NU Exclusive: Archer Daniels Asks For EB Captive Okay

By Caroline McDonald

NU Online News Service, Feb. 5, 10:23 a.m.EST?A new group has applied for federal approval toprovide long-term disability insurance through a captive-- a movethat could spur a spate of similar captive requests, industryexperts said.

The applicant is Archer Daniels Midland Company, according toP.Bruce Wright, a partner with LeBoeuf, Lamb, Greene & MacRaein its New York office.

Archer Daniels Midland's filing with the Department of Laborputs an end to more than a year of waiting by the insuranceindustry for a second group to make the effort to go through agroundbreaking application process that will set a standard andclear the way for further applicants.

Mr. Wright said that the move by Decatur, Ill.-based ArcherDaniels Midland Company, an agricultural processor, follows aground-breaking application by Herndon, Va.-based ColumbiaEnergy.

In 2000, the DOL gave approval to Columbia Energy Group to usethe Vermont branch of Columbia Insurance Corp. Ltd. in Bermuda toreinsure long-term disability benefits-- ending a process that tookeight months.

The Archer Daniels application, Mr. Wright said, should movethrough fairly quickly. "We do not have the Bermuda element here,their captive is in Vermont," Mr. Wright said. "That's a differencethat I think makes it a little bit simpler."

The significance of this case, he explained, is that "if the DOLalso considers this to be similar to the [Columbia Energy] case,there is an accelerated process, an expedited exemption procedure,which would allow subsequent submissions to be made on an expeditedbasis."

Chuck Waldron, consulting actuary in Milliman U.S.A.'s Hartford,Conn., office, said that the process, which took nearly a year forColumbia Energy, should now be much faster. After the second case,he said, the DOL is required to expedite the process to 45-90 days."I think the Department of Labor is eager to get somebody else inthere," he said.

Mr. Waldron said he also has had interest from otherorganizations wishing to write employee benefits through a captive,but "nobody wanted to go through the expense of trying it again."This company, he said, "is a large organization that can afford todo this and it will be worth a lot of money for them to do so."