Hawaii Issues Captive License to MHC Insurance Co.

December 14, 2006

The Hawaii Department of Commerce and Consumer Affairs Insurance Division has granted a captive license to MHC Insurance Co. Ltd., which participates in insuring the worldwide risks of its Japanese-related owners and affiliates.

Insurance Commissioner J.P. Schmidt noted that this license, issued on Nov. 1, 2006, marks the 200th captive license granted in the state. “This represents the continuing success of the state’s efforts to maintain a reputable and attractive environment for this specialized kind of business,” he said. “Interest in new captives in Hawaii continues to be strong, in spite of lower commercial insurance market prices and the proliferation of new captive jurisdictions across the country.”

Captive insurance is a form of self-insurance, where large companies set up their own insurance company to cover their risks. Smaller companies may take a similar alternative risk management approach by banding together in a risk retention group. According to the DOI, more than half of the United States allow the formation of captive insurance companies. Hawaii enacted its captive laws in 1986, at which time only about four states allowed captives.

For 2005, the most recent year figures are available, Hawaii’s 158 actively licensed captives had combined premiums of approximately $1.6 billion and total combined assets of $6.5 billion, according to the DOI. The division also noted Hawaii is the second largest captive domicile in the United States and is in the top 10 in the world, based on the number of licensed companies. Based on total combined assets, Hawaii is one of the top five domiciles in the world.

“The business conducted by our current licensees is expected to increase as companies continue to refine and expand their existing captive programs,” said Craig Watanabe, who oversees the state’s regulation of the captive insurance industry.

He noted other captive highlights for the year included:

• Licensure of Hawaii’s first captive to insure employee benefit risks. AGL Resources received U.S. Department of Labor exemption from Employee Retirement Income Security Act (ERISA) and approval to use its Hawaii captive, Global Energy Resource Insurance Co. USA, to insure some of its U.S. employee benefits programs. Atlanta-based AGL specializes in the distribution of natural gas.

•Hawaii attracted Japanese-related captive DENSO Reinsurance America. The captive is owned by the DENSO Corporation of Japan, a global supplier of technology, systems and components to major automakers.

Topics USA Japan

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