S.C. Exceeds 2002 Captive Expectations

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By Caroline McDonald

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NU Online News Service, Jan. 10, 3:35 p.m.EST?The captive domicile of South Carolina announcedyesterday it finished 2002 with a total of 34 licenses and anofficial said expansion is continuing, slowed only by a scarcity ofreinsurance and fronting capacity.

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Clayton Ingram, South Carolina Department of Insurance managerof risk development, alternative risk transfer services, said witha total of only two full years as a domicile, South Carolina haslicensed a total of 46 captive insurers.

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Mr. Ingram projected licensing at least 30 more captives in2003. "That's taking into consideration good, quality licenses. Ifyou look at what we've been presented and what we've ended uplicensing, I think if we did 30 next year, that would be a good,conservative estimate."

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The department easily could license 14 in the first quarter of2003, he said. Currently three captives' licenses are in finalprocess, three more are ready to license, and there are 11 more"that we've got commitments from," he added. "If things go the wayI would like to see them go, we'll be issuing the 50thlicense in June."

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The main trend continues to be professional liability. However,he said, "we're seeing, again, what I would call a trend toward theclassic captive?a single company insuring its own risk, it's ownliabilities, workers' comp and property."

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Mr. Ingram said finding fronting and reinsurance continue to bea problem. "It held a few up," he said. "It's been tough. They'veboth been problems, but it looks like reinsurance has been thetougher of the two."

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Fronting has become available for those with "good solidprograms," he said. "Reinsurance, for us at least, has been eventougher in the last six months and I don't know why."

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The squeeze, however, "hasn't stopped anyone," he added, thoughit has "forced some to take lower limits and to change theirbusiness plans."

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