Top three domestic U.S. captives hold on to their spots in first half of 2003; Vermont is on track to shatter last year's record; South Carolina sees important gains

Risk & Insurance, August, 2003 by Thomas J. Slattery

In the first half of this year, Hawaii licensed ICT (Insurance Company of Trinet), the captive insurer of Mitsui & Co., a publicly-traded Japanese general trading company, to insure Mitsui's domestic and global risks. The state also harbors the captives of such Japanese giants as Nissan Motor Co. and Citizen Watch Co.

South Carolina: A Strong Third

A year or so ago, if Vermont were to pick the stock epithet for South Carolina it might have been something like the Palmetto Predator. At the time, the South Carolina Captive Insurance Association was readying a "redomestication seminar" in Columbia, S.C., to lure captives from other jurisdictions, a move Vermont took as a provocative attempt to poach on its preserve. Now the skirmish appears to be over.

Leslie Jones, deputy director of the South Carolina Insurance Department's risk transfer division, will tell you it was all a misunderstanding, that the target was offshore business and that what hostilities there were have ceased. And Vermont's Derick White will tell you his state has made its peace with South Carolina and that he's in frequent contact with Clayton Ingram, director of business development at the South Carolina department.

In the meantime, South Carolina has surged ahead on the captive front. In just three years, it has moved into the No. 3 position among U.S. captives. By mid-year, South Carolina had licensed a total of 43 captive insurance companies and Jones says she has an additional six or seven on her desk. Conservatively, she says, the state will license 60 by the end of 2003.

Jones has a word for this impressive captive industry growth: "phenomenal." It's a word Vermont and Hawaii, looking to their own impressive first-half performances, just might echo.

No. of Captive Companies Operating in the Top Three States

Top U.S. domestic captive states report healthy
growth rates in first half.

                                  Net
                 2002   2003 1H   Gain   % Gain

Vermont           433     469      36     8.3%
Hawaii            100     109       9     9.0% *
South Carolina     38      43       5    13.1%

Source: Captive associations.

* Through May 31st.

Thomas Slattery can be reached at t.j.slattery@worldnet.att.net.