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The U.S. Department of Labor has given final approval to The Coca-Cola Co. to expand the use of its South Carolina captive insurance company to fund additional benefits risks.
Under the arrangement, Atlanta-based Coca-Cola will use its Red Re Inc. captive to reinsure group term 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 arrangement, the Labor Department said in a notice that will be published in the March 29 Federal Register, “is in the interests of the plan and its participants and beneficiaries.”
Coca-Cola's application is the first to receive Labor Department final authorization since DOL regulators said last year they were reviewing the criteria employers must satisfy to win so-called ExPro, or fast-track, approval of captive benefit funding arrangements. That review is continuing.
Under ExPro, applicants can receive, in just over two and a half months, a Labor Department exemption for arrangements that would normally be considered prohibited transactions. ExPro is generally available to applicants that can cite two substantially similar exemptions the department has approved within the past five years.
Coca-Cola did not use the Ex-Pro process. Last July, it applied for and now has received an individual exemption for its transaction.
The global captive insurance market continued to grow in 2012, both in terms of new captive formations and new captive domiciles. New captive insurers are forming to provide a variety of coverages for a host of different industries, with particular activity in formations by health care organizations or formations of group captives to provide stop-loss coverage for employee medical benefit programs.