NU Online News Service, May, 12, 3:01 p.m.EDT

The Captive Insurance Companies Association says an article inThe New York Times this week, casting a shadow on captiveformations and domiciles in the U.S. and abroad, “completely missesthe point” and is “impossible to correct.”

The CICA says, “It is disappointing and frustrating to try torespond to an article that clearly doesn’t understand the conceptof captive insurance, completely misses the point that captiveinsurance is a highly regulated industry utilizing regulatorapproved conservative investments, and poses no danger to theunsuspecting public because it is, at its core, a self-insurancedevice.”

The Times owns a New York domiciled captive insurance company calledMidtown Insurance Co.

“Captives are not ‘financial wizardry’ as the article claims. Rather, they are simply a method for companiesto formally fund and self-insure a portion of their risks,” CICAexplains.

CICA says its frustration extends to whether it should directlyrespond to the Times. That course of action would onlyserve to “give the original story ‘legs,’” says the CICA, whichadds that it would be “impossible to correct a story with as manymisunderstandings and conceptions as the original story.”

About 30 states within the U.S. and dozens of domicilesthroughout the world “have welcomed the formation of captiveinsurance companies as a vehicle for companies and groups to servetheir own insurance needs rather than relying on the commercialinsurance market that may or may not meet their needs,” CICAnotes.

Each captive domicile “has a set of regulatory protocolsdesigned to evaluate each captive’s financial strength, whichalmost always includes an independent, state-approved actuarialanalysis of insured losses. The history of captive default isalmost non-existent and any loss falls on the owners of thecaptive, not the government,” the statement reads.

Midtown Insurance Co. is listed as a consolidated subsidiary ofThe New York Times Co. in its 10-Q filing for the U.S. Securitiesand Exchange Commission, filed Nov. 8, 2007 for the period endingNov. 30, 2007.

A New York State Insurance Department (NYSID) spokesperson saysthe Midtown Insurance Co. captive is still viable.