Brookfield Partners is pleased to offer Captive Insurance Companies as part of our package of advanced planning tools, which offers exciting planning capabilities and strategic flexibility to small, closely held businesses. Utilization of a Captive for small to medium-sized companies offers an extension of tax efficient strategies beyond qualified plans with benefits including:
• Potential lower cost of insurance
• Broader insurance coverage
• Potential underwriting gains
• New profit center
• Tax savings – Federal and State
• Asset protection
• Wealth accumulation
• Wealth transfer
• Owner control
What is a Captive?
A captive is an insurance company organized primarily for the purpose of insuring and re-insuring the liabilities of its owner (parent).
Types of Captives:
• Standard – a single parent entity for the express purposes cited above.
• “Rent-a-Captive” – a multiple parent (owner) entity designed to insure the risk of others for a fee.
Purposes of Captives:
• Reduce casualty insurance premiums
• Fill in gaps in coverage, exclusions, deductibles and difference in conditions
• Deductible premiums
• Tax deferred accumulations
• Conversion to LTCG/dividend rates
Jurisdictions:
With the exception of minor differences in costs, the precise legal jsuridiciton does not effect the overall purposes and uses of a captive arrangement.
• Domestic – there are several states in which captives might be formed including Vermont, DC, Arizona, Utah and Hawaii
• International – the leading jurisdicition include Bermuda, Cayman Islands, Guernsey, BVI, Barbados, Turks & Caicos and Isle of Man
Regulatory/Compliance:
• Ample guidance form the IRS via Notices and Rev. Rulings
• Lengthy list of case law
• Adequate reporting capability to ensure compliance
For Questions on the Technical and Practical Aspects of a Captive Insurance Company, please contact:
Bradford J. Kadelski
brad@brookfieldpartners.com