Captive formation benefits may be achieved by any number of circumstances which positively impact your business group.

The growth of captive insurance holdings has more than doubled over the last 5 years and over half of the Fortune 1,500 companies in the US utilize a captive.

Tax Advantages - insurance companies are provided a special tax treatment; they can accrue tax-deductible reserves for unpaid claims, whether known or estimated

Lower Insurance Costs - this is achieved through no profit loading, elimination or reduction of broker commissions and lower administrative costs

Cash Flow - insurers rely on investment and underwriting profit to improve cash flow. Premiums are typically paid in advance while claims are paid out over a longer period of time. By utilizing a captive, premiums and investment income are retained within the group. The captive can also provide more flexible premium payment plan thereby offering a direct cash flow advantage to the parent

Risk Retention - a company can manage its own risk by increasing the deductible levels. These deductibles can be insured through the captive

Risk Management - a captive can act as a focus for risk management and risk financing activities of its parent organization

Access to the reinsurance market - a captive can access the reinsurance market which operates on lower cost structure than a direct insurer

Control – Control of underwriting, rates and forms, as well as control of claim settlements and investments

Flexibility - a captive can offer specifically tailored wordings in the structure of the policiesCoverage provision - Captives can provide coverage to subsidiaries and members that are not available in the market place, such as punitive damages

Captive Formation