Vermont sees wave of captive restructurings in 2026

Vermont’s captive market has seen a high level of restructuring activity in 2026 as existing captive owners rethink how their programmes are organised, according to the state’s captive regulators.

Speaking to Captive Review on the eve of the VCIA conference Christine Brown (pictured), deputy commissioner of the Vermont Department of Financial Regulation’s Captive Insurance Division, and assistant director of captive insurance Jim DeVoe-Talluto, said that while there has not been a shift away from traditional captive uses, more parents are adjusting their captive structures to better suit changing business needs.

Examples include incorporated cells maturing into standalone pure captives, businesses spinning out of larger group programmes to establish their own structures, pure captives converting into group programmes, companies using incorporated protected cells to facilitate runoff, and sponsored captives being established to support corporate acquisitions before ultimately absorbing existing captive operations.

“We’re seeing all of this activity in 2026, where it’s really identifying and emphasising the flexibility of the vehicle, the flexibility of the statute, and helping companies continue to use their captive structure to meet their needs in the moment and prepare for the future,” DeVoe-Talluto said.

Brown said the trend mirrors a broader shift within the captive industry, where consultants are increasingly carrying out strategic reviews of existing captives.

“For existing captives, it’s not just about sitting on a shelf and doing what its always done,” she said. “I’m hearing a lot more from consultants that one of the services they’re offering is this kind of refreshed, almost feasibility look to see is the structure right for you? Should you be doing more? That’s probably a lot of what’s driving this, which is wonderful, because that’s what captives are intended to do.”

She added that Vermont has continued to modernise its legislation to ensure captive owners can convert between different structures with ease as their needs evolve.

In addition to restructurings, the regulators stressed the market continues to attract new owners.

Vermont had licenced 15 new captives this year up to the end of June, with 12 surrendering their licence, as the H1 2026 total of captives rose to 710.

Heading into VCIA, Vermont’s DFR had another five new captive applications expected to be approved shortly.

DeVoe-Talluto said the traditional drivers of captive formations remain in place, with companies continuing to use captives to finance deductible reimbursement programmes for auto liability, general liability and workers’ compensation.

Of the 15 new captives, nine are pure captives, with DeVoe-Talluto saying most belonged to companies entering the captive market for the first time.

“We’re still seeing plenty of that growth,” he said. “The majority are privately held businesses.”

He added that while public companies continue to explore captive formation, the strongest growth remains among middle-market and larger privately owned companies.

“It’s still surprising that there is not 100% market penetration with large publicly traded companies, but there’s still room for growth,” he said.

International business remains a smaller but consistent component of Vermont’s pipeline. Of the applications currently in process, two have non-US parent companies, with ultimate parents based in London and Singapore.

Sponsored captives have also been more popular this year. Of the 15 H1 formations, five were sponsored captives, compared to only four in all of 2025.

According to DeVoe-Talluto, businesses have been using them in several different ways, including creating platforms for third-party clients, segregating risks by business unit and developing new insurance offerings.

Brown added that cell structures are increasingly being used to house emerging or innovative risks where actuarial data is limited.

“These risks are being put in a cell to be segregated and watched,” she said. “Oftentimes the cell structure is not really retaining the risk. It’s going off to a reinsurer, so that’s another use that we’re seeing with these sponsored captives that we’ve formed. The risks are really unique.”

Medical stop-loss also remains an active area of formation, particularly through new cells being added to existing programmes.

Vermont’s DFR has received around 10 standalone cell applications this year, not including the one cell that launches with every sponsored captive formation. This would put the number of cellular formations at roughly the same as the number of non-cellular formations.

DeVoe Talluto said Vermont continues to maintain a healthy pipeline beyond current applications, with several additional formations expected over the coming months and further opportunities likely to arise through discussions at this week’s VCIA conference.

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