NJ Licenses Second Captive

The state of New Jersey has licensed its second captive insurance company, which will cover past liability exposure for a medical center.

Sequoia Insurance Company of New Jersey was licensed in October, said Ed Rogan, a spokesman for the Department of Banking and Insurance.

The captive was formed by the Bayonne Medical Center and Hoboken University Medical Center. Both institutions are owned by the principals of HUMC Holdco LLC, which closed on the Hoboken University Medical Center acquisition earlier this month.

The captive will cover prior liabilities from the Hoboken University Medical Center from before the merger was completed, Rogan said.

In July, Prudential Insurance Company of America was the first to launch a captive insurance company in New Jersey (Best's News Service, July 14, 2011). New Jersey opened its doors as a captive domicile in May, following Gov. Chris Christie's signature to the law in February.

New Jersey's new captive law is modeled after the tax structure and capital and surplus requirements in place in Vermont, the largest captive domicile among U.S. states (Best's News Service, Feb. 23, 2011). New Jersey captives will be subject to minimum capital and surplus requirements of $250,000 for single-parent captives and $750,000 for association captives. Premium taxes would be within a minimum of $7,500 and maximum of $200,000. Direct written premiums taxes would be 0.38% on the first $20 million in premiums, 0.285% on the next $20 million, then 0.19% through $60 million and 0.072% on premiums past that level.

(By Meg Green, senior associate editor, BestWeek: Meg.Green@ambest.com)