STAND. COM. REP. NO.  125-08

Honolulu, Hawaii

                , 2008

RE:   H.B. No. 3101

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Fourth State Legislature

Regular Session of 2008

State of Hawaii

Sir:

     Your Committee on Economic Development & Business Concerns, to which was referred H.B. No. 3101 entitled:

"A BILL FOR AN ACT RELATING TO INSURANCE,"

begs leave to report as follows:

     The purpose of this bill is to keep Hawaii, one of the world's leading captive insurance jurisdictions, competitive in the world market, by allowing Hawaii-licensed captive insurance companies to pursue the growing demand for the securitization of insurance risks.

     The Department of Commerce and Consumer Affairs, Artex Risk Solutions, Inc., and Willis Management (Hawaii) testified in support of this measure.

     Securitization is a financing process that allows a company to obtain current funding from illiquid assets that cannot be readily sold.  Large national and international insurance companies use securitization organizations to issue securities to obtain capital for their operations and reserves.  The transactions involved fall within the multi-million to billion dollar range and may be used for purposes such as transferring catastrophic risks to the securities market.

     Hawaii, as the second largest captive domicile in the nation, and tenth in the world in the very competitive captive market, has developed the expertise necessary to oversee the complex transactions involved in the securitization of insurance risks.   This measure would enable Hawaii to respond to the strong demand for securitization by domestic life insurers by authorizing the formation and regulation of special purpose financial captive insurance companies.

     As affirmed by the record of votes of the members of your Committee on Economic Development & Business Concerns that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 3101 and recommends that it pass Second Reading and be referred to the Committees on Consumer Protection & Commerce and Judiciary.

Respectfully submitted on behalf of the members of the Committee on Economic Development & Business Concerns,

____________________________

KYLE T. YAMASHITA, Chair