Governor Greg Abbott of Texas has recently signed into law amendments to the Texas Insurance Code broadening the authority of captives. This law is effective as of September 1, 2015.
There are three amendments in this law:
- Section 964.052 increases the types of risks that pools can now write to include reinsurance pools composed only of other captives and affiliated captive insurance companies.
- Section 964.063 provides that captives can, with the permission of the Commissioner, pay dividends or make distributions to “holders of an equity interest in the captive insurance company.” Further, the Commissioner is required to issue rules implementing this section.
- Section 964.072 sets forth the two requirements that must be satisfied before a captive can participate in a reinsurance pool pursuant to Section 964.052, the pool is composed only of captive insurance companies; and the captive is sufficiently capitalized in order to meet the pool’s financial obligations.
It is clear that Texas is inviting companies to form their captives in Texas. Tex. SB No. 667 (eff. Sept. 1, 2015).
This post written by Barry Weissman.
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