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South Carolina Puts Out Welcome Mat For Captives

South Carolina Governor Jim Hodges recently signed into law a bill allowing reinsurers to form captive subsidiaries in the State that will be allowed to discount loss reserves. The Governor said he was trying to make South Carolina competitive with Bermuda, Guernsey, and other overseas captive domiciles. Under the law the minimum capitalization for the new captives will be $300 million. At least 35 percent of a captive reinsurer's assets will have to be managed by an asset manager domiciled in the State. Segregated cell rent-a-captives also can be set up under the law. "A captive reinsurance company may discount loss and loss adjustment expense reserves at Treasury rates applied to the applicable payments projected through the use of the expected payment pattern associated with the reserves," according to the new law, which amends South Carolina's insurance code.