Toyota affiliate plans Hawaii insurance unit
Japan-based Denso would join the roughly 160 captive insurance companies in the state
Denso Corp., a Toyota affiliate that makes automobile parts and manufacturing systems, plans to establish a company in Hawaii to provide workers compensation and marine risk insurance for its North American operations.
Denso Reinsurance America Inc. initially will be capitalized with $3 million and begin operating next month, the company said.
Known as a "captive insurance" company, Denso Reinsurance America is being established under Hawaii policies that allow companies to insure themselves by setting up insurance subsidiaries in the Aloha State.
Nearly 200 captive insurance companies have been established in Hawaii since the state's program began in 1986; of those, about 160 remain active, said Craig Watanabe, who administers the program for the state Department of Commerce and Consumer Affairs.
About 150 of the active captive insurance companies are subsidiaries of U.S. firms, Watanabe said. Japanese companies, including Nissan and Sanyo, represent several of the 10 or so companies that have corporate parents based outside of the United States, Watanabe said.
As of 2004, the assets of Hawaii's captive insurance companies totaled $5.2 billion, $1.3 billion of which was invested with Hawaii banks, Watanabe said.
Hawaii once was one of just a few states that allowed captive insurance companies, but the number of states allowing the programs has swelled in recent years to 19, plus the District of Columbia, according to the Captive Insurance Companies Association. Marlene Goldsmith, a spokeswoman for Denso in Detroit, said the company chose to establish the insurance subsidiary in Hawaii because of the state's favorable insurance infrastructure and tax incentives for the industry. Captive insurance companies are not allowed in Japan, she said.
Goldsmith said it is not yet clear whether the company will employ local staff. Watanabe said the state has approved Denso's application and business plan, but has not yet granted its license.
Denso Corp., Japan's largest auto parts maker, recently posted a 42 percent gain in its third-quarter profit as Toyota increased orders and a weaker yen boosted overseas sales. Denso predicts record profits this year.