Nevada is not only one of the older captive domiciles in the United States, it is also a domicile that has enjoyed significant growth.
At the end of 2019, Nevada, whose captive statute marked its 20th anniversary last year, had, excluding cell captives, 174 active captives, up from 143 in 2013.
Of those 174 captives, the bulk, 144, were single-parent captives, while Nevada also had a significant number of risk retention groups: 13.
A key factor, captive managers say, that has driven Nevada's captive growth is the quality of their regulatory staff.
Regulators "are knowledgeable, accessible and proactive," said Allan Smith, client service leader with Marsh Captive Solutions in Phoenix, Arizona.
"The captive department has staffers who are thoughtful and good to work with," added Jon Harkavy, executive vice president and general counsel for captive and risk retention group manager Risk Services L.L.C. in Washington.
Nevada captive regulators attribute the growth 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, program officer at the Nevada Division of Insurance in Carson City.
In addition, legislative changes also have boosted Nevada's appeal as a captive domicile. For example, legislation passed in 2019 allows captives to go into dormant status, significantly reducing how much capital and surplus the captives must maintain, with captives having the option to return to active status in the future.
In addition, legislation passed in 2014 simplified financial reporting for single-parent captives, while a measure approved in 2003 provides a $5,000 tax credit offset against state premium taxes during a captive's first year of business.
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.
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.
As of April 2020, 75, or just over 40 percent of Nevada captives, were formed by companies in the banking, finance, and insurance industries, while 22, or nearly 13 percent, of captives were formed by real estate and construction companies, and 17—about 10 percent—were formed by medical and health care companies.