Missouri granted its first special purpose life reinsurance captive insurance company license to RGA Reinsurance Company, Chesterfield, Mo., a unit of Reinsurance Group of America Inc., in what the state says is a new option for insurers that could eventually generate $10 million in state revenue over 3 years.

Special purpose life reinsurance captives assume life insurance business from their corporate life insurance parent companies or affiliates to facilitate financing of life insurance reserves, says a statement from the Missouri Department of Insurance, Financial Institutions and Professional Registration.

The new license is now available because of amendments made to chapter 379 of Missouri law as outlined by S.B. 215 enacted in 2007.

The new license establishes a captive to assume business from a direct life writer or reinsurer, says John Rehagen, captive insurance program manager with the department.

The captives will mainly assume business to release reserves to the ceding company associated with Triple-X or A-Triple-X business, according to Rehagen. The new license is one of a number of ways that a ceding company can obtain reserving relief, he adds. Some of those other methods include letter of credit, trusts and securitizations with the backing of financial guaranty companies, he says.

The new license offers benefits for both the company establishing the captive and for the state, Rehagen explains. Companies can operate more efficiently by freeing up reserves that can be used to grow the company and may receive a good federal tax benefit depending on each company’s situation, he explains.

At press time, a representative with RGA could not be reached to comment.

In order for a company to be eligible to establish a captive life reinsurer, it must hold at least 35% of its assets either directly or through a financial institution in Missouri.