Montana’s Steve Matthews Looks Back on His Career and the RRG Industry

Montana Chief Financial Examiner and Captive Insurance Coordinator Steve Matthews will be retiring at the end of June. Matthews, who stepped in as the head of the Montana insurance team in 2005, has been in the position for over 18 years. Matthews started his insurance career on the traditional side in South Carolina in the 1990s.

Montana—which has just shy of 300 captives domiciled in the state, including seven risk retention groups—first enacted its captive law in 2001. In addition to his responsibilities regarding captives, Matthews also handles the 30 traditional companies domiciled in Montana.

The Risk Retention Reporter spoke with Matthews to discuss the characteristics that lead to successful risk retention groups, the challenges of regulating RRGs, and other thoughts on his career as captive insurance regulator.

Risk Retention Reporter: Where did you start your insurance career, particularly your captive insurance career?

Steve Matthews: I started in South Carolina in 1996 as an analyst for traditional companies. In the late-90s or early 2000s, the commissioner at the time, Ernie Csiszar, decided that South Carolina should have a captive program. The program was modeled after Vermont—everyone saw the success in Vermont. The department called on a couple of people in-house to start the program and I got tapped to do that. I’ve been doing captives ever since.

Montana initially saw a lot of risk retention group activity. Many of those groups have seen long-term success. For example, American Trucking and Transportation Insurance Co., Risk Retention Group (ATTIC), which has been serving the Transportation sector for 20 years. What are the characteristics that, from your experience as a regulator, set up a risk retention group for long term success?

Matthews: ATTIC is a great example of a good RRG. First, you’ve got to have member involvement. Members that are engaged and know the risks. The RRG knows who the new members coming in are and they’re in control of the program. Then, the RRG needs a team to run the program. ATTIC is fairly unique in the captive and RRG space, because they’re a regular brick and mortar operation here in Montana. They’ve got a president there, a CFO, and claims adjusters and they’re all here in Montana. But most risk retention groups aren’t that way— they must rely on a captive manager. If so, the RRG needs a good captive manager. That’s important due to the increased regulation of RRGs and the financial reporting requirements. The captive manager needs to know GAAP or statutory accounting.

Finally, the RRG has got to be focused on financial strength and serving members rather than growth. RRGs need to get the basics down first. Pricing needs to be right. Reserving needs to be right. Focus on financial strength first and then you can grow.

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