Mr. Kramer's spoke during the Vermont Captive Insurance Association's annual conference in Burlington, Vt.

One previous objection was that the notice would require an "A" rating for captives by A.M. Best. Mr. Kramer said that the new notice, HO 415, would now require a "B-double-plus" rating from A.M. Best, and may approve additional ratings services.

Once again, however, a captive requires a rating, which Mr. Kramer said was a "bone of contention." He noted that HUD's guidelines would have a great impact because many health care facilities refinance in order to upgrade their facilities and many of them need HUD to guarantee their loans against default. The "catch-22" is that a rating is required by HUD in order for a nursing home to refinance and be guaranteed by HUD, but a captive needs several years in the market before it can be rated.

Mr. Kramer noted that "while HUD now recognizes that captives and risk retention groups are a vital part of protecting the assets of nursing homes and related health care facilities from liability issues, HUD needs to be clearer on what might be ambiguous guidelines."

He said he hopes that Neace Lukens and the captive industry can continue its dialogue with HUD to clarify the guidelines.

HUD's next step, and whether the organization will invite comment as it did after the first notice was issued in January, is not yet known.