What are the minimum capital requirements for a captive in Utah?
The statutory floor is one number and the actuary's number can be higher
Travis Wegkamp gives the minimum capital by captive type, and says the pure captive minimum covers the majority of what Utah licenses. Then he adds the part that matters more in practice: the statutory floor is not always the operative number. If the feasibility study's actuary concludes the programme needs more capital to be feasible given the lines and limits proposed, the department wants to see that higher amount confirmed at the bank before it issues the certificate of authority.
Wegkamp runs the minimums by structure. A pure captive carries the lowest floor and is the majority of what Utah licenses. An association captive sits above it, a risk retention group higher again, and a sponsored insurance programme matches the pure captive figure with a portion of it required to come from the sponsor and stay there.
He also notes that an individual cell inside a sponsored programme carries no minimum capital requirement of its own.
Key takeaways
Wegkamp gives a different statutory capital minimum for pure captives, association captives, risk retention groups and sponsored programmes, and says the pure captive case is the majority in Utah.
An individual cell has no minimum capital requirement of its own, while a sponsored programme requires part of its capital to come from and be maintained by the sponsor.
The actuary's feasibility determination can require more capital than the code does, and the department wants that amount confirmed at the bank before issuing the certificate of authority.
The more useful half of the answer is what overrides those numbers. Wegkamp explains that any additional capital the department needs to see before issuing a certificate of authority comes from the feasibility study and the actuary's determination of what the programme needs to be feasible.
His worked example is direct: given the coverages and limits a captive wants to write, an actuary might conclude the programme needs substantially more than the statutory floor, and in that case the department wants a bank confirmation of the larger amount before the certificate is issued.
From the conversation
Travis Wegkamp
Director, Captive Insurance Division, Utah Insurance Department
“capital requirements to start off with a typical pure captives, the minimums $250,000”
This answer begins at 12:07 of the full conversation. Watch or listen to the whole thing.
Citations
Sources
- Captive, Utah Insurance Departmenthttps://insurance.utah.gov/captive
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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