had situations in the past where an operating company has gone bankrupt but the captive insurer which it has previously set up was fully solvent, continued to operate and pay claims notwithstanding the bankruptcy and the disposition of the company.”

It reminded me of the Vermont captive for the bankrupt firm Enron back in the 90s. Even though the firm was mired in bankruptcy proceedings due to the fraudulent leadership at the top, under the supervision of Vermont’s Department of Financial Regulation its captive remained solvent and paid out every one of its claims under its policies in full. Having the captive kept the policy claims separate from the bankruptcy proceedings. Even debtors require various liability, casualty, property and other insurance programs in the ordinary course of their businesses.

Thank you all very much, and I look forward to hearing from you.

Rich Smith
VCIA President

Young at Heart

Young professionals

Young captive professionals at a recent VCIA event.

Recruiting and training the next generation of captive professionals is a paramount issue for our industry, as everyone knows. Both CICA and NRRA have programs designed to reach out to this group and draw them into the industry.  Fostering newcomers to join the field and eventually step into the roles of our current captive leaders and professionals is an initiative that VCIA takes to heart.

Over the past number of years, VCIA’s Annual Conference has created places and sessions where young professionals can learn from and network with both peers and seasoned professionals as they pick a pathway forward in the captive insurance field.  Besides our NEW Captive Immersion experience, which will familiarize those who are new to the captive industry on the key services, and our annual Captives 101 session that provides a basic overview of captive insurance companies and RRGs, other VCIA sessions designated for young professionals include:

Developing the Next Generation of Captive Industry Leaders, which will explore what is being done in the industry to attract and retain new talent.  According to the Pew Research Center, millennials were the largest portion of the workforce in 2016. As a group they are very connected, having grown up with the internet in their everyday life. In the workforce, they are eager to make a meaningful contribution to the workplace and the greater good. In many ways, this group is helping transform organizations.

Our Young Professionals Forum will provide a great resource particularly for those with fewer than 10 years of captive experience.  Three dynamic facilitators will lead small group discussions about sharpening your speaker skills, how to approach your early career years and work/life balance.  Afterwards, an open forum will occur for a fluid discussion on topics such as transitioning into the workforce, professionalism and meeting work demands in a sometimes-stressful environment.

On top of all that is just the best networking opportunities both “on campus” and “off campus” in the captive industry, so, I hope you all can join us! Click here to register for the VCIA Conference today.

Thank you all very much, and I look forward to hearing from you!

Happy Fourth of July!

montpelierWishing everyone a Happy (and SAFE) Fourth of July this week! I love how Montpelier (my home town) does their annual parade and fireworks at the State House every year. A real mix of traditional bands mixed with a crazy quilt of floats and causes – and sometimes a Presidential candidate (although I believe Bernie Sanders will be in New Hampshire this few days for some reason…).

Thanks to all of you who registered for VCIA’s Annual Conference before the end of June. We have over 800 captive professionals already registered to come to Burlington, Vermont, well on our way to hosting over 1000 attendees. Even more exciting, we have over 80 people signed up for our new Captive Immersion program happening on Monday, August 5th.

Captive Immersion will offer an afternoon of educational sessions designed to familiarize new captive industry professionals on the essentials of captive insurance.  The key services that are needed during captive formation and management will be presented by industry experts to give newcomers a complete sense of the various components and their importance in the overall captive picture. It’s not too late – sign up for the conference and Captive Immersion today by clicking here.

Thank you all very much, and I look forward to hearing from you!

Great News: VCIA’s captive bill passes… but you knew that was going to happen

imjustabill
Thanks to the expert testimony of Deputy Commissioner Dave Provost, this year’s captive bill passed the House and Senate and is on its way to the Governor for his signature. Unless there is a calamity, the Governor will sign it into law within the next week.

Here is a quick outline of what it will do:

  • Allows non-profit protected cells can issue dividends to its owners.
  • Eliminates the requirement for an attorney-in-fact bond of a reciprocal RRG in most circumstances.
  • The commissioner currently can waive the three-year exam period, but with the maturity of many of Vermont’s captives, it made sense to revisit the timeframe. This section makes default exam period 5 years, but commissioner can shorten if determined to be prudent.
  • Allows any type of entity recognized by the Secretary of State to be formed as a captive.
  • Allows groups and agencies to either comply with current statutory investment requirements OR come up with an acceptable plan (which DFR will keep confidential). Section 3463a – valuation methodology – still applies.
  • Re-writes the RRG independent director section for clarity.
  • Makes NAIC statutory accounting the standard for the new affiliated reinsurance company or ARCs.  Vermont didn’t need to meet accreditation standards, but wanted to avoid a repeat of the AXXX/XXX fights.

Thank you all very much, and I look forward to hearing from you!

