NEW YORK—Funding employee benefits through a captive has been a natural progression for The Coca-Cola Co., a company that has gained control of the cost and administration of its worldwide benefits programs by learning how to cover more traditional exposures though its own insurers.

Coca-Cola recently began reinsuring some of its international pension liabilities through its Dublin-based captive, Coca-Cola Reinsurance Services Ltd. The captive reinsures about $400 million in annuities written by insurers for benefits provided to enrollees in three Coca-Cola pension plans in the United Kingdom and Ireland.

The company expects to expand the program to another European country soon, Coca-Cola executives announced during the recent Business Insurance Risk Management Summit in New York.

The innovative move to use the captive for international pension obligations came after Coca-Cola first gained years of experience operating captives, Laurie Solomon, Atlanta-based Coca-Cola's director of risk management, said during the conference.

The company has experience covering benefits through a captive. Coca-Cola already had in place Red Re Inc., a South Carolina-domiciled captive writing terrorism and other coverages. It was expanded to write reinsurance for fronting insurers that cover Coca-Cola's international life, health and disability programs, Ms. Solomon said.

“That was our first successful foray into the employee benefits arena,” she said.

Coca-Cola also is awaiting a private letter ruling from the IRS on an innovative plan to use Red Re to fund retiree health care obligations for about 4,000 U.S. retirees and dependents.

Ms. Solomon said Coca-Cola has been in the captive business more than 15 years, and its experience in funding property/casualty risks in captives left it with a good understanding of how to do the same with benefits programs.

“We understand how cash flow works, how we move money in our international operations—paid at the local level and then moved to the captive so that it's centralized and managed,” Ms. Solomon said. “That experience was there; that was used as the backdrop of trying to figure out how we could get into the employee benefits arena.”

Coca-Cola had been handling “quite significant” property/casualty risks in its captives for “quite some time,” said Stacy Apter, senior global benefits consultant with Coca-Cola and a panelist at the conference. “Why would we not be taking advantage of the same efficiencies on the employee benefits side when they are more predictable risks?”

Medical coverage, for example, is almost like a cash-flow operation, she said, and it is not difficult to predict yearly costs.

There are advantages in moving benefit programs to a captive, Ms. Solomon said. “It's the exact same thing that any of us who have captives on the (property/casualty) side would recognize immediately: the centralization of funding, the understanding of losses, the coordination of premium collection.”

Funding benefits in a captive gives the parent “consistency and stability in funding and financing” instead of having company units in different countries operate on their own in buying insurance, she said.

“It is a very efficient way of running insurance,” Ms. Apter said.

At the same time tax benefits are accrued for writing local policies, the ability to reinsure the program into the captive provides a way for the parent to centralize and control its programs, she said.

Regulators have been receptive to Coca-Cola's plans for funding its pension obligations in a captive, Ms. Apter said.

After lengthy discussions in Ireland, for example, regulators dealing with underfunded pension plans were pleased with Coca-Cola's method of handling its retiree obligations, she said.

“The idea that we were fully funding a pension plan—they thought that was a fantastic idea,” Ms. Apter said.

The panel discussion was moderated by Stephen M. Wilder, vp of risk management at Burbank, Calif.-based The Walt Disney Co.