Captive Re-domestication

This has become a hot topic and many owners are re-evaluating their choice of domicile. For a captive formed in the hard market, this is a natural step to take as the captive reaches maturity. Despite the discussion, there has not been much movement out of the traditional healthcare domiciles of Cayman, Bermuda and Vermont. This could change as the newest jurisdictions develop. Where there has been movement it has usually been due to problems of perception about being domiciled offshore.

Rather than re-domesticate, some captives have supplemented their offshore presence by also forming an onshore captive. A typical structure is to create an onshore Risk Retention Group to front for the offshore captive. This allows the insurance program to be offered directly in states where the insureds are located. It also removes the need and cost of fronting carriers, freeing the captive from high collateral requirements. The offshore captive can continue to write coverages that the RRG is unable to write (e.g., workers compensation, or coverage to non-owners).

For many owners this structure represents the best of both worlds. See also http://www.specandagg.com/articles/article.cfm?id=20124 (Re-domestication: To Move or not to Move).