Happy New Year!

rich-great-gatsby

OK, that was weird…. 2019 is here and 2018 seems like a strange dream. 2018 was one of the most “interesting” years in my brief (well, not so brief anymore) and wondrous life. That being said, we have a lot on our plates this year and I am looking forward to working with you to further advance the captive insurance canon!

2018 proved to be another highly successful year for Vermont’s captive insurance industry with 25 new captive licenses added, bringing its total to 1,137 with 558 active captive insurance companies. Over the past ten years or more, the average number of new captives licensed yearly in Vermont has been roughly 25, regardless of the marketplace. This steady figure highlights the resiliency of both the captive marketplace and Vermont as a domicile.

The new captives were made up of 12 pure captives, 3 sponsored captives, 4 Risk Retention Groups (RRGs), 2 special purpose financial insurers, 1 branch captive and 2 industrial insured captives. As usual, a healthy mix of sizes, types and industries, ranging from healthcare, manufacturing and financial services to religious institutions, entertainment and nonprofits. As David Provost, Vermont’s Deputy Commissioner of Captive Insurance, always says, Vermont’s focus will always be licensing quality companies, not chasing numbers.

Don’t forget that January 23rd this year is VCIA’s annual Legislative Day at the State House in Montpelier, Vermont’s capital. It’s a full day of meeting and hearing from Vermont’s political leaders on the captive industry and issues facing the State broadly. Go to www.vcia.com and register today!

Thank you and I look forward to hearing from you.

Congratulations Sandy & Ian!

sandyandIan2018Two of Vermont’s best in the captive industry have just been recently honored.

Sandy Bigglestone, Director of Captive Insurance for Vermont’s Department of Financial Regulation, has been named to the Business Insurance 2018 Women to Watch, that recognizes 30 women leaders doing outstanding work in risk management and commercial insurance worldwide.  Business Insurance readers nominated candidates for Women to Watch, and a panel of Business Insurance editors selected the honorees based on those nominations.  Also recognized in this list is Ellen Charnley of Marsh Captive Solutions. Sandy not only does outstanding work for the State of Vermont, but she has become a true leader in the captive insurance industry – someone who is sought out for her advice and her expertise on panels and forums across the country. And she does it all with a great sense of humor and aplomb!

Ian Davis took the reins at Vermont’s Department of Economic Development as Director of Finance only a short time ago and he has already made a name for himself. He quickly became the go-to guy for Vermont in its continuing conquest of the captive insurance world. Vermont Business Magazine named Ian to their 2018 Class of Rising Stars. Award recipients were selected by a panel of judges for their commitment to business growth, professional excellence and involvement in their communities. I couldn’t agree more!

Just two more reasons Vermont is the BEST place for captive insurance. Congratulations Sandy and Ian!

Thank you and I look forward to hearing from you!

Rich Smith
VCIA President

Fred Hackett 1933 – 2018

fred hackett

An early photo of Fred Hackett, in the 1980’s, second from left. Fred was instrumental in the foundation of the captive industry in Vermont.  (From left to right: VCIA Members and captive industry participants Julie Boucher, Fred, Mark Boll, Kathy Davis and Dan Labrie.) 

Former Vermont captive insurance founder and director of VCIA, Luther “Fred” Hackett, died of Alzheimer’s disease on October 8, 2018 at the Wake Robin Continuing Care Retirement Community in South Burlington, Vermont.

After graduating from the University of Vermont in 1955, he served in the Air Force before returning to Vermont to join his father in a new insurance business. He was Chairman of Hackett, Valine and MacDonald Inc., Champlain Captive Management, Inc. and Benefit Investment Advisors, Inc. He was an advisor to the Vermont Captive Insurance Association Board in the early era of the captive industry in Vermont.

In 1965 Fred was elected to the Vermont House of Representatives from South Burlington. He served on the Appropriations Committee, and as Chairman from 1969-1970 and served as republican majority leader from 1967-1968. He was Chairman of the Joint Fiscal Committee of the Vermont House and Senate in 1969. In 1972 he won the Republican Primary for Governor. He lost the Governor’s race to Thomas Salmon in the general election.

Fred was an environmentalist. He proudly assisted with the legislation in 1969 for preservation of certain land abutting the Camel’s Hump State Park, creating a state-owned Forest Reserve that formed Camel’s Hump State Park. He was instrumental in the creation of ACT 250 and heavily involved with the Clean & Clear Task Force for Lake Champlain.

Fred was a sixth generation Vermonter and spent most of his life building a business and aiding ventures he felt would make a positive difference to the future of his beloved State of Vermont. Over the many years Fred received numerous awards and recognition for all he did for our state, but I remember him as a man willing to give excellent advice to an upstart in Vermont (that would be me) with no trace of condescension, and being treated as an equal. I believe that graciousness and community spirit has been successfully imprinted on Vermont’s captive insurance community.

If VCIA had a flag, it would be lowered to half mast today. Thank you for all you did, Fred.

Rich Smith,
VCIA President