Whilst these improvements are welcome, there is still plenty of room for improvement.

There is also clarification on the ways in which dividends can be paid to the shareholders of captives.

2.

1.

Risk pooling is now sanctioned. This will mean that groups of captives can pool risks, subject to the approval of the Department of Insurance. Pooling has been one of the main methods of obtaining third party risks which US captives need in order to meet IRS requirements and this feature will be helpful to Texas captives. Regrettably, some pools were poorly set up and paid little more than lip service to the requirement, with little or no real sharing of risk. The has led to investigations by the IRS and it is hoped that the approval of the Department of Insurance will ensure that Texas pools meet all of the requirements

On 22nd May, 2015 final approval was given to Texas ‘SB 667’ which is an amendment to the first captive law in Texas that was passed in 2013. It was signed by the Governor on 15th June, 2015 and improves the existing captive legislation in three ways:

New Captive Legislation for Texas

3.

This has been amplified by changes to the rules on credit for reinsurance. Captives will be able to take credit for reinsurance ceded to a pool, provided that all of the contributors to the pool are properly licensed (in Texas or elsewhere). Credit can also be taken for reinsurance ceded to an affiliated captive that is also duly licensed.