In The News: Press Release

Foundation Highlights Captive Insurance Solutions

The Self-Insurance Educational Foundation (SIEF) today announced that it has released a new video highlighting captive insurance solutions for mid-market companies, including stop-loss captive programs, enterprise risk captives, and property & casualty group captives.
May 11, 2016

Captive Industry Sees Solid Growth in 2015 and Looks for More in 2016

Numbers released for 2015 captive formations shows that captives are continuing to grow despite a lingering soft market. – Written by Karrie Hyatt
April, 2016


Summary:

Since the beginning of the year, U.S. captive domiciles have been releasing results of captive activity in 2015. These results show that overall captive formation was strong even while pricing results for the property and casualty market were down. Captives are being formed all over the U.S. in both established domiciles and newly legislated domiciles and, according to industry insiders, 2016 is shaping up to be an even better year for the industry.

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Information Statement Regarding Micro-Captives

CICA – CICA Information Statement Regarding Micro-Captives 8-17-15 Final
August 17, 2015

Summary:

Micro-captives are simply small captive insurance companies generally utilized by middle-market, privately held businesses. The insurance and risk management challenges faced by small businesses differ in some important respects from those of larger companies. Fortune 1000 companies are often geographically diversified, have multiple revenue streams, have large balance sheets, and can readily access capital and credit markets to smooth cash flow fluctuations that result from unexpected contingencies. Further, these organizations tend to procure fairly standard commercial insurance coverages and policies from a variety of global carriers on an annual basis. The coverages are, as a general statement, consistent and are priced in a very dynamic competitive environment.

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The Billion-Dollar Insurance Strategy That Could Save Your Business

Forbes – Garrett B. Gunderson
June 15, 2015

Summary:

Sometimes small businesses are small because they think small.
For example, there’s a “War Chest” strategy that most of America’s largest companies use. It generates billions in profits while providing extra risk protection. And even though this strategy is available to many small and mid-sized businesses, few take advantage.

But if more small and mid-sized businesses change their mindset and start “thinking big,” they can start to reap the rewards of this “War Chest” strategy, too, even if on a smaller scale.

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Captive Insurance Solutions for Rising Insurance Premiums

The Tax Adviser – Mark Heroux
October 1, 2014

Summary:

Companies large and small can have a difficult time finding and affording traditional insurance policies to cover their risks and assets.

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CICA Statement on 831(b) Captives

Captive Insurance Companies Association
March 9, 2014

Summary:

Do 831(b)s Right or Don’t Do Them at All

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Captive Insurance Reinsurance Pools – Where’s My Money

James Landis
April 25, 2013

Summary:

As the number of captives, captive managers and risk distribution pools continues to grow rapidly, the opportunity for a scandal in the captive industry also grows.

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Captive Insurance and Wealth Planning

Bo Brower
April 23, 2014

In our company we use the acronym (PALM) Parallel Asset Life Maximization. Visualize a mountain lake if you would. Beautiful homes on the beaches, children playing along the shoreline, boats zipping across the pristine water. What a wonderful asset! Now if an engineer were to build a dam on this lake to provide electricity to a city below would this effect the asset’s original use? No! You would be creating an additional life from the asset without compromising the assets original use. The asset would be optimized.

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Captive Insurance – Onshore Vs. Offshore

Bo Brower
April 2, 2014

Just over a decade ago there were only four states that had captive legislation in place.  We now have over 35 states that have captive legislation – with the most recent being the longhorn state.  Texas recently issued a Certificate of Authority for their very first captive to operate as an insurance company in the state.

With so many great onshore options, I don’t see the advantage of domiciling a micro-captive offshore unless you have a very specific purpose for doing so.  In fact, our management company has elected to stay onshore exclusively for all of our managed captives.

Below is a recent Forbes article that addresses some of the complexity of an offshore captive arrangement as well as some of the happenings coming out of the IRS office.

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Advantages to Forming a Captive Insurance Company Early in the Year

Bo Brower
March 27, 2014

Business owners often wait until the very end of the year to implement a captive insurance structure.  However, taking this approach can cause problems for a variety of reasons.  Below are a few advantages for a business owner to get started early in forming a captive insurance company.

Risk Management

Businesses are exposed to self-insured risk throughout the year.  A business can better understand and manage their true risk exposure through having professional risk managers and actuaries review their current situation.  Putting a plan in place early in the year can help business owners sleep better at night knowing their risk has been identified and is being managed appropriately.

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Rent-A-Center, Inc. v. Commissioner: A divided Tax Court allows a deduction for premiums paid to a captive insurance company

PricewaterhouseCoopers LLP
January 23, 2014
Access the original article at http://www.pwc.com
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In brief

In a divided opinion, a majority of the U.S. Tax Court in Rent-A-Center v. Commissioner, 142 T.C. 1 (January 14, 2014) held that payments made by a parent company to a subsidiary insurance company on behalf of other wholly-owned subsidiaries were properly deductible as insurance premiums. This long-awaited decision is not only the first captive insurance case in several years, but also the first since the IRS abandoned its economic family theory in 2001 and replaced it with other, safe-harbor rulings. This favorable opinion could alter the future design and operation of captive insurance arrangements and the dynamics of ongoing IRS examinations and appeals.

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Ten Favorite Things About Captive Insurance Companies

Jay Adkisson, Contributor
August 10, 2013
Access the original article at http://onforb.es/139w7BX and http://goo.gl/tK3kMP
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A couple of weeks ago, I wrote an article on my 10 pet peeves regarding captive insurance companies, entitled Tax Shelters, Nebraska Hurricanes And Other Captive Insurance Mistakes. Following that article, quite a few folks e-mailed me requesting that I write an article on my 10 favorite things about captives. So, for those folks and anybody else who might be interested, here you go:

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Tax Shelters, Nebraska Hurricanes And Other Captive Insurance Mistakes

Jay Adkisson, Contributor
July 28, 2013
Access the original article at http://onforb.es/17NR17O and http://goo.gl/nlu7sfNYSN
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A captive insurance company (commonly referred to in short as a “captive”) is an insurance subsidiary that is set up by the parent company, to underwrite the insurance needs of the other subsidiaries. For example, British Petroleum wisely set up a captive insurance company (Jupiter Insurance Ltd.) to provide environmental insurance to its operating units, and the moneys from its captive were used to fund in substantial part the Gulf cleanup.

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Section 831(b) Captive Insurance Companies And The Tax Preparer Penalty

by James Landis
July 2, 2013
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Summary: The hurdles for properly deducting premiums paid to one’s own insurance company are both numerous and, to some extent, subjective.

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The Benefits of Captive Insurance Companies

by Robert E. Bertucelli, CPA
March, 2013
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For many years, large corporations in this country have enjoyed many benefits from operating their own captive insurance companies. Most were established to provide coverage where insurance was unavailable or unreasonably priced. These insurance subsidiaries or affiliates were often domiciled offshore, especially in Bermuda or the Cayman Islands. The risk management benefits of these captives were primary, but their tax advantages were also important.

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Getting Big Around the Middle

by Lynna Goch
March, 2012
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Vermont may have the Fortune 500 business, but Utah’s captive industry has its eye on the thousands of companies in the next tier.

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