Is it hard to get a captive dividend approved?
Not hard if the ratios hold up after the money leaves
Fenhua Liu's answer is that difficulty depends on financial strength rather than on policy. The department already holds the audited financial report and examines companies on a cycle, so when a dividend request arrives it is reading a captive it knows. It looks at capital and surplus, liquidity, the loss ratio and the multi year trend, and asks one question: after this money leaves, do the ratios still hold. Where they do, she says the department typically approves and processes it quickly.
The framing matters. Liu does not describe a dividend as something to be justified, she describes it as something to be tested. The test is whether the captive is still sound on the other side of the payment.
That is why she starts with financial strength rather than with process. A captive with strong ratios is asking an easy question; a captive with weak ones is asking a hard question regardless of how the request is written.
Key takeaways
Liu says the difficulty of a dividend depends on the captive's financial strength rather than on departmental policy.
The department reviews capital and surplus, liquidity, the loss ratio, and the trend across recent years before releasing a distribution.
Connecticut examines captives on a five year cycle, and strong governance and audited financials can let a pure captive go longer between examinations.
The department is not reading the captive cold. Audited financial reports are already on file, and Connecticut examines companies on a five year cycle, with pure captives able to go longer where corporate governance and audited financials are strong.
Liu describes looking more closely at a captive outside that pattern. The practical implication is that governance quality does not just satisfy the regulator at licensing, it buys lighter handling later.
From the conversation
Fenhua Liu
Assistant Deputy Commissioner and Director of Captive Insurance, Connecticut Insurance Department
“We typically approve it.”
This answer begins at 12:19 of the full conversation. Watch or listen to the whole thing.
Citations
Sources
- Captive Insurance Regulation, Connecticut Insurance Departmenthttps://portal.ct.gov/cid/mission-and-divisions/captive-insurance
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