Hunton Insurance Recovery Blog

Captive insurers are formed with careful attention to domicile to select for favorable tax, regulatory, and operational climate. But as a recent decision reminds us, jurisdictional exposure doesn’t end with the state or country of incorporation. Captive insurers, like any other entity, can find themselves subject to litigation in jurisdictions where their conduct has an effect. Understanding this reach is essential to managing risk from an insurance and corporate governance perspective.

Captive Insurance Overview

Unlike the typical insured-insurer relationship, a captive insurer is wholly owned and controlled by the insured. Captive insurance is a form of self-insurance outside of the commercial insurance market where the insured establishes a licensed insurance company to insure their own risks. There are several types of captive insurers, including those established by a single company, multiple companies (usually within the same industry), or a trade or professional association. In each case, the insured party or parties put their own capital at risk, usually through premiums, and claims are handled under the terms set by the captive insurer.

Captive insurers often are formed where the commercial insurance market is prohibitively expensive, unavailable, or not fit for the insured’s needs. Other benefits may include reduced costs, tailored coverage, and tax advantages.

When establishing a captive insurer, where to incorporate is often a prime consideration for regulatory and tax reasons, as well as legal exposure and personal jurisdiction. Regarding the latter two considerations, insureds should be aware that legal exposure and personal jurisdiction are not limited to a captive insurer’s place of incorporation. A recent case, Mayer v. Goldner, No. 2024CVS1258 (N.C. Bus. Ct. Oct. 2, 2025), illustrates this point. 

The Mayer v. Goldner Decision

This case centers on a shareholder dispute involving Sherbrooke Corporate Ltd., a captive insurer operating in North Carolina. Minority shareholders sued the majority shareholder. The majority shareholder and Sherbrooke responded with counterclaims and third-party claims, notably against Grand Hook Agency, LLC. The third-party complaint alleged that while serving as Sherbrooke’s officers, minority shareholders formed Grand Hook to compete with Sherbrooke. Among other acts, they allegedly defamed Sherbrooke to the North Carolina Department of Insurance, damaging Sherbrooke’s reputation in its home state.

Grand Hook moved to dismiss for lack of personal jurisdiction, arguing it had no physical presence or business dealings in North Carolina. The court, however, found that specific jurisdiction existed because Grand Hook—through its agents—allegedly engaged in intentional tortious conduct directed at North Carolina, knowing the harm would be felt there. The court emphasized that physical presence is not required for personal jurisdiction when a defendant’s actions are purposefully directed at the forum state. Accordingly, the court denied Grand Hook’s motion to dismiss, holding that exercising jurisdiction would not offend due process under the circumstances.

Key Takeaway

Forming a captive insurer involves many strategic decisions, one of which is where the captive insurer may be subject to jurisdiction. While where the captive insurer is headquartered and incorporated are factors in this jurisdictional analysis, it doesn’t end there. As illustrated by Mayer, the captive insurer’s after-formation conduct can subject it to jurisdiction in other forums. While jurisdictional planning shouldn’t eclipse a captive’s core purpose to manage and insure risk, it should remain an active part of risk management itself.