LOSS BEFORE TAXES (16,063.19) 911,900.04 895,836.85 957,502.50 386,804.36
Federal Income Tax - 129,754.60 129,754.60 - -
Net Loss (16,063.19) 782,145.44 766,082.25 957,502.50 386,804.36
Cell 2: Net Income - - 957,502.50 - -
Cell 3: Net Income - - 386,804.36 - -
TOTAL NET INCOME (LOSS) (16,063.19) 782,145.44 2,110,389.11 957,502.50 386,804.36
Offshore Regulatory Reporting –
Cayman & Bermuda• Cayman captives are required to file:
– GAAP based audited financial statements
– Modular versus Columnar approach
– CIMA INForm – electronic submission of financial information
– Financial information is combined from all core and all cells and submitted in one filing.
• Bermuda Segregated Account Companies are required to file:
– Default requirement is a combined basis presentation for all segregated accounts and general account in
one filing.
– Audited statutory financial return.
– But many companies with segregated accounts that are “fully funded” obtain a “Section 56” exemptions
allowing:
i. Balance Sheet presentation of all Segregated Account assets & liabilities as line items on a combined
basis
ii. Exemption from obtaining actuary loss reserve opinion
Cooperative of American Physicians, Inc. (CAP)
• California consumer cooperative – created in 1975
• Medical Professional Liability (MPL)
affordability and availability crisisaffordability and availability crisis
• Exodus of commercial insurers
• Legislative response
• California Insurance code 1280.7
• Authorization of interindemnity trust
arrangements for MPL
• Mutual Protection Trust (MPT)
• Interindemnity arrangement created in 1977
– 500 members and $10 million
• Mission statement:• Mission statement:
“We support and protect California’s finest physicians.”
• 12,000+ member physicians, >$340 million
• AM Best rating A+, superior
CAP Features
• Risk Management & Patient Safety focus
• CAP Cares program• CAP Cares program
• Experienced claims professionals
• Dedicated law firm
• Tool of binding arbitration
• Subsidiary insurance agency
• CAPSource
• October 17, 2002 - Initially licensed as a Class 1 Pure Captive
• Objectives:
• Supplemental layer of reinsurance for MPT
• Protection from vagaries of reinsurance marketplace
Cooperative of American Physicians
Insurance Company, Inc. (CAPIC)
• Protection from vagaries of reinsurance marketplace
post 9/11
• Aggregate stop loss for MPT
• Smoothing of future pricing fluctuations
• Additional coverages added later
• Direct insurance to CAP
• MedGuard
• Employment Practices
Cooperative of American Physicians
Insurance Company, Inc. (CAPIC)
• Employment Practices
• Supplemental Professional Liability
-
2011 - CAP’s Need for Product Diversify
• Ever-changing healthcare environment
• Larger, integrated medical groups• Larger, integrated medical groups
• Geographic areas crossing state lines
• Need for a more traditional insurance framework
• Potential for new risks not typical to medical
professional liability
-
Cooperative of American Physicians
Insurance Company, Inc. (CAPIC)
• January 1, 2012 - Converted to a Class 3 Risk Retention
Captive Insurance Company
• Objectives
– Primary MPL insurance product for larger groups
– Supplemental reinsurance to MPT– Supplemental reinsurance to MPT
– Direct insurance to CAP for MedGuard and EP and
Supplemental Professional Liability
-
Cooperative of American Physicians
Insurance Company, Inc. (CAPIC)
2012
• CAP successfully partners with a national carrier for the
purpose of writing hospitals in California.
• CAPIC RRG faces regulatory hurdles
– Varying regulatory practices in nondomiciliary states
– Differing interpretations of the LRRA
– Hurdles make marketing the product difficult
• National carrier agrees to partner on large medical groups
Cooperative of American Physicians
Insurance Company, Inc. (CAPIC)
• May 29, 2013 – CAPIC converted to a Class 4 Sponsored
Captive Insurance Company
– Continue to provide reinsurance to MPT
– Continue to provide direct coverage to CAP
– CAPIC participates in the reinsurance in the large group – CAPIC participates in the reinsurance in the large group
and hospital space through a quota share agreement with
our partner
– Cells may be useful tool in the future
Class 4 – Sponsored Captive
Insurance Companies
• HRS Chapter 431, Article 19, Part 300
• Concept initially enacted in 1999 as “Leased
Capital Facility”Capital Facility”
• Subsequently amended to generally be
consistent with other U.S. captive domiciles
35
Basic Requirements for a
Sponsored Captive Insurance Company
• Minimum statutory capital of $500,000, and
provided by one or more sponsors
• Qualification of Sponsor:• Qualification of Sponsor:
– Hawaii licensed insurer, reinsurer or captive insurer, or
– Any other person, company, or organization approved by
the Insurance Commissioner
• A risk retention captive may not be a sponsor or
participant
36
Participant Requirements
• Associations, Limited Liability Companies,
Partnerships, Trusts and other Business Entities
approved by Insurance Commissioner
• Sponsor may also be a Participant• Sponsor may also be a Participant
• Participant does not have to be a shareholder or
member of the sponsored captive or any affiliate
thereof
• Participant shall insure only its own risks through a
sponsored captive insurance company
37
Protected Cell Requirements
• Sponsored captive may establish one or more protected
cell(s)
• Protected cell can be organized and operated as an • Protected cell can be organized and operated as an
association, corporation, LLC, partnership, trust or other
business form authorized by Insurance Commissioner
• Separate accounting for each protected cell
• Assets of a protected cell not chargeable with liabilities
from other insurance business conducted by the
sponsored captive
38
Protected Cell Requirements<continued>
• Sale, exchange, or other transfer of assets require consent of protected cells and sponsor, and approval of Insurance Commissioner
• Written notification to the Insurance Commissioner • Written notification to the Insurance Commissioner within 10 days of insolvency or inability of any cell to meet its claims or expense obligations.
• Participant contracts and addition or withdrawal of protected cells require prior approval of the Insurance Commissioner
39
Protected Cell Requirements<continued>
• Annual audited financial statements, with accounting
