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Captive Providers, LLC

Providing a Cost Effective Turn Key Captive for Successful Business Owners

From Feasibility, Design & Implementation to On-going Compliance & Maintenance

If you are a successful business owner, physician or professional and are not paying Captive insurance premiums to your own Captive insurance company for business risks associated with your business, then you are not taking advantage of one of the most beneficial provisions of the U.S. tax code!

So why would a business owner do this?

Business owners who own a “properly structured” Captive may take deductions for the Captive insurance premiums paid to their own Captive insurance company for business risks “particular” his/her business; hence the term “Captive” insurance.
Subsequently, it is possible that vast amounts of pre-tax wealth can be accumulated as underwriting profits on a tax-deferred basis less any claims and losses filed against these reserves. Eventually, the reserves that are not used for future business risks can be distributed as dividends.

As an example…

A client decided to pay a Captive premium of $300,000 to cover certain business risk as opposed to taking a bonus of $300,000. If the bonus had been taken he would have ended up with approximately $180,000 after Federal, State and miscellaneous taxes. Instead, after all the costs of the Captive less claims, he ended up with underwriting profits of $264,000 which accumulates annually on a tax deferred basis and only pays dividend rates on the interest earned on these underwriting profits. For each $100,000 of Captive premium he will save annually about $28,000 in taxes. Important: to realize the benefits of owning your own Captive a business owner must have actuarially based premiums to cover valid business risks particular to their business. Excessive claims from the risk pool or by the business owner could have caused negative results.

While creating your own insurance company can be a daunting task, we turn a fairly complicated process into an extremely simple turn-key one for our clients. After a feasibility study and understanding the business owner’s objectives, we assist him/her to determine the appropriate jurisdiction (domestic or international) and subsequently handle every aspect from Captive formation, underwriting, actuarial studies to the on-going maintenance and compliance work.

Our conglomerate of companies did approximately $80 million in Captive premiums in 2009.

When professional tax planning is incorporated in the use of a Captive, there are many other significant advantages as noted below…maybe this is why so many business owners have chosen our company to structure their Captive.

A Phenomenal Pre-tax Wealth Accumulation Tool
A Highly Efficient Estate Planning Vehicle

Asset Protection

The Wealth Transfer of Pre-Tax Assets

Risk Control

Insurance Cost Minimization

Favorable Tax Treatment

Unlike most Captive formation companies who will state that to be cost effective that a company must justify a minimum Captive premium of $500,000, we have reduced the associated costs so that the smallest premium that must be justified through actuarial studies and underwriting of the parent company’s operations is $100,000 of “aggregate” risk premiums. This provides the opportunity even for the sole proprietor or single physician to potentially benefit from a properly structured Captive.

Exploring a Captive Insurance Company makes sense for almost every self-employed person and potentially could have a profound impact upon your financial future. We would welcome a conversation with business owners or their advisors about how a Captive might integrate into your strategic wealth planning.

To determine if a Captive is right for you, please go to Contact Us.

Disclaimer: This information contained in this website is intended to be exclusively educational for both clients and advisors. It is not intended as a statement of law or as legal or tax advice to any individual or entity. If you intend to implement any of the concepts discussed herein, a representative is available to speak with your legal, accounting, or tax advisors. I understand and agree that the information provided in this website is NOT legal or tax advice and should not be relied on as such. I agree by choosing one of the links above. All work is done subject to IRS and U.S. Treasury Department reporting requirements and filings. Treasury Department Circular 230 Disclosure: Neither Captive Providers, LLC nor anyone associated with Captive Providers, LLC, collectively or separately provide tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction. In order to comply with Internal Revenue Service Circular 230 (if applicable), you are notified that any discussion of U.S. federal tax issues contained or referred to herein is not intended or written to be used, and cannot be used, for the purpose of: (A) avoiding penalties that may be imposed under the Internal Revenue Code; nor (B) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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