FOR IMMEDIATE RELEASE
DEPARTMENT LICENSES STATE'S FIRST GROUP CAPTIVE FOR FOURTEEN OF NEW YORKS MAJOR FINANCIAL INSTITUTIONS
Group Captive to Provide Coverage Above Level Provided by Federal Government
Superintendent of Insurance Gregory V. Serio today announced that the State Insurance Department has licensed Customer Asset Protection Company as a captive insurance company in New York insuring the risks of CAPCO Holdings, Inc.
CAPCO Holdings, Inc is owned equally by fourteen financial institutions which include AG Edwards, Inc., The Bank of New York Company, Inc., The Bear Sterns Companies, Inc., Credit Suisse First Boston (USA, Inc.), Edward D. Jones & Company, LLP, The Goldman Sachs Group, Inc., JP Morgan Chase & Co., Legg Mason, Inc., Lehman Brothers Holdings Inc., Morgan Stanley, Raymond James Financial, Inc., Robert W. Baird & Co., FMR Corp. and Wachovia Corporation.
"Customer Asset Protection Company (CAPCO) is the State's first group captive and demonstrates that major financial institutions can cooperate around an insurance mechanism to avail themselves of this vital risk management tool in New York State," said Serio. "The announcement of the first group captive proves that companies are finding solutions to their global insurance needs in New York State. Governor Pataki has made it a priority to continue to meet the needs of the business community and the Captive Law, which allows for the formation of captives, has provided a valuable and more flexible option for companies, like CAPCO Holdings, Inc., to manage their insurance needs and better managing their risk management strategies."
CAPCO will provide a mechanism for these fourteen financial institutions to provide excess insurance for investors in the event they sustain losses as a result of a bankrupt or otherwise financially troubled investment firm. This coverage is designed to be in excess of an initial layer of coverage provided by the federal Securities Investor Protection Corporation (SIPC). This excess coverage, which has been recently made unavailable by the admitted insurance market, is now available through the formation of this group captive insurer.
Prior to 1997, captives were not permitted in New York and had been headquartered in a small number of states or off-shore in jurisdictions such as Bermuda. With the passage of the Governor's Captive program bill in 1997 and the recent creation of the Captive Group at the Insurance Department, businesses are now choosing New York State as an on-shore location for innovative alternative insurance programs such as captives.
All information necessary to become licensed as a captive is available by calling the Department's captive group toll-free at 1-866-NYSCAPTives or by visiting its Web site at www.nycaptives.com. Companies can quickly download the licensing forms as well as a copy of the law from the site. The approval process for licensing in a captive insurer is estimated to be only 30 days.