A captive is an insurance company created and wholly owned by one or more non-insurance companies to ensure the risks of its owners. Captives are essentially a form of self-insurance whereby the insurer is owned wholly by the insured. They are typically established to meet the risk-management needs of the owners.
Once established the captive operates like any commercial insurance company and is subject to state regulatory requirements including reporting capital and reserve requirements.
Under IRC Section 831(b) the recent tax act increased the annual deductible premium contribution from $1,200,000 to $2,200,000. If your business has consistent sustainable operating profits you should consider a captive insurance company.
KRD can help you analyze your company’s business operations and financial situation to determine if a captive insurance company may be appropriate for your business. We then work with other specialized professional to get the entity set up, actuarial projections performed and the requirements. KRD prepares the annual audited financial statements. Contact us today to learn more.
