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Gas utility seeks OK to fund life insurance, disability via captive


A St. Louis-based utility company has asked the U.S. Labor Department for permission to use its South Carolina captive insurer to fund life insurance and long-term disability risks.

Under the proposal by Laclede Gas Co., the life insurance would be underwritten by Minnesota Life Insurance Co., while the long-term risks would be written by Prudential Insurance Co. of America.

Those risks would be reinsured by Laclede's 3-year-old captive, Laclede Insurance Risk Services Inc., which already funds medical stop-loss risks and reported $1.2 million last year in gross written premiums.

If approved, Laclede's application, which was filed by Ted Scallet, a principal with Groom Law Group in Washington, would be the fourth employer this year to win Labor Department's approval of funding employee benefits through a captive.

In June, Hormel Foods Corp. received final Labor Department authorization to fund life and accidental death and dismemberment benefits through its Vermont captive insurer.

Earlier in the year, regulators 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.

The captive benefits funding approach is appealing to employers for several reasons, including cutting costs compared with buying coverage in the commercial market, as well as broadening a captive's book of business, captive experts say.

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