Hormel gets final OK to fund benefits in captivePosted On: Jun. 26, 2015 12:00 AM CST
Hormel Foods Corp. received final U.S. Labor Department authorization Friday to fund several employee benefit risks through its Vermont captive insurer.
Hormel, the Austin, Minnesota-based producer and marketer of meat and other food products, will use the captive, Diversified Foods Insurance Co. L.L.C., to fund life and accidental death and dismemberment benefits for its employees. Policies will be issued by Zurich American Life Insurance Co.
Hormel already uses its captive, which was licensed in 2012, to fund a variety of risks, including property, earthquake and terrorism.
Hormel is the third employer this year to receive final approval from Labor Department regulators to fund benefit risks through their captive insurers.
Earlier this year, the Labor Department approved captive benefit funding plans filed by Healthcare Services Group Inc., a Bensalem, Pennsylvania-based provider of management and other services to health care companies, to fund voluntary medical, life and short-term disability benefits through its New Jersey-based captive.
Regulators also gave final approval to an application filed by Sealed Air Corp., a Charlotte, North Carolina-based packing materials manufacturer, to fund life and accidental death and dismemberment benefits through its Vermont-based captive insurer.
All three employers sought Labor Department approval of their captive benefit funding applications through a regulatory review process known as ExPro. Under ExPro, the Labor Department must act within 45 days of a company request for an arrangement that would normally be barred by the Employee Retirement Income Security Act
To qualify for ExPro, an applicant has to cite two substantially similar individual exemptions approved in the past 10 years, or one similar exemption and one approved through ExPro within the past five years.
In its application, Hormel cited an individual exemption The Coca-Cola Co. received in 2013 to fund group term life insurance and accidental death and dismemberment benefits through its South Carolina captive, and an exemption Intel Corp. received last year to reinsure similar benefits through its Hawaii captive.
More employers are expected to use the ExPro approach in seeking regulatory approval for their captive benefit proposals, experts say.
“We expect to see more captive employee benefits applications, and approvals, as favorable experience with ExPro continues to accumulate,” said George O'Donnell, technical director of global risk consulting at Aon Risk Solutions in Somerset, New Jersey, who filed Hormel's application.