The Feasibility Study
The first step to owning your own Captive Insurance Company begins with a Captive Feasibility Study. Each Captive Feasibility Study we perform is custom tailored to meet our client’s individual needs. This means that your Captive Feasibility Study will be developed using your data — not industry-wide data, and all of our recommendations will be tailored to meet your unique business and personal goals.Your customized Captive Feasibility Study will answer most, if not all, of the questions you have regarding the costs and benefits of owning your own Captive Insurance Company. Although it is not as detailed as the Captive Business Plan which is required to form a Captive, it does provide an excellent Executive Overview and Summary of the most important aspects of your Captive.Your customized Captive Feasibility Study will contain the following key components:
A Multi-Year Cost Benefit Analysis
Synergy Captive Strategies will perform a cost benefit analysis which will compare the economics associated with forming a Captive Insurance Company to the economics associated with not forming a Captive.
Captive Insurance Tax Analysis
The feasibility study will include a summary of IRS Safe Harbor Rulings as well as the tax incentives which are currently available to small property and casualty insurance companies under Section 831 and Section 162 of the Internal Revenue Code. For clients who currently own voting stock in a privately held insurance company, we will also include a review of the effect which the “Controlled Group” statutes found in IRC Section 1563 will have (if any) on their Captive’s taxation under IRC Section 831.
Identification of the Lines, Limits, Rules, Rates and
Policy Forms Your Captive will Use
Synergy Captive Strategies will identify specific commercial property and casualty risks, which you are not currently insuring, that can be insured by your Captive. Synergy Captive Strategies will also provide suggested coverage limits, premium rates and policy form numbers for each line of insurance which it recommends your Captive underwrite. All underwriting recommendations will follow the specific underwriting Rules which are published in the Commercial Line Circular or Manual of each line.
Document the Captive’s Business Purpose
Your Captive Feasibility Study will begin by documenting several business purposes for creating your Captive Insurance Company. It is important to clearly document your rationale for establishing a Captive Insurance Company in order to satisfy IRS requirements that require a valid “business purpose” for creating an operating company, especially one which will qualify for substantial tax incentives.
Synergy Captive Strategies will help you to select the best Domicile in which to incorporate, license, operate and manage your Captive.
Captive Structure Selection
Synergy Captive Strategies will help you to select the Captive Structure which best meets your needs (i.e., Single Parent Captive, Association Captive, Group Captive, Industrial Insurance Captive, Rent a Captive, Sponsored Captive, Protected Cell Captive, Segregated Cell Captive, Affiliated Reinsurance Company (ARC), Producer Owned Reinsurance Company (PORC), Closely Held Insurance Company (CHIC), etc.