Coca-Cola seeks to expand benefit risks covered by captive insurer

The Coca-Cola Co. has asked the U.S. Department of Labor for authorization to expand the use of its South Carolina captive insurance company to fund additional benefits risks.

Atlanta-based Coca-Cola wants to use Red Re Inc. to reinsure life insurance and accidental death and dismemberment policies written by Metropolitan Life Insurance Co.

Coca-Cola, the world's largest nonalcoholic beverage company, now uses Red Re, one of three Coca-Cola captives, for a wide range of risks, including reinsuring fronting insurers used to provide international benefit coverages.

The application is separate from a complex retiree health care funding arrangement the Labor Department approved in 2010.

Under that arrangement, Coca-Cola would use funds now held in a trust—known as a voluntary employees' beneficiary association—to purchase medical stop-loss policies from Prudential Insurance Co. of America to pay claims over the expected lifetime of about 4,000 retirees and dependents.

In turn, Prudential would use the premium it receives from Coca-Cola to reinsure the risk with Red Re.

Coca-Coca is waiting for a private-letter ruling from the Internal Revenue Service before proceeding.

So far this year, the Labor Department has approved captive benefit funding applications submitted by Via Christi Health Inc., a Wichita, Kan.-based health care system; Mountain View, Calif.-based search engine and technology giant Google Inc.; Redmond, Wash.-based Microsoft Corp.; and R+L Carriers Shared Services Inc., a Wilmington, Ohio-based freight carrier.