North Carolina is joining the growing number of states allowingfor the formation of captive entities within their borders.

On Wednesday, Gov. Pat McCrory signed into law HB-473 that willallow the formation of all types of captives, including financialcaptives, in the state beginning in July.

The capital and surplus requirements for pure captives, in whichone corporate owner insures its own or its subsidiaries' risks, andprotected-cell captives specializing in insuring certain types ofrisks, are set at a minimum of $250,000. The same requirementapplies to financial captives that insure finance companies.

The captives will be subject to a 0.4 percent state tax ondirect premiums up to $20 million and 0.3 percent on directpremiums over $20 million. Reinsurance premium tax ranges from0.225 percent to .05 percent, based on whether the captive'spremium range is closer to $20 million or $60 million or more.

Reinsurance premiums of $40 million to $60 million will be taxedat a rate of 0.05 percent; the tax for reinsurance premiums of $60million or more will be 0.025 percent.

Texas was the last state to join the onshore captive marketplace, which now counts more than 30states, when the Texas Department of Insurance (TDI) passed billCSSB-734 in May 2013.