A Look Into the DCIA 2016 Fall Forum
Aaron Hillebrandt

A Look Into the DCIA 2016 Fall Forum

The Delaware Captive Insurance Association (DCIA) held its annual Fall Forum September 19-20, 2016 on the Wilmington riverfront. Attendees included leading captive service providers, captive owners and Delaware’s captive regulators.

There was a degree of uncertainty among the participants due to Karen Weldin Steward, Insurance Commissioner for the past 8 years, being recently defeated by Trinidad Navarro in the Democratic primary election. Republican candidate Jeff Cragg is also running, and both candidates attended the conference. 

Steve Kinion, Director of the Bureau of Captive and Financial Insurance Products (the Bureau), led his usual regulatory update session, commenting on Delaware’s development as a captive domicile. There were no comments directly addressing the uncertainty around any potential changes which might be made by a new Insurance Commissioner. 

As of September 14th, Delaware has 1,055 active captives, 681 of which are series captives. At about $360 Million, captives represent 0.6% of Delaware’s GDP. For the first time in several years, new captive applications slowed at year-end 2016: From January 1, 2013 through January 1, 2016, the total new application count was 114, 150, 160, and 128 annually. Additional intriguing regulatory update session highlights include:

  • This year, there will be no changes to the year-end application process or annual statement forms. 
  • There are currently two bulletins pending issue by the Bureau. The first is expected to be released by the end of September and will allow mutual funds to be used to meet minimum capital and surplus requirements, provided the funds are on the NAIC mutual fund list. 
  • The second bulletin relates to reducing the minimum amount of capital held by the core of a series captive from $250,000 to $50,000. The capital is held for the contingency that a member of the series may go insolvent, but to date Delaware has licensed over 700 series and there have been no insolvencies. According to Mr. Kinion, this bulletin is expected to be issued soon. 
  • The Bureau is also trying to ease the process of altering captive ownership to comply with the changes to IRC section 831(b) effective 12/31/2016. Mr. Kinion presented two examples of methods to accomplish this, one of which includes forming a new captive and the other which does not. If a new captive will be formed, the business plan change must be filed by 12/1/2016, for a target license issue date of 12/31/2016. 
  • Mr. Kinion also highlighted XXX and AXXX captives as new opportunities for Delaware.

Presentations from the Forum can be found online here

The DCIA 2016 Fall Forum provided great networking opportunities and educational sessions, and we look forward to participating in future events.

Aaron Hillebrandt, FCAS, MAAA, CPCU, FFSI, FLMI, LPCS, AINS, is a Consulting Actuary with Pinnacle Actuarial Resources, Inc. in the Bloomington, Illinois office. He holds a Bachelor’s Degree in Mathematics from Illinois State University, where he is now involved as a mathematics lecturer.  Aaron is an honorably discharged Sergeant and combat veteran of the United States Marine Corps. He has over eight years of actuarial experience in the property/casualty insurance industry, including considerable experience in assignments involving loss reserving, funding studies, loss cost projections, captive feasibility studies, and personal and commercial lines ratemaking.

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