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MAPFRE RE first to form onshore reinsurance alternative in Vermont

9th January 2019 - Author: Charlie Wood

Global reinsurer MAPFRE RE, has become the first Affiliated Reinsurance Company (ARC) to form in the U.S state of Vermont following 2018 legislation introduced as a response to the Base Erosion Anti-Abuse Tax (BEAT).

MAPFRE REThe BEAT initiative was introduced to tackle a perceived overdependence on offshore reinsurance companies and applies to certain premiums paid to non-U.S affiliates.

The ARC structure provides an alternative to offshore vehicles, such as a Bermuda affiliated reinsurer, for U.S. companies that are currently reinsuring offshore and may now be subject to the BEAT.

According to data released by the Department of Financial Regulation the State of Vermont also licensed 24 new captive insurance companies in 2018.

New licenses were made up of 12 pure captives, four risk retention groups (RRGs), three sponsored captives, two industrial insured captives, two special purpose financial insurers and one branch captive.

“I am extremely proud of the outstanding performance of our captive team and the leadership that Vermont continues to deliver for this industry,” said Vermont Governor Phil Scott. “2018 proved to be another great year for captive insurance in Vermont.”

The new captives were licensed in healthcare, insurance, retail, manufacturing, professional services, real estate, entertainment and energy.

“The continued growth of hospitals and doctors’ groups forming Vermont captives for medical professional liability coverage has been very positive,” stated Ian Davis, Director of Financial Services. “We are also seeing a considerable amount of interest from mid-market companies, and expect both trends to continue in 2019.

Other notable captives in the class of 2018 include Twenty-First Century Fox, and ACE Hardware Corporation.

“We pride ourselves on keeping pace with the needs of the industry,” added Dave Provost, Deputy Commissioner of Captive Insurance. “The regulatory enhancements we were able to introduce last year highlight our state’s ability to adapt quickly in support of the captive insurance industry.”

The new captives licensed in 2018 bring Vermont’s overall total licenses to 1,137, with 558 active captive insurance companies.

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