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Risk Management and Asset Protection

Mission

Full Service provider of Association Captive Insurance, Asset Protection, and Wealth Planning with ideal candidates who are financially solid, best-in-class companies with an entrepreneurial background where the top executives want to achieve greater control over risks.

Offer

Multidisciplinary alternative insurance structure for best-in-class companies with entrepreneurial with select and prioritized Medical and Dental Groups, Real Estate Brokerage and Construction Companies, Professional Athletics, Food & Beverage, hospitality and transportation firms.

Relevance

Companies that join group captives are seeking the advantages of cost savings, insulation from the market cycles, greater ability to manage risk; also, they have the opportunity to share in investment income and underwriting profits.

Objectives

Establish and manage with integrity and innovation Heterogeneous Member-owned (Segregated Cell and Protected Cell) and Homogenous Sponsor-owned captive associations (Common Industry or Trade).

Risk Sharing Captive Insurance

Risk Sharing Captive Insurance is a form of self-insurance where a captive subsidiary company (CIC) is formed to provide property and casualty insurance for the parent company. It functions as a risk management tool, an investment vehicle, and a planning structure that allows for significant tax and asset protection opportunities. All successful businesses and self-employed professionals should consider owning a CIC for risk planning and is potentially the most powerful tax saving, risk management and wealth protection vehicle available today.

Captive insurance is a form of self-insurance where a subsidiary company is formed to provide property and casualty insurance for the parent company. It functions as a risk management tool, an investment vehicle, and a planning structure that allows for significant tax and asset protections opportunities. The purpose of the captive insurance company (“CIC”) is to provide unique coverage when not available through a third-party insurer. An example of such coverage is enterprise risk, which is typically not a commercially insurable risk available from third-party insurers. Often a CIC is best used as a supplement to existing coverage. Another benefit of Captives is that they afford the opportunity to capture costs that are normally lost to third-party insurers. As with other forms of self-insurance, a CIC allows the entity to better manage enterprise risk and control insurance costs. Premiums that are paid to the Captive are tax deductible, as they are treated as an ordinary and necessary business expenses for tax accounting purposes.

There are many potential advantages and benefits to forming a CIC, including: the opportunity to dramatically lower insurance costs, opportunity to enjoy additional risk protection when such protection would not be available in the third party commercial insurance market, and importantly, a number of risk management advantages. The specific risk management advantages that a CIC affords are: greater control over claims, increased risk coverage, increased capacity, underwriting flexibility, incentives for loss control, reduced insurance costs, capture of underwriting profits, pricing stability, improved claims review and processing, and customized ability to purchase based on unique insurance needs particular to a company. Additionally, it should be noted that the CIC provides tax benefits and potential investment income.

As a practical matter, a CIC coordinates coverage with traditional third-party coverage to best distribute and protect against risks. Important to note as part of a company’s financial planning is the consideration that, pursuant to IRC section 831(b), Captives’ appreciated assets are taxed as investment income. CIC annually premiums up to $1.2 Million are tax deductible. (Entities funding a CIC do not pay tax on the premiums provided that annual premium contributions are below $1.2 million annually.) Additionally, Captives may retain surplus from underwriting profits within a reserve account that is income tax exempt. The extra measure of control afforded by a CIC is an important and often overlooked consideration, while the more obvious benefit of cost capture from eliminating overhead costs associated with typical third-party insurance is a more obvious advantage.

Tax Benefits of CIC Ownership: IRS Section 953(d) allows classification of your statutory insurance company as a domestic insurance company, requiring your captive insurance company to file annual tax returns. The biggest tax benefit is the first premium income of up to $1.2 million is tax deductible (exempt). This is true for each calendar year under IRC Section 831(b).

Our Formation Advisory Team provides initial turn-key formation and annual management. We begin with a thorough examination of your unique insurance situation including an actuary analysis presented in a feasibility study that outlines the strengths and weaknesses of the captive program along with a comprehensive and thorough analysis of possible jurisdictions in which to locate the captive.

Captive Management includes in-house accounting, compliance, investment strategies, actuarial, banking, claims management, legal, audit and taxation services.

We coordinate the formation and management of CICs with state licensed and approved managers and professionals. Services include a feasibility study, underwriting, arranging and maintaining reinsurance and risk pooling, ownership structure, accounting, and claims functions specifically including annual reports and filings for regulators.

We coordinates the integration of the planned risk management and asset protection strategy with the existing strategy and business model of the entity. This will obviously differ depending on the legal structure of the firm, LLC, Corporation, Sole Proprietorship, or Partnership, and on the objectives of the owner-entrepreneurs.

Ideal Candidates for Captive Insurance

  • Businesses where owners are looking for asset protection
  • Businesses with requisite risk currently self-insured, uninsured, or under-insured.
  • Business owner(s) interested in personal wealth accumulation and/or family wealth transfer strategies.
  • Businesses with $500,000 or more of sustainable operating profit.
  • Profitable business entities seeking substantial annual adjustable tax deductions.
  • Businesses with multiple entities or those that can create multiple operating subsidiaries or affiliates.
  • High-income business owners seeking ERISA-free options for accumulating retirement assets.

Estate planning and asset protection legal work provided by your professional advisory team.