This website provides an introduction to the concept of the captive insurance company and its most popular variants. It is written on an introductory and educational level to help those business owners and their advisors who are considering a captive arrangement.

A captive insurance company is simply an insurance company owned by the parent that underwrites the insurance needs of the parent's subsidiaries.

This website also supports the book Adkisson's Captive Insurance Companies: An Introduction to Captives, Closely-Held Insurance Companies and Risk Retention Groups written by Jay Adkisson. The author has been active in the alternative risk management sector since 1995, has been forming captive insurance companies since 1998, and for several years was the owner of a licensed captive insurance management firm in the British Virgin Islands.

Mr. Adkisson is an attorney licensed in California, Oklahoma and Texas and practicing in the law firm of Riser Adkisson LLP which has offices in Newport Beach/Orange County, California, and Athens, Georgia.  He has twice appeared as an expert witness to the U.S. Senate Finance Committee and has lectured to the U.S. Internal Revenue Service, the U.S. Department of Justice, the University of Miami's Heckerling Institute on Estate Planning, the American Bar Association, numerous state and county bar associations, and similar forums nationwide.

Since its release in late 2006, Jay Adkisson's book on captive insurance companies has become the all-time captive insurance bestseller, providing a basic introduction to captives and related structures and how they are properly utilized within the context of the client's overall business and estate planning. Available now from: Amazon and Barnes & Noble

Captive insurance companies are here to stay. After the IRS lost its $600+ million challenge against a captive owned by United Parcel Service in 2001, the Service resigned itself to the legitimacy of captive insurance companies and soon thereafter abandoned its economic family challenges to captives. The IRS has since issued a great deal of guidance to assist captive owners in their proper structuring, management and reporting.

Most large corporations have captives. Starbucks™ formed a captive in 2007 for instance. Premiums paid to captives in 2006 in Vermont alone were estimated to exceed $11.55 billion.

More than half of the states have now passed captive insurance enabling statutes, and more than a half-dozen of those states now aggressively cater to the domestic captive market. Captives are now being formed for medium-sized businesses that are able to pay as little as $500,000 per year in premiums to their captive.

Many advisors are only now becoming aware of the concept of the captive insurance company and introducing it to their clients. In addition to serving an insurance function, captives can also legitimately serve an intergenerational wealth transfer function to the extent that underwriting is successful by being tightly integrated with an advance estate plan. Financial and life insurance companies are now developing services and products that are specifically aimed at the captive marketplace.

We assist prospective captive owners and their advisors in evaluating, designing, and implementing captive solutions. We also review existing captive structures and suggest ways that they can be used more efficiently. In addition to Mr. Adkisson's own firms, we also have relationships with experienced and reputable insurance managers, actuaries, underwriters, and accountants who specialize in captive insurance arrangements.

You may contact Jay Adkisson for a telephone conference or for a speaking engagement by calling his scheduling assistant at 949.629.1176 or by e-mailing him directly to jay [at] captivebook.com (We serve clients nationwide).

Explore this website further from the Sitemap

_____________________

Industry News

TAM 200816029 on Partnership Entities Counted For Risk Distribution Purposes

IRS Technical Advice Memorandum 200816029 confirms that a partnership entity that is not treated as a disregarded entity will count towards the number of insureds for risk-distribution purposes, even if owned in substantial part by the same parent as the captive.

Read More

Michigan Adopts Captive Insurance Legislation

Read article here. Whether Michigan's notoriously anti-business reputation will allow the state to actually attract out-of-state captive business is another thing altogether. Forming in-state captives rarely makes sense because of state premium or independently-procured taxes, which is why businesses usually go out-of-state for their captive formations. Still, Michigan is one of the first large states to adopt legislation that seeks to attract captive formations.

IRS Abandons Challenge to Deductibility of Reserves Within Consolidated-Return Captives

Bowing to intense lobbying major corporations that have captives and Congressional pressure from the domestic captive domiciles, the IRS has decided that it will abandon its challenge to the deductibility of reserves within captives that are part of a control group with a common parent (which would encompass most large captives). This is a very clear and significant victory for the tax viability of captive insurance companies.

Read More

IRS Rules Each Cell of a Protected Cell Company Must Be Treated as a Stand-Alone Captive for Testing of Risk Shifting and Distribution

Rev.Rul.2008-8 provides guidance on the standards for determining whether an arrangement between a participant and cell of a Protected Cell Company (defined below) constitutes insurance for federal income tax purposes, and whether amounts paid to the cell are deductible as "insurance premiums" under § 162 of the Internal Revenue Code.

Read more