GEM is capitalized through surplus contributions of its members. GEM members' equity totaled $18,468,803 million as of 12/31/08.

Yes. GEM members make a minimum five-year commitment. GEM is similar to public entity pools that expect a long-term commitment from members and not one where members are shopping reinsurance each year based upon price.

Unlike commercial reinsurers, GEM maintains surplus and policy accounts for each member. Members have the opportunity to financially benefit from favorable loss experience.

GEM is not an assessable mutual. We can request but not require additional contributions from the membership.

A member may have up to 100% growth in its net written reinsurance premium before they can be requested to make an additional surplus capital contribution. Should a members surplus account balance fall below the surplus to the premium ratio specified in the GEM Surplus and Contribution Policy the member will be requested to make an additional surplus contribution. The request can be made at such time as the members' reinsurance gross written liability and/or workers' compensation net written premium to surplus ratio exceeds 2:1. Some factors which may contribute to GEM making a capital request are: increase in reinsurance premiums because of expansion in membership, decreased self-retention, adding a line of reinsurance coverage.

The member may choose not to make the additional contribution and exercise one of two GEM withdrawal options.

Any Founding, Premiere or Associate Member that withdraws within a five (5) year period of becoming a member forfeits its contributed surplus and any balance that has been allocated to its GEM Surplus Account.

Any Founding or Premiere Member that chooses to withdraw from GEM after the initial minimum five (5) year period has two options.

The first option is to withdraw only the amount of surplus contributions it has made to GEM. The GEM Board of Directors then has the discretion to return the funds not later than five years from the date of withdrawal. Under this option there is the distinct disadvantage of not having any allocations of net income or other distributions to the account being returned.

The second option is to maintain the Surplus Account with GEM. In this case, the withdrawing member will share in all allocations to and from surplus accounts as if it continued to be a GEM member. Distributions from such Surplus Account will be made at the earliest of: (i) liquidation of the Company or (ii) at the sole discretion of the Company's Board of Directors. In this instance, the withdrawing member could consider the funds as an investment.

It should be pointed out that the GEM Board of Directors may, some years in the future, consider the option of returning all or a portion of the surplus contributions in the form of dividends. In this scenario net income from GEM's operations would need to be retained as capitalization.

No. GEM underwriting is performed on an individual member basis. Underwriting considerations include historical loss experience; type of exposures being insured; policy forms; financial condition; state tort environment; claims, underwriting and loss prevention policies and practices; and program management.

Each of the members that have joined GEM expect the Company to protect their surplus contribution investment. This means GEM has a goal of having a combined expense and loss ratio that is breakeven (100%) or better. To achieve this objective, the GEM Board of Directors is committed to maintaining sound underwriting standards and a professional underwriting process.

GEM is licensed and regulated as an association captive by the Department of Insurance and Securities Regulation of the District of Columbia.

GEM was required to submit a regulatory business plan to the DC Department to get its captive reinsurance license approved.

The Company is required to file an annual statement, prepare an annual loss reserve certification and have an annual financial audit. It is also required to meet the same minimum standards as commercial reinsurers to be accredited or authorized in other states. The annual statements are public information.

Reinsurance companies do not need to be accredited or authorized to provide reinsurance in any state. However, all states do have a process for accrediting or authorizing reinsurers. In some instances, reinsurers also have the status of being an admitted insurer. This means the insurer is also licensed to provide primary coverage either as a domestic or foreign insurer (domiciled in another state).

State laws or regulations for public entities and public entity pools and mutual insurance companies vary from state to state. Generally there are no statutory or regulatory restrictions as to whether a pool uses an accredited or authorized reinsurer for liability and property coverages. However, in a number of states, public entities that provide workers' compensation coverage must comply with the regulations of the State Department of Labor. You should consult legal counsel to see what, if any, requirements pertain to your organization.

GEM is not an accredited or authorized reinsurer in any state except for Washington, D.C. However, as part of its strategic plan GEM is seeking to reach a minimum capital level of $20 million. It is anticipated that this will occur sometime in 2009. At that point GEM will begin the process of seeking to become accredited in the various states it does or may wish to do business.

GEM is regulated as a captive insurance company and as such it is restricted as to how much risk it can retain. Like public entities, GEM seeks to retrocede its reinsurance to quality reinsurers.

GEM is what is called a "homogeneous" group captive to the extent that it provides reinsurance only to pools and public entities. However, there is great diversity in the public entity risks covered by pools.

Insurance is based upon the principles of the law of large numbers and diversity in risk. One of the principals of risk management is that diversity and spread of risk can afford greater opportunity for stability.

GEM's underwriting philosophy is that each prospective member is individually underwritten.

There is risk in contributing equity capital and/or purchasing reinsurance from GEM. A decision of whether to participate in GEM should include an assessment of that risk.

State guarantee funds will not protect against insolvency of reinsurers or members of a reinsurance captive. State guarantee funds protect purchasers of primary coverage not purchasers of reinsurance.

Over the years, some public entities have experienced one or more of their commercial reinsurers becoming insolvent. The result is the pool or public entity paid losses that were expected to be covered by reinsurance. Reinsurer insolvency is a credit risk that exists for any pool, as well as for GEM. It exists wherever reinsurance is purchased.

There is also the risk of losing the surplus (capital) contribution of members.

This risk of insolvency is a reason why it is vital to have a knowledgeable Board of Directors, professional staff and service providers. All of those involved in governing or providing services on behalf of GEM have considerable experience with pool and or (re)insurance operations.

There are other means to reduce the risk of losing member equity. One method is using financially sound companies to reinsure a portion of the risk assumed by GEM. A second technique is having reinsurance policies issued to members by an admitted, financially sound fronting reinsurance company in lieu of having GEM issuing the policy, etc.

Finally, GEM is a non-assessable insurance company. The extent of a member's risk is their surplus contribution and any losses resulting from uncollectable reinsurance.

Yes, GEM is a direct writer or can be accessed by brokers.

Call our Executive Office @ 603-223-0231. Ask for Joel Kress, GEM Underwriting Manager, or John Foehl, CEO & President. Feel free to e-mail a request to underwriting@gemre.com.

Your interest is welcome!

To report a claim to GEM use the "Report a Claim" link located in the top right corner of the website. This link is accessible from every web page on the site and details the various options available to you to report your claim.

Protected cell captives are a mechanism to isolate specific risks within a single corporate entity. The corporation maintains a core structure that holds capital and general assets and liabilities. In addition each cell has additional capital that is provided by the individual or group using the cell. Cell assets can only be used to satisfy creditor’s claims with respect to that particular cell. Cell captives exist in numerous US and off-shore domiciles.