How do you pause, close or move a captive out of a state?
Three exits, and none of them require winding the captive up
Mark Wiedeman says Tennessee can do both of the things the question asks about. A captive that wants to pause can go dormant: there is a provision that allows it, the owner provides the details of the situation, and the department processes the captive into dormancy. A captive that is finished can dissolve. And an owner who wants to keep the captive but not the domicile can pick it up and move it to another state, which he describes as redomesticating it. His framing is that there are options for the exit of a captive as well, which is the part a cautious owner wants to hear before forming one.
Dormancy is the option most owners do not know exists. Wiedeman says Tennessee has a provision that allows a captive to go dormant, with the owner providing details of the situation and the department processing it into that status.
It matters because the reason for pausing is usually temporary. A soft commercial market or a change of control does not mean the structure was wrong, and dissolving a captive discards the licence, the history and the capital position that took years to build.
Key takeaways
Tennessee has a provision allowing a captive to go dormant rather than close when an owner wants to pause.
A captive that is genuinely finished can be dissolved.
An owner can also pick the captive up and move it to another state, keeping the entity and changing the domicile.
Dissolution is the clean end. If an owner decides to sell the captive or cease it, Wiedeman says they could dissolve a captive.
Redomestication is the third path and the one that preserves the most. An owner can pick the captive up and move it to another state, keeping the entity while changing the regulator.
From the conversation
Mark Wiedeman
Director, Captive Insurance Section, Tennessee Department of Commerce and Insurance
“we do have a provision that allows them to do so”
This answer begins at 16:43 of the full conversation. Watch or listen to the whole thing.
Citations
Sources
- Captive Insurance Section, Tennessee Department of Commerce and Insurancehttps://www.tn.gov/commerce/insurance/captive-insurance.html
The views expressed are those of the featured guest, drawn from a recorded conversation, and reflect their own professional experience. Nothing on this page is insurance, tax, legal, or investment advice. Consult your own advisors about your specific situation.
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