New Georgia Captive Law Lowers Taxes Among Other Changes

On April 9, 2015, the Georgia legislature sent a bill to the governor for his signature that would improve the regulatory environment for captive formation in the state. House Bill 552 reduces the taxes imposed on all Georgia domiciled captive insurance companies, among other captive friendly revisions. Once enacted, Georgia’s captives will have a tax rate of 0.4 percent on the first $20 million of direct premiums and 0.3 percent on each dollar thereafter; 0.225 percent on the first $20 million of assumed reinsurance premium, 0.150 percent on the next $20 million, 0.050 percent on the next $20 million and 0.025 thereafter; and an aggregate maximum tax of $100,000. The bill also provides that two or more captive insurance companies under common ownership and control shall be taxed as though they were a single captive insurance company.

In addition, the new law would cut the required surplus requirement for pure captives in half, from $500,000 to $250,000. Also notably, HB 552 provides that the board of directors of a captive insurance company must hold at least one meeting per year in Georgia and contain at least one director that is a resident of Georgia (instead of one-third of all directors as currently required).

The Georgia Captive Insurance Organization has voiced its support for the legislation. According to the Captive Insurance Companies Association, 15 captive insurers are licensed in Georgia.