IAG - Infinity Assurance Group

A Captive - What, Why and Whom? IAG Risk Solutions



What is a Captive?

A captive is a special purpose insurance company that insures the risk of its owners and if desired affiliated third parties. Captives are WHOLLY OWNED SUBSIDIARIES CREATED TO PROVIDE INSURANCE TO THE PARENT COMPANIES. A sophisticated way to self insure and provide significant after tax returns to the owners and their Estates.

  • All 30 Companies Comprising the Dow Jones Industrials own Captives
  • World Trade Center Captive Insurance Company - In July of 2004, the World Trade Center Captive Insurance Company was created by New York City with funding from the U.S. Federal Emergency Management Agency (FEMA).
Why Form a Captive?
  • Better Coverage - Captives can tailor policy language
  • Increased Cash Flow - Premiums are lower for better risk clients and typically cheaper than a one-size-fits-all commercial policy. Premiums paid into the captive can be invested to grow.
  • Better Claims Service - Captives have much less red tape when handling losses. Direct access to Claims rep.
  • Complete Control - Control all operations. Own all bank accounts and Investments.
  • Increased Cash Flow - Premiums paid into the captive can be invested to grow.
  • Owning a Captive can Create a New Profit Center - Owning an Insurance Company is Warren Buffett’s primary Investment.
  • Competitive Advantage - Captives can be used to retain key employees, vendors or joint venture partners.
Who Should Form a Captive?
  • A company that has an above-average risk profile.
  • A company or individual with the financial resources to contribute to the captive
  • A company that pays more than $1M in annual Insurance Premium it is almost certain that a captive would save significant expense and generate ADDITIONAL CASH FLOW IMMEDIATELY!
  • If the company pays between $500k and $1M in annual Insurance Premium it is very likely to significantly benefit from forming a Captive.
  • Some types of businesses carry higher risk and are more likely to form a captive—Doctors, Manufacturers, Construction, Commercial Property Owners
  • A company where PREMIUMS INCREASED even though it have had very few claims.

Google and Microsoft established Employee Benefits captives in 2012 but, You Don’t have to be a Fortune 500 Company!