A company usually forms a Delaware captive insurance company to protect its financial interests and those of associated companies. Because they are managed and owned by a policyholder (or several), they are called "captive companies", and recent U.S. taxation provisions allow them to claim tax deductions on the premiums they accrue during the year, which then go back to the parent company. Because forming and maintaining a captive can be a time consuming and complicated process, many parent companies hire a financial management company to help them with the process. These advisors perform various services for their client companies, such as evaluating, forming, and managing captive companies.
Doing a feasibility study is usually the first step in forming a captive company, since it shows how it can best service the parent company. This could include identifying and classifying company insurance risks, analyzing different risk transfer solutions, drawing up a plan to form and manage a captive, summarizing insurance coverage, premium levels, risk retention amounts, capital, allocation of funds, and financial projections for a captive.
When forming the captive, the management company will take care of any financial fronting, reinsurance, tax problems, accounting, or other related matters. Licensing also falls under this category, which means they should take care of service providers, preparing applications and documents that need to be submitted to insurance regulators, any regular communication to discuss and obtain approval for insurance licenses, applications, supervision of incorporation of the captive, filing insurance applications, paying licensing fees, and providing any other requested information.
Managing a Delaware captive insurance company means that these companies take care of regulatory compliance matters, underwriting policies, accounting, and other services. This ends up being the long term work and bulk of the total workload, which saves the parent company hours of manpower and headaches.
Handling accounting means detailing what filing under a section 831b captive insurance tax break would mean for a company, preparing balance sheets, and drawing up a separate business plan with detailed financial statements. Tax details also fall under this category, meaning they will care for preparing NAIC (National Association Of Insurance Commissioners) filings, tax returns, extensions, tailored management reports, any arrangements for retaining professionals, and arranging yearly external audits. Underwriting and policy issuance could also be included. This means that they would determine premium levels and coverage options, underwrite any insurance risks, coordinate with ratings methodology professionals, prepare applications, declaration pages, confirmation of coverage forms, policy forms, insurance binders, premium payment notices, and other related documents. Regulatory compliance involves looking over and monitoring brokerage, banking and financial statements, quarterly financial reviews, annual reviews of insurance and corporate legal requirements, intermittent reviews of solvency, meet capital adequacy and asset allocation requirements, and preparing annual financial compliance reports.
Doing a feasibility study is usually the first step in forming a captive company, since it shows how it can best service the parent company. This could include identifying and classifying company insurance risks, analyzing different risk transfer solutions, drawing up a plan to form and manage a captive, summarizing insurance coverage, premium levels, risk retention amounts, capital, allocation of funds, and financial projections for a captive.
When forming the captive, the management company will take care of any financial fronting, reinsurance, tax problems, accounting, or other related matters. Licensing also falls under this category, which means they should take care of service providers, preparing applications and documents that need to be submitted to insurance regulators, any regular communication to discuss and obtain approval for insurance licenses, applications, supervision of incorporation of the captive, filing insurance applications, paying licensing fees, and providing any other requested information.
Managing a Delaware captive insurance company means that these companies take care of regulatory compliance matters, underwriting policies, accounting, and other services. This ends up being the long term work and bulk of the total workload, which saves the parent company hours of manpower and headaches.
Handling accounting means detailing what filing under a section 831b captive insurance tax break would mean for a company, preparing balance sheets, and drawing up a separate business plan with detailed financial statements. Tax details also fall under this category, meaning they will care for preparing NAIC (National Association Of Insurance Commissioners) filings, tax returns, extensions, tailored management reports, any arrangements for retaining professionals, and arranging yearly external audits. Underwriting and policy issuance could also be included. This means that they would determine premium levels and coverage options, underwrite any insurance risks, coordinate with ratings methodology professionals, prepare applications, declaration pages, confirmation of coverage forms, policy forms, insurance binders, premium payment notices, and other related documents. Regulatory compliance involves looking over and monitoring brokerage, banking and financial statements, quarterly financial reviews, annual reviews of insurance and corporate legal requirements, intermittent reviews of solvency, meet capital adequacy and asset allocation requirements, and preparing annual financial compliance reports.
About the Author:
If you find a financial management team that handles these details, you are on the right track. To learn more about management services and captive businesses, click on Delaware captive and also best Delaware captive.