Arkansas Licenses First Captive

Arkansas Licenses First Captive

By Caroline McDonald

The captive domicile of Arkansas, which passed captive legislation in June of 2001, announced it has licensed its first captive.

The captive, AMC Re, was formed by American Management Corporation, an insurance agency in Conway, Ark. The new captive will reinsure risks written or placed by its parent company, according to the Arkansas Insurance Department.

David Grimes, treasurer for AMC, said the company chose to domicile in Arkansas because it was located in the state.

He said AMC, which currently has a captive cell in Bermuda that writes its workers' compensation, formed a producer reinsurance captive, which he said is somewhat “unique to the Arkansas law.” The producer reinsurance captive allows the agency to set up individual protected cells for various clients for risks written or placed through the agency, he said.

“We're excited to have the captive option available to offer to insurers,” said Lenita Blasingame, deputy commissioner for the Arkansas Insurance Department.

“We're looking forward to helping it grow. We realize we're new and we're obviously working to make Arkansas an attractive option for captives,” she said.

Ms. Blasingame said the state offers “a good regulatory environment.” The department works closely with captives “to expedite the process of establishing a captive and getting it licensed here,” she said.

She said that the domicile, at this point, does not employ a separate captive division within the insurance department. Currently captives are handled out of the department's legal division with the assistance of the finance division.

Arkansas regulations, she explained, are “almost a combination of Vermont and South Carolina, with the best of both.”

One thing the Arkansas captive law requires is that portions of the captive companys assets be reinvested in Arkansas bonds and securities. Those investments are to be used by the state or local community to support hospitals and improvement projects, according to the department of insurance.

So far the domicile has had inquiries from organizations “looking for niche areas that they are trying to fill,” she said. “With the options we have available in our law,we can help [organizations] structure the captive to fit into one of those options,” she said, describing the Arkansas captive law as one that allows for a “broad and diverse” array of captive opportunities.

Geographically, she said, the department is located in Little Rock, which is at the center of the state.

The domicile is also located at the “center of the United States. Hopefully that's an attractive plus,” she said.

Of the two organizations now considering a captive in the domicile, Ms. Blasingame said one is located in the state and one is outside of the state.

Reproduced from National Underwriter Edition, March 10, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved. Copyright in this article as an independent work may be held by the author.