Oct. 28, 2002                                                         Contact:Lucas Hamilton

Hospitals form state's third captive insurance company State Auditor says captives solution for many in hardening market

       State Auditor John Morrison today announced that the Montana Hospital Network has formed Montana's third captive insurance company this year.
      Montana Health Network Mutual Liability & Casualty, Inc. will provide professional and malpractice insurance for 10 rural hospitals in eastern Montana.
      "The hardening insurance market in 2002 has led to increased deductibles and limited coverage for certain risks," said Morrison, Montana's insurance commissioner. "Captives can provide great relief to hospitals struggling with skyrocketing insurance premiums."
      A captive insurance company provides a form of self-insurance in which a corporation or association organizes an insurance subsidiary to insure itself or its members. Captive insurance companies serve the insurance needs of the parent organization or its affiliated companies without the uncertainties of commercial availability and cost.
      The 2001 Legislature passed a law proposed by Morrison, allowing captive insurance companies for the first time to operate in Montana. The law requires Montana-based captives to locate their headquarters in Montana and hold an annual board meeting here. Captives don't interact with consumers in the same fashion as traditional multi-line companies so Morrison's office has been able to create a streamlined regulatory environment for them.
      Montana Health Network Mutual Liability & Casualty, Inc. will pay a minimum premium tax of $5,000 to the state of Montana. Last year the insurance industry paid about $48 million in premium taxes to the state's general fund.
      The company will use the services of accountants, lawyers and actuaries in Montana.
      "As interest in the captive industry grows, I am increasingly assured that this will be a stimulus for economic growth in Montana," Morrison said. "It is a good sign that Montana companies and organizations are recognizing the benefits of forming captives. The industry can make a great contribution to the state's economy and captives can be beneficial to the financial health of many companies and organizations."
      In January, ALPS Reinsurance of Missoula, a wholly owned subsidiary of Attorneys Liability Protection Society, redomiciled from Vermont to Montana. Last month, the State Auditor's office presented a captive insurance license to American Trucking and Transportation Insurance Co., A Risk Retention Group, based in Missoula.
      ATTIC's membership includes Watkins and Shepard Trucking of Missoula, Combined Transport of Central Point, Ore., and Transam Trucking of Olathe, Kan.
      Hospitals insured by Montana Health Network Liability & Casualty, Inc.:
      Beartooth Hospital & Health Center Red Lodge
      Central Montana Medical Center Lewistown
      Daniels Memorial Hospital Scobey
      Frances Mahon Deaconess Hospital Glasgow
      Garfield County Health Center Jordan
      Glendive Medical Center Glendive
      Northeast Montana Health Services Wolf Point
      Phillips County Hospital Malta
      Prairie Community MAF & Nursing Home Terry
      Roosevelt Memorial Medical Center Culbertson
      Rosebud Health Care Center Forsyth
      Roundup Memorial Hospital Roundup
      Sheridan Memorial Hospital Plentywood
      Sidney Health Center Sidney
      Stillwater Community Hospital & Nursing Home Columbus
      Wheatland Memorial Hospital Harlowton