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Texas Captive Count Climbs to 34 with Captive Law Changes Possible

Texas 480x377
February 17, 2017

The 4th annual Texas Captive Insurance Association (TxCIA) Conference was held in Austin, Texas, on February 15–16, 2017, with over 70 captive owners, captive managers, and service providers in attendance. In his opening remarks, TxCIA President Josh Magden declared there are now 34 captives licensed in Texas, up from 21 at the end of 2015. Fourteen captives were licensed during 2016, and two more have been licensed so far in 2017. Three captives were dissolved in 2016, leaving the total as of February 16, 2017, at 34.

The conference featured a wide range of topics, covering such things as pending legislative changes in Texas, captives and credit ratings, weather risk management, strategic planning for captives, and a case study of Baylor Scott & White Healthcare's use of captives. And, of course, no captive conference would be complete without spending at least an hour on tax issues.

On the legislative front, two identical bills were introduced in the Texas House of Representatives (HB 1944) and Senate (SB 1915) on February 15, 2017, that, if they become law, will be beneficial to the Texas captive insurance scene. Along with some more minor changes, the Texas captive law would be amended to achieve the following.

  • Captives could insure employee benefits covered under the Employee Retirement Income Security Act.

  • Captives would get credit for risks ceded to a nonaffiliated reinsurer if certain criteria are met.

  • Captives could be formed as reciprocals.

The Texas Legislature meets every other year and only 20 percent or so of the bills filed in a session are passed, so these changes may or may not become law. However, the TxCIA president, Mr. Magden, and its government-relations consultant, Bob Kamm, are optimistic that these Texas captive insurance bills will be passed due to the Legislature's desire to keep Texas a business friendly state.

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