Authoritative Regulatory Counsel
Richards Layton represents many of the large and sophisticated insurance companies domiciled in Delaware (including subsidiaries of global financial institutions) in matters before the Delaware Insurance Commissioner. We assist our clients with the full range of matters that come within the Commissioner’s regulatory authority, including:
- Insurance company and agency formation
- Insurance holding company system registrations
- Change of company ownership, including through mergers or acquisitions that involve an insurer’s Delaware subsidiaries
- Approval of insurance products, such as special purpose insurance lines
- Approval of insurance investments, particularly asset securitizations
- Required filing of annual financial reports
- Required triennial financial audits.
The Delaware Insurance Commissioner is an elected position, and our knowledge of both the political and the regulatory environment in the state means that our clients receive the full benefit of our sound working relationship with the Commissioner’s office. The firm’s insurance team includes a former Delaware Secretary of State and directors who have played a lead role in creating legislation that spurred the state’s strong growth in special purpose financial captive insurers.
When combined with our knowledge of Delaware trust and special purpose entity law, our experience in these areas means that we can handle virtually any regulatory issue that arises for Delaware-domiciled insurers.
Investment Transactions
Asset-backed securities have been a major component of insurers’ capital market transactions, and Richards Layton applies our structured finance and alternative entity experience to help insurers develop and secure regulatory approval for these sophisticated investments. Our lawyers negotiate and structure investment transactions involving asset-backed derivative securities through the use of trusts and other investment vehicles. We are sensitive to the legal and regulatory constraints that financing activities and direct investments involve for insurers, and handle the details to create the maximum possible investment return.
CASE STUDY: Securing Approval for Sophisticated Investment Products
- Clients: Major international financial service companies with insurance subsidiaries based in Delaware.
- Issue: The need for these companies to issue innovative financial investment products for corporate clients, such as sophisticated swaps and derivatives.
- Challenge: Secure quick and efficient regulatory approval from the Delaware Insurance Commissioner’s office.
- Solution: These financial products often involve intricate deal structures and cutting-edge financing techniques, and can be carried out by Delaware statutory trusts. Our firm’s recognized role in the creation of many of the relevant statutes for doing this means that the state’s insurance regulators give us an authoritative voice in the Commissioner’s office. When newly developed investment products are issued in Delaware, our explanation of the underlying financial principles can be crucial in furthering regulators’ understanding and subsequent acceptance.
- Result: Because Richards Layton insurance lawyers know the law and the regulators, we secure successful approvals that often—because of the complexity of the investments involved—shape the regulatory framework in which future transactions are carried out.
Delaware Captive Insurers
Richards Layton played a leading role in the legislative drafting committee for the Delaware Special Purpose Financial Captive Insurance Company statute signed into law in July 2007. The law provides for the formation of special purpose financial captive insurance companies in Delaware, which are empowered to issue securities and otherwise access financial markets and alternative sources of capital through securitizations and other transactions.
Today several of our directors are active in the Delaware Captive Insurance Association, including service on its board of directors and legislative committee. Our firm’s widely recognized experience and credible track record in developing innovative alternative entities for structured finance transactions make Richards Layton a natural choice to advise these captives on how to best take advantage of Delaware insurance and trust law.
Summary: The Ideal Choice
Although Delaware insurance law does not offer the same kind of unique advantages as other aspects of the state’s business statutes, the role of the state as a preeminent business jurisdiction makes it an attractive domicile for subsidiaries of major insurers.
Richards Layton’s preeminence in Delaware business law, and our focused knowledge of the state’s insurance regulatory structure, make us the ideal choice to assist and advise the state’s most sophisticated insurers as well as major national and international financial institutions with Delaware insurance subsidiaries with respect to their regulatory and financial needs.