Bestvan Consulting Presentation 07 2015
Transcript of Bestvan Consulting Presentation 07 2015
Bestvan Consulting : A better idea.Committed to doing the right things right with alternative risk for you
Presentation for:
Captive Insurance Entities
What is Captive? Why Create A Captive? Why Offshore and Why Turks & Caicos? Implementation Steps and Timeline Bestvan Consulting Services Recap & Questions
What is a Captive?
A captive is formalized, structured and funded self insurance.
Very simply, a captive is an insurance company that you own.
You then use the insurance company that you own to provide insurance to yourself.
The insurance company may provide various types of insurance you now purchase from someone else.
Why Create A Captive?
Reason #1: Make a profit! Reason #2: Create a financial asset. Reason #3: Control cost of risk
As the owner of the insurance company you can make additional money and have more ongoing control of your insurance needs.
Optimal Solution
Profit / Asset Protection: The owner runs the captive to protect the assets in the captive and make money.
Ownership: The owner keeps the premiums otherwise lost to an insurance company.
Control: Captive empowers the owner to control the claim, coverage and cost of risk.
The Captive Structure
ControlOwnership
Profit
Why Offshore?
U.K. law attaches including tax treaty Access to major re-insurers and carrier fronts Limited right of Discovery Not subject to U.S. court jurisdiction No statutory accounting No Yellow Book International generally accepted accounting
principles Turks uses American dollars as currency
Why Offshore and Why Turks & Caicos?
Lower regulatory expenses Economical annual financial audits No requirement that a board member be a resident Economical annual licensing fees / full transparency Annual actuarial study required Captive Funds may be invested stateside
Captive Formation Steps
0-30 Days
90 – 180 Days
Begin Operations!
CapitalizationFront Company
If Needed
Engage Bestvan Consulting
OrganizationDocumentsPreparation
NameSelection &
Incorporation
OpenBank Account
ReinsuranceIf Needed
Business Plan& FinancialProjections
MeetingWith CaptiveRegulators
File CaptiveApplication
Timeline
30-60 Days
60-90 Days
Bestvan Consulting Role & Strategic Partners
Reinsurance & Fronting – Risk & Reinsurance Solutions Actuarial – Merlinos & Associates Offshore Bank – Safe Harbor Bank Offshore Counsel – First Anguilla Trust Company, LTD. Offshore Auditors - Porter, Keadle & Moore, LLP. Medical Group Benefit – Capitol Administrators of S.E., LLC Claims – Usually Provided by the Fronting Carrier Onshore Administrator - Bestvan Consulting
Create a Captive Insurance Solution
Reinsurance
Fronting
Risk Management / Loss Control
Compliance & Legal
Treasury & Banking
Accounting
Investment Strategy
Actuarial
Audits
Policy Administration
Claims Management
Captive Management
Bestvan Consulting
INSURANCE
ACCOUNTING
MANAGEMENT
Bestvan Consulting manages all your needs to create, operate and grow your captive insurance company.
Build an asset, capture control and add profit to the bottom line!
Captive Models & Structure
Employer Owned Life: Captive issues policy. Liability: Self issued insurance coverage. Workers Comp: Self insured mandated coverage. Risk Sharing: Participate in risk of issued premiums. The captive model has many variations to fit your
business. Each provides a vehicle to make a profit, build an asset and provide more control to you.
Employer Owned Life Insurance
Employer issues employee life policy Employer pays premium Employer deducts premium as business expense Employer owns life insurance policy Employer is the beneficiary Employer receives death benefit tax free Employer accrues underwriting profit
Employer Owned Group Life Example
Individual Employee Group PolicyEmployer PaidPremium
$55,000,000
$550,000
GroupLimits
$50,000 Policy LimitPer Each Employee
ATRISK
AGGREGATERISK
TOTAL
Employer issues employer owned life insurance policy insuring employees. Employer pays premium, owns the policy and receives death benefit tax free.
Example1,100 employees; $550,000 total annual premium
Liability Captive
You currently pay huge premiums to an insurer. Insurers keep all the profit and interest. Insurers use your funds to pay your claims. When you work hard to control losses, the outside
insurer benefits.
A Liability Captive is simply an entity set up to issue your own liability insurance policy to yourself.
Liability Coverage Example Model
Individual Claim Policy Premiums
$250K
$850K
ATRISK
PremiumIncome
$1M PerOccurrence
Policy Exposure
$1M
$3M PolicyAggregate
Limits
AGGREGATERISK
TOTAL
$1.35M
Reinsurance
Captive liability coverage combined with a solid risk reduction strategy provides a model for rapid growth of the captive assets. Controlled risks provide immediate and significant profit.
Workers Compensation Captive
Workers Compensation insurance is mandated coverage you must purchase.
Insurers keep these funds unless claims occur. Insurers keep all the profit and interest. Insurer issues the policy to comply with statutory
requirements.
A Workers Comp Captive can be used to issue your own mandated coverage, limit your risk and profits from proper business controls.
Workers’ Comp Example Model
Individual Claim Annual Exposure Policy Premiums
$250K
$750K$680K
$1M
StatutoryLimits
StatutoryLimits
ATRISK
ATRISK
TOTALPremiumIncome
As with the liability model, the worker’s comp model provides a model for rapid growth of the captive assets and the potential for immediate and significant profit.
Risk Participation in Issued Policies
You are collecting huge premiums for insurers. Insurers make money on premiums collected by
deferring tax, making an underwriting profit and accruing interest on investments.
The captive shares risk on the policies issued by taking a sliver of risk and a portion of issued policies premium.
A captive company allows you to participate in the risk and profit from writing good business.
Risk Participation Example Model
IndividualClaim
Total Premiums
$50K
$1M
Per OccurrenceLimits
ATRISK
PremiumIncome
Total WrittenBook
$1M
$10M
ATRISK
TOTAL
$10M
The risk participation model provides a long term growth opportunity to participate in a profitable book of business with proper risk distribution.
Bestvan Consulting Orchestration Role
Captive Setup
Investment Plan Setup
OngoingAdministration
Off ShoreIncorporation
CaptiveLicensure
BankingSetup &
Relationship
OperationalCaptive
Captive ModelAnalysis
Policy / PlanDesign
Filings &Regulatory
Setup
Financial /TreasuryTransactions
Back OfficeAdministration
Audits &Loss Control
ActuarialAnalysis
Financial Filings& Compliance
Bestvan Consulting manages the entire life cycle of the captive and provides continuous monitoring and adjustments as needed.
Captive Insurance Opportunity
A Captive insurance entity provides your business a financial asset and an additional profit source.
Turks & Caicos provides reasonable cost structures.
The Captive provides additional controls and insight to make your core business more profitable.
Bestvan Consulting Complete Captive Management
A successful captive is dependent upon two key elements: Proper design and execution of setting up the
captive. Competent ongoing oversight and
management of an extremely valuable asset. Bestvan Consulting fulfills this role and keeps you
informed.
Bestvan Consulting Manages the Captive Cycle Ongoing
AdminPlan
Design
Setup