VCIA Captive Chronicle | May 2021

Thank You VCIA 2021 Conference Sponsors:
Presenting Sponsor:
Platinum Sponsors:
Top of the News
Still Busy!
Last year, the State of Vermont licensed 38 new captive insurance companies in 2020, according to data released by the Vermont Department of Economic Development and Vermont is now home to 589 licensed captives. Interest in captives and formations have not waned since the end of last year – in fact DFR’s Dave Provost thinks we will have a similar number of new captives formed in Vermont by the end of this year. The continued hard insurance market is driving the interest, but it only magnifies a trend that started some years ago: more organizations seeing the advantages of controlling your risk. Vermont has licensed over 1200 captive insurance companies since 1981 and remains, by far, the largest U.S. domicile for captive insurance and third largest in the world.

Captive Update Advances
The bill that includes updates to Vermont’s captive statutes has passed both the House and the Senate in Montpelier. Although the legislature is working virtually this session, they have effectively moved the requested amendments that represent the consensus process between VCIA and the Vermont Department of Financial Regulation.

VCIA 2021 Annual Conference
Planning for the 2021 virtual annual conference continues afoot. VCIA will offer fresh, new ways to bring captive services to captive owners and create a rich experience where people are not only there to listen but to create and engage in meaningful conversations. “Solution Labs” are replacing the exhibit pavilion, with video “Speakeasy Rooms” for service providers to present solutions, concepts, products or services to attendees. These customizable video rooms host up to 100 people!

Call Janice Valgoi today to find out how your organization can have a presence at this special event. Or browse our offerings here. See the article in this issue from Conference Chair Tina Bukow for more event details, and save the date for August 10 – 12, 2021!

More Flights
Although it’s hard to imagine as we come out of this pandemic year, air travel is gearing up once again. VCIA continues to work with the authorities at Burlington’s International Airport (BTV) to increase the options and frequency of flights in and out of Vermont. With our help, BTV announced more flights to Chicago a few years ago, and then new routes to Denver. Now, harkening back to VCIA’s letter of support for service to Logan Airport in Boston in 2018 BTV announced that the new service starting this April will be a boon for our members and their clients in Massachusetts. It’s a great case of planting seeds for success knowing that it often takes time to see it to fruition.
Note from the Conference Chair
Can't Wait to "See" You in August!

Tina Bukow, VCIA Conference Chair
Managing Director, Business Development
Kroll Bond Rating Agency

Hello my friends!

Here we are, firmly planted in Spring (thank goodness). One of the few things we can always count on is the change of seasons, particularly in the Northeast. Spring seems sweeter this year as we emerge from the shroud of the pandemic and open our proverbial windows and doors to a fresh new start. A true “rebirth”, or at least a good start!

Another thing we can always count on is a world-class VCIA Annual Conference and this year is no exception. If you’ve not yet done so, please mark your calendars for August 10th – 12th , 2021. The VCIA Conference Task Force, Content Advisors and Captive Owners (a phenomenal group of professionals) are creating an excellent event with stellar education, meaningful networking and solid ways to connect with industry colleagues.  

As you may know, 2021 marks Vermont’s 40th anniversary as a domicile and this year’s conference will pay homage to that milestone. They say that 40 is the new 20 so I cannot wait to see what “fabulousness” (yep, I said fabulousness!) lies ahead for the domicile and its constituents in the decades to come.

Speaking of fabulousness… the conference, while virtual again this year, not only provides an opportunity to earn Professional Ed credits at a great value, but offers exciting new ways to interact with attendees. This year we boast 21 timely educational sessions including 6 brand NEW Discussion Group Forums and 1 stand-alone Captive Owner Forum. All offerings are taught and led by captive industry leaders. One of the positives of a virtual conference is access to a larger pool of professionals willing to share their experience and knowledge. This year, due to the outstanding efforts of the task force, we are privileged to have a perfect balance of familiar speakers and a host of new and dynamic ones as well.

I am happy to share that we are working with a new virtual platform this year. This platform allows us to enhance the networking and sponsorship experiences (no doubt the single biggest challenge of a virtual conference!). The event will feature innovative virtual substitutes for “exhibit booths” that are focused on problem-solving via “Solution Labs”, showcase best in class industry products and services via “Ignite Talks”, and inspire creative ways to collaborate, live, with industry leaders and peers via live video “Speakeasy Rooms”. Connect with friends and prospects during Morning Coffee or, of course, set up meetings in advance.

Please spread the word to others - if you have a colleague or industry associate who has considered attending VCIA in the past, this is the perfect year for them to take the plunge! 

To find out more about having a presence in the Solution Labs, just get in touch with Janice Valgoi at [email protected]. Solution Labs are the best way for service providers to present to, and connect with, potential clients. They are creative and a great way to participate in VCIA on a new level.

Conference registration opens June 1st at I hope you take advantage of all the fabulousness (couldn’t resist!) the conference has to offer – you will not be disappointed.
Thank you for your contributions to the industry and “see” you in August!

