What does a regulator look at in a captive's annual report?
Two filings: one that shows how the year went, one that argues the industry's case
Travis Wegkamp describes an annual report due at the start of March containing two documents. The annual statement is an officer signed, non independent financial picture: assets, liabilities, income, changes to officers, directors and ownership, general interrogatories, the lines and limits written, and the loss triangles. Reading it, the department checks that minimum capital has been maintained and looks for related party loans or dividends that should have had prior approval and did not. The second filing, the statement of economic benefit, is not about solvency at all.
The annual statement is the department's first look at how a captive's year went. Wegkamp emphasises that it is non independent, signed by a couple of the company's own officers rather than verified by an outside party, which is what makes it a quick initial read rather than an audit.
What it contains is a full financial picture plus the operating detail: any changes to officers, directors and ownership, the general interrogatories, the listing of lines and coverages with their limits, and the loss triangles showing what claims have actually cost.
Key takeaways
Utah captives file an annual report at the start of March containing an annual statement and a statement of economic benefit.
The annual statement is signed by the captive's own officers without independent verification, and the department uses it to confirm minimum capital and catch loans or dividends that skipped prior approval.
The statement of economic benefit records what the captive spends in Utah and exists to make the industry's case to the legislature for keeping the flat fee.
Wegkamp then names what the department is checking for beyond the financial picture. One is that the minimum capital requirement has been maintained through the year. The other is compliance archaeology: related party loans or dividends that required approval and never got it show up here, and he says the department can catch them in the filing.
That is worth reading alongside his repeated point about prior approval. The annual statement is where a captive that skipped a step finds out that the department noticed.
From the conversation
Travis Wegkamp
Director, Captive Insurance Division, Utah Insurance Department
“make sure that they've maintained the minimum capital requirement”
This answer begins at 18:22 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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