Nevada is one of the older captive domiciles in the United States, and it is also a domicile that has enjoyed significant growth since 2010, as well as weathering the challenges in the current market.
At the end of 2022, Nevada had, excluding cell captives, 155 active captives, down from 161 in 2021 but up sharply from 143 in 2013.
Of those 155 captives, the bulk, 129, were single-parent captives, while Nevada also had a significant number of risk retention groups: 10.
Including cell captives, Nevada had 299 captives at the end of 2022, up from 295 captives in 2021.
In addition, excluding cell captives, 45 percent of Nevada captives were formed by parents in the banking, finance, and insurance industries; 15 percent were formed by real estate and construction companies, which includes agricultural, transportation, and manufacturing companies; 10 percent were formed by healthcare companies; and 5 percent were formed by sales companies.
Nevada captive regulators attribute the state's growth as a captive domicile to several factors, including the state's early passage—in 1999—of captive legislation.
"Nevada earned a position of captive leadership through early entry in the market. This head-start helped establish a base of over 100 companies by 2010," said Robert Gallegos, the Program Officer at the Nevada Division of Insurance in Carson City.
Legislative changes in 2019 boosted Nevada's appeal as a captive domicile. For example, Nevada statutes now include a dormancy status that significantly reduces costs and filing requirements, as well as reduces the amount of capital and surplus a captive must maintain.
Another positive development is its new captive association, the Nevada Captive Insurance Council (NCIC). The NCIC was launched in early 2020 to promote, protect, and enhance the state as a captive domicile.
A key factor, captive managers say, that has driven Nevada's captive growth is the quality of their regulatory staff.
Premium taxes assessed on captives are modest with a $5,000 annual minimum tax and a $175,000 maximum. New captives receive a first-year $5,000 tax credit.
Capital and surplus requirements vary by type of captive. For example, the minimum capital and surplus requirements are $200,000 for a single-parent captive, $500,000 for an association captive and sponsored captives, $600,000 for an agency captive, and $800,000 for a rental captive.
All in all, Nevada has been and continues to be an attractive domicile, Mr. Gallegos notes.
"In Nevada, the captive industry enjoys low application expenses, simplified financial reporting requirements, a fair and consistent regulatory environment, and a team dedicated to providing prompt customer service and helping our captive insurers achieve success," he said.