State program to help captive insurance companies raise cash

Scott Richardson, director, S.C. Insurance Department The program will allow life insurance companies to use the S.C. Jobs-Economic Development Authority/Insurance Funding Program to raise millions of dollars through the issuance of bonds to secure the long-term life insurance policy reserves associated with underwriting term life insurance.

Staff Report
Published Sept. 7, 2010

S.C. Department of Insurance will be unveiling a new program to help captive insurance companies meet mandatory funding requirements.

Scott Richardson, Insurance Department director, will introduce the new S.C. Insurance Funding Program during the annual S.C. Captive Insurance Association Conference, Sept. 13-15 in Charleston.

The program will allow life insurance companies to use the S.C. Jobs-Economic Development Authority/Insurance Funding program to raise millions of dollars through the issuance of bonds to secure the long-term life insurance policy reserves associated with underwriting term life insurance.

Scott Richardson, director, S.C. Insurance Department

These mandatory policy reserves are required by all states to provide additional protection to policyholders.

“South Carolina is taking this step in order to create a more fluid market for these securitizations, which we feel should be looked upon as one of the safest investments available in the debt security arena,” Richardson said.

The S.C. Insurance Funding Program is being developed jointly with the South Carolina Jobs-Economic Development Authority, the Department of Insurance and members of the captive insurance industry in South Carolina.

The JEDA/SCIF bonds will be rated by the NAIC Securities Valuation Office, which will allow the insurance industry to invest in these bonds as admitted assets. The bonds will be issued for some of the largest life insurance and reinsurance companies in America.

“South Carolina was at the forefront of creating the concept of special purpose financial captives to securitize redundant reserves for the life insurance industry and is a leader in the industry with over $20 billion dollars of securitizations,” Richardson said.