Virtually yours,
Tina Bukow, VCIA 2021 Conference Chair
Kroll Bond Rating Agency
VCIA's Inaugural Signature Series a Success!
A huge thank you to the participants and sponsors of our first Signature Series event last month. The captive education provided was first rate, and adding in the live video Discussion Groups was the icing on the cake! The surveys from the event were complimentary of our amazing speakers, as well as the opportunity to hear from different perspectives and learn about other industries. We received constructive feedback which will go into our efforts to continue the Signature Series in November.
Captive Manager Spotlight
KeyState Captive Management’s Vermont Office Grows Rapidly During First Year

VCIA Member company KeyState Captive Management, which serves a client roster of 100 domestic captives from its offices in Nevada, Delaware and Vermont, has expanded its captive presence in the Northeast over the past three years. The assembly of a team of seasoned industry professionals based in Vermont, under David Guerino’s leadership, has focused KeyState on providing its captive clients with independent, consultative captive management services. The Vermont office opened in early 2020.
KeyState’s expanded captive team brings years of captive insurance experience in key industries including financial services; auto dealers; real estate and REITS; construction; healthcare; insurance companies; retail; manufacturing; energy; and public utilities. Alongside Guerino, the team includes captive professionals and veterans Alicia Huskes, Jeff Vigne, and Pam Cote.
The KeyState Companies were founded in 1991 and launched its captive management business in 2007.

Thank you, KeyState for being part of Vermont’s professional captive community!  
David Guerino
Sr. Vice President and
Managing Director,
Captive Insurance
Pam Cote
Senior Relationship Manager
Alicia Huskes
Director, Captive Client Services
Jeff Vigne
Director, Insurance Services
Welcome New VCIA Members!
ARJ Insurance Corp.
Legislative Updates
Vermont Update:
VCIA 2021 Legislative Agenda. VCIA and Vermont’s Department of Financial Regulation proposed several amendments to the State’s captive laws for the Vermont General Assembly to consider for this year. These amendments are contained in a broader DFR bill that has now passed both the House and the Senate. S.88 is now on its way to the Governor’s desk for his signature before becoming law. Some of the issues in the bill include clarifying references for mergers and redomestications, and providing a practical timeline for capitalization.
Federal Update:
PRIA. There has been no recent action by Congress to consider a draft of the Pandemic Risk Insurance Act of 2020 (PRIA), however, the bill is still percolating in Congressional staff discussions. The bill would support the ability of the insurance and reinsurance sectors to handle claims from a COVID type of pandemic. VCIA expects the bill will be brought up sometime this Congressional session, and we will be part of the discussions.

Cannabis. The Safe Banking Act, which would provide a safe harbor for financial services firms doing business with cannabis firms where it is legal in states, is back in discussion in the House after dying last year in the Senate. Two other safe harbor bills for insurers have been introduced in the House and the Senate. However, Senate banking committee chair Sen. Sherrod Brown says he does not think this is a priority currently.

IRS Court Success. Last month, the IRS on Wednesday won its fourth consecutive case against 831(b) captive owners when the U.S. Tax Court ruled that a construction business’ captive did not qualify as insurance for tax purposes in the ruling of Caylor Land & Development Inc. v. Commissioner of Internal Revenue. The Caylor ruling follows the Avrahami ruling in 2017, the Reserve Mechanical ruling in 2018 and the Syzygy ruling in 2019, which all went in favor of the IRS.

CIC Services v IRS – Supreme Court Case.  CIC Services, a Tennessee-based captive manager, sued the IRS alleging that IRS Notice 2016–66, which states that certain transactions of such micro-captives made them transactions of interest and requiring them to report information, violated the Administrative Procedure Act and the Congressional Review Act and that the notice required congressional review before it could go into effect. VCIA participated in an industry-wide amicus brief supporting the procedural objections. The court heard oral arguments at the end of last year and expects a decision in the days to come.

NAIC Update:
Group Capital Calculation. VCIA has been monitoring the GCC’s potential impacts on captives and RRGs, including any threshold conditions. At this point, there are no exemptions for RRGs, but VT’s DFR is pushing to exempt RRGs from the need to file. As it looks today, an RRG would have to file one GCC report and only have to file again if it met certain parameters – DFR does not think any would meet the need to file again.

Other States Report:
Washington State. A new captive bill passed by the Washington State legislature has been signed into law that sets new requirements for captive insurance companies licensed in other domiciles but doing business in Washington State. The bill sets a terrible precedent acceding some regulatory oversight to the Washington State insurance commissioner on captives domiciled in other states. For more information on this, check out the recent blog post.

Minnesota. An effort lead by MN RIMS is pushing back against the MN proposed tax bill that includes a 1% tax increase on the Non-Admitted Insurance tax (currently at 2%, proposed increase to 3%) The main issue being that the bill neglects to consider the increase in revenue the MN Dept. of Revenue will already receive due to their recent changes made to a tax form which as of 2020 includes captives as part of the definition of non-admitted insurers.

Vermont Captive
Insurance Association
Tel: (802) 658-8242