A major amendment to Vermont's captive insurance law went into effect on July 1, which promises to keep the state at the forefront of captive domiciles.
The amendment establishes requirements and guidelines for the formation and operation of a special-purpose financial captive insurance company, or “SPFC.” These provisions are included in a new Subchapter 4 to Chapter 141, Title 8 of the Vermont Statutes Annotated.
Vermont enacted the SPFC legislation to create a flexible framework for captives used in sophisticated financing transactions. In the short term, the legislation responds to the growing trend in the life insurance industry of using captives to facilitate financing of life insurance triple-X and AXXX reserves, and releasing the embedded value of books of life insurance business.
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