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Captive Insurance Growth in Delaware Sees Another Record Year

Delaware Flag
February 15, 2016

Delaware in 2015 licensed 74 pure captive insurers, 3 special purpose captive insurers, and 112 series captive insurers, for a total of 189 captive entities. It was another record year for captive growth in the state, according to Karen Weldin Stewart, insurance commissioner, and announced in a press release.

As of December 31, 2015, according to the press release, the number of active captive insurers of all types in Delaware is 1,060. That total consists of 242 pure captive insurers, 740 series captive insurers, 45 special purpose captive insurers, 5 special purpose financial captive insurers, 1 agency captive insurer, 2 industrial insured captive insurers, 2 association captive insurers, and 3 sponsored captive insurers.  

Delaware pioneered the licensing of series as captive insurers, the press release stated. In 2015, Delaware amended its captive insurance laws to codify the licensing of series, which included creation of a new type of captive insurer—a series captive insurance company.

Series are sometimes incorrectly confused with protected cells, the press release explained. The difference between a protected cell and a series is that a protected cell is typically a financial account instead of a business organization and, as a creation of a state’s captive insurance laws, lacks the features of a separate legal person.

In contrast, the press release continued, a series is the creation of Delaware’s business organization laws and has many features of a separate legal person. Series are primarily formed pursuant to the Delaware Limited Liability Company Act. Unless the governing document provides otherwise, a series of a Delaware limited liability company has the power and capacity, in its own name, to contract; hold title to assets, including real, personal, and intangible property; grant liens and security interests; and sue and be sued. Because a series is a form of business organization, Delaware law now provides it the opportunity to obtain its own certificate of authority as a captive insurance company.

For example, the press release noted, a series can be licensed in Delaware as a series captive insurance company or as any other type of captive insurance company including a special purpose captive insurance company.

"When I pioneered the use of the series as a captive insurer, I did so with the goal of maximizing flexibility in the use of Delaware business organizations as risk bearing and transfer vehicles," Ms. Stewart stated, as quoted in the press release. "I am delighted that the captive insurance industry has so readily accepted the series as a captive insurance company."

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