With a strong business infrastructure and a responsive judiciary system, Delaware is set to become a leader in the captive arena, both in the United States and internationally, according to William P. White, the domicile's new captive administrator.

"Something like 60 percent of all the Fortune 500 companies use Delaware as their corporate domicile," he noted. "There are reasons for that...financial reasons as well as the fact that the law is responsive to business." Mr. White accepted the position just one week before the Vermont Captive Insurance Association conference in Burlington early last month.

He added that the state has expertise in dealing with the legal issues of businesses, while its judiciary understands what needs to be done to properly regulate commerce.

From both a government and business standpoint, "there was a very high-level cooperative effort here in moving this [captive initiative] forward. One of the underpinnings of it is that Delaware has one of the most flexible corporate laws in place," he said.

"You bring this insurance aspect into that same environment, and that is a very comprehensive approach to working with business from a regulatory standpoint, and that, I think, is one of their key advantages," he told National Underwriter.

Delaware, he added, has "good underpinnings for all of this, and I think we'll be able to move some things along very quickly."

Mr. White--the former captive regulator in Washington, D.C.--said he will be working closely with Michael Vild, Delaware's deputy insurance commissioner, and Insurance Commissioner Matthew Denn, both of whom "very much understand the need to be responsive to business."

Delaware, he explained, has had captive regulations in place since 1984, but a rewrite was passed in June 2005. Delaware's new law, he said, will stand up very well against any of the other captive laws--not just in the United States, but on a worldwide basis--"and that's where there's a key difference."

"Delaware looked at this not just in terms of other competitive states, but in terms of worldwide business in the alternative market," he said.

In rewriting the law, Delaware "did not go back and just take their 1984 law and compare it to what everyone else was doing," he said. "Delaware has taken a step that's a little different."

The difference, he explained, is that Delaware has included a provision for a "special purpose captive" that is slightly different from D.C.'s, which he helped develop. D.C. allows for special purpose captives with the approval of the regulator. Delaware, he said, has a key provision that "enables businesses to develop additional risk-bearing facilities in response to their changing business needs."

When viewed as part of an ongoing risk management structure, he said, the provision "provides some significant benefits. I think it would be particularly useful for certain sidecar transactions."

Mr. White continued that in combination with other provisions, "such as flexibility of entity type and accounting treatment, and provisions that allow captives to own other captives," Delaware's captive law responds to "both current and emerging domestic and international risk management needs."

He noted that equally important is the backing of the state. In fact, he said, the state already has allocated funds to support the captive program over the next three years, "with the proviso that as things develop more funds can be allocated for staff and other resources."

Initially, he said, he would be adding one or two staff members before the end of the year, with an additional allocation planned for 2007.

Special Reports /

Delaware Rekindles Captive Growth

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