Arkansas State Insurance Commissioner Mike Pickens announced that his state’s first captive insurer, AMC Re, has been formed by American Management Corporation (AMC), an insurance agency in Conway. The new company will reinsure risks written or placed by its parent company, AMC.
Captive insurance companies, which traditionally have operated off shore, provide more flexibility and control than a traditional insurance company. A captive insurance company only insures particular groups, such as a parent company and its subsidiaries or members of an association. Since these companies are generally owned and controlled by the companies they insure, they are not regulated as strictly as insurers that sell on the open market. Due to the hardening insurance market, more businesses are turning to captive companies to fulfill insurance coverage needs.
“It just makes sense to give companies the option to set up captives here at home, as opposed to going out of the state or country,” said Steve Strange, AMC president and CEO.
The Arkansas General Assembly passed in 2001 Act 1428, which provides for the licensing and regulation of captive insurance companies. The captive law allows for several captive options.
“We are very excited about the development of this new company,” Commissioner Pickens said. “We believe our captive laws will prove to be beneficial to the economic growth of the State of Arkansas.”
Arkansas captive law requires portions of captive company assets to be reinvested in bonds and securities. Those investments would be used by the State or local community to support hospitals, and other improvement projects.
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