March 15, 2012
On 27 October 2011, Connecticut Governor Dannel Malloy signed into law An Act Promoting Economic Growth and Job Creation in the State1 (the “Act”), which is intended to spur
the creation of new jobs, encourage innovation and entrepreneurship, and strengthen the state’s overall competitiveness. This article highlights the provisions of the Act, which revise Connecticut’s existing captive insurance law and make Connecticut a more attractive domicile for captive insurance companies. They include a first-year tax credit for newly established captives in the amount of $7,500, more fully developed provisions on what constitutes “common ownership and control” for the purpose of aggregating tax liability among multiple insurers, and the express recognition of different types of captive entities. Moreover, the more comprehensive law should simplify for Connecticut-domiciled captives the task of satisfying IRS consideration of the rigor of captive insurance regulation as part of the test of whether the captive conforms with commonly accepted notions of an insurance company.