News Release

New Jersey Department of
Banking and Insurance

Acting Commissioner Ken Kobylowski

For Immediate Release:
May 7, 2012

For Further Information:
Ed Rogan or Marshall McKnight (609) 292-5064

TRENTON, NJ – New Jersey Department of Banking and Insurance Acting Commissioner Ken Kobylowski today announced the approval of the State’s fourth captive insurance company under New Jersey’s captive law signed by Governor Christie. The Department issued a certificate of authority this month for Exchange Indemnity Company New Jersey (EICNJ), a wholly owned subsidiary of Verizon Communications Inc. Verizon Communications is a global leader in delivering broadband and other wireless communications services to mass market, business, government and wholesale customers. 

“I am very pleased that Verizon has acted to take advantage of the Christie Administration’s efforts to promote development in all sectors of the economy,” said Kobylowski. “This is another example of a business friendly New Jersey. Businesses can now insure their New Jersey risk in New Jersey. Our captive law is creating new opportunities for business creation that will in turn help already established firms grow.”

The firm, headquartered in Morristown, will provide liability insurance deductible coverage for various Verizon subsidiaries. The company employs thousands of New Jersey-based employees and provides landline, broadband, video services, cell phone and other wireless services to New Jersey residents. The company will use EICNJ to help stabilize and control its insurance costs, improve coverage availability and improve its cash flow.

The new captive is itself a subsidiary of Exchange Indemnity Company. It is one of Vermont’s largest captive insurance firms.

Captive insurance companies are established with the specific objective of financing risks emanating from their parent group or groups. Before Governor Christie signed P.L.2011, C.25 into law, New Jersey did not allow captive insurance firms to be established. This prompted major New Jersey employers to establish captive insurers in other states and countries. Without this law, companies would continue to go to other jurisdictions to form their captives.

Captives allow businesses to gain greater control of the organization’s ability to identify, manage and finance insurable risks. The potential advantages include: greater control in risk management and claim activities, paying lower premiums, federal tax savings, tailoring coverage to their specific needs, and direct access to reinsurers.

EICNJ is the first captive insurer approved in 2012. Last year, the Department approved three captives:

• Ports Insurance Company, Inc. (PIC) provides Longshoreman and Harbor Workers insurance to its parent, Ports America, the largest terminal operator and stevedore in the United States, operating in more than 80 locations at 42 ports. PIC also provides deductible reimbursement insurance for Ports America’s commercially purchased insurance.
• Sequoia Insurance Company is an industrial captive formed to write liability coverage for Bayonne Medical Center and Hoboken University Medical Center, both owned by HUMC Holdco.
• Prudential New Jersey Captive Insurance Company (NJCAP) manages risk in a portion of Prudential Insurance Company of America’s life insurance and annuity policies. NJCAP was the first captive approved in New Jersey.

“This is what new business development looks like,” said Kobylowski. “There are more companies with applications in the pipeline. Expect to see New Jersey employers create more captive insurers in New Jersey this year thanks to Governor Christie’s foresight in signing the captive insurance law.”