South Carolina Department of Insurance

Others say growth also has been fueled by the steady increase in the number of captive managers and other captive service firms in the state.

"We are a one-shop state. There is a wealth of captive expertise here. That puts us ahead of many other domiciles," said Bryan Hudson, president of the South Carolina Captive Insurance Association and a shareholder with accounting and consulting firm Bauknight Pietras & Stormer PC in Columbia, South Carolina.

Regulators concur with that assessment. "A strong driver has been the captive service providers with their tremendous knowledge, resources, and experience," said Jay Branum, South Carolina Department of Insurance director of captives in Columbia.

At the same time, South Carolina legislators also have taken action to improve the state's captive law, since its passage in 2000. For example, in early 2018 state lawmakers approved a measure to allow captives, with the approval of state regulators, to make loans to their parent companies and affiliates, as well as allow regulators to reduce capitalization requirements for inactive captives.

Capital and surplus requirements vary by type of captive. For example, the minimum capital and surplus requirements for single-parent, branch, and special purpose financial captives are $250,000, $500,000 for risk retention groups and industrial insured captives, and $750,000 for association captives.

Pure or single-parent captives comprise the biggest percent—nearly 40 percent—of South Carolina's 175 captives last year. In addition, 39 risk retention groups and 413 special purpose captives are domiciled in South Carolina. Other captive types based in the state include cells, branch, association, and special purpose financial captives.

Other captive requirements include holding an annual board of directors meeting in South Carolina at which a majority of the board must be present, while captive examinations are required within 3 years after a captive is licensed and every 5 years after that.