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News Release

New Jersey Department of
Banking and Insurance

Commissioner Ken Kobylowski

For Immediate Release:
June 11, 2015

For Further Information:
Ed Rogan or Marshall McKnight (609) 292-5064

New Jersey Approves New Healthcare Industry Captive Authority

TRENTON - Department of Banking and Insurance Commissioner Ken Kobylowski today announced the approval of a new line of authority for the captive insurer formed last year by Healthcare Services Group, Inc. (HCSG) of Bensalem, PA. Under the new authority, HCSG joins a new but growing area of captive insurance for company employee benefit plans.

 “Healthcare Service Group’s expansion of its captive insurance company is a testament to the company’s innovation and another indicator of the strength of New Jersey’s captive market,” said Commissioner Kobylowski. “HCSG’s expansion of a captive approved just last year shows how captives can adapt quickly to help companies cover additional risks and grow their business.”

Captive insurance companies are insurance companies established with the specific objective of financing risks emanating from their parent group or groups. Legislation allowing the formation of captives in New Jersey was enacted in 2011.

HCSG, founded in 1976, provides professional management of healthcare industry services such as housekeeping, laundry, dining and nutrition. The company employs 45,000 in 48 states, and services more than 3,700 housekeeping/laundry facilities and more than 900 dining/nutrition facilities. In New Jersey, HCSG provides services to 116 facilities and employs 1,570 individuals.

In January 2014, HCSG received approval to form a captive insurer to write general liability deductible reimbursement coverage for the company. Under the new authority, lines of business covered by the captive will include Limited Medical, Short Term Disability and Term Life. The plans are regulated by the Employee Retirement Income Security Act of 1974 (ERISA), which also required approval of the transaction by the U.S. Department of Labor.

“It was a pleasure working with New Jersey on the captive’s business plan change,” said Andrew Kush, Senior Vice President of Human Resources and Risk Management, Healthcare Services Group. “The regulators were thorough but expeditious in their review, which is clearly a testament to their expertise within the industry and commitment to the captive insurance community.”

Prior to the enactment of the Captive Insurance Law, P.L.2011, c.25, New Jersey companies that wished to form captives had to do so in other states and countries. Today, New Jersey companies can use the law to insure their New Jersey risk in New Jersey.

Since the law became effective, the Department has approved the formation or redomestication of 17 captive insurance companies, and there are currently several other potential captive insurance companies in various stages of approval in New Jersey.

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