Vt. Scores 18 New Captives, Nears Hire of New VCIA President
By MATTHEW BRODSKY, senior editor/Web editor of Risk & Insurance®
The Vermont captive industry is alive and well, despite a fire alarm that cleared the conference center mid-session on Wednesday. As reported at the annual meeting of the Vermont Captive Insurance Association, the domicile has seen 18 new captive formations in the first half of 2009. That's more than the 16 formed in all of last year and brings the total number in the domicile to 558.
As David Provost, the state's deputy commissioner for captive insurance forecasted, formations in the pipeline for the rest of 2009 could make this a better than average year. An average year, for reference, usually equates to 25 to 27 formations.
The state's regulators and association members have no single explanation for the boon.
"A little bit of everything," said Provost when questioned about it during the VCIA press conference in Burlington.
He explained that some 2009 captive formations came about from owners that planned for formation in 2008 but had not acted upon it until now. The economy perhaps has "hit the bottom," according to Provost and companies can now better plan for the future financially.
Another factor could be the recent captive legislation passed in the state legislature, which not only allotted more resources to regulators but also gave captive owners a minor tax break.
"They seemed excited about it beyond its real value," Provost said about captive owners' reaction to the tax provision.
Also built into the forecast for 2009 is the impending hardening market, "whether it comes in two quarters or two years," said Provost.
As prices go up in the traditional insurance market (as they have already for certain lines), insurance buyers typically look toward alternative risk transfer.
Out of the 18 formations, five of them were risk retention groups, six were for medical professional liability insurance and three new captives were relocations: one from South Carolina, one from Cayman and one from Nebraska. Also sprinkled in were mortgage insurance startups, energy company captives, property and TRIA terrorism captives and one SPFC.
VCIA representatives were tight-lipped as to who they have in mind to replace current VCIA President Molly Lambert.
But according to board chair Michael Bemi, Lambert's replacement could be named within the next three weeks. The plan is to have the new president in office by October 15, with Lambert sticking around through the end of the month for ease of transition.
"It was very difficult for the search committee to hone and refine the list," said the president and CEO of the National Catholic Risk Retention Group Inc. about the field of applicants.
According to reports, a small child set off the fire alarm at the Sheraton conference center, interrupting the Wednesday afternoon sessions.
August 13, 2009
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