Modern Captive Insurance: A Legal Guide to Formation, Operation, and Exit Strategies

Insurance is a sophisticated financial vehicle that can be best understood through the lens of risk management. Experiencing dramatic growth, captive insurance is owned and controlled by its insureds, pooling the risks of its owners. Captive insurance provides businesses with unmatched flexibility regarding coverage, claims, premium, and control, while also offering advantages such as lucrative dividends and innovative financing techniques.

This state-of-the-art guide traces the development of small captive insurance and addresses how to set up and properly manage a captive. Modern Captive Insurance: A Legal Guide to Formation, Operation, and Exit Strategies, begins with an overview of what captive insurance is and detail the advantages in setting up a captive for a range of different business situations. Chapters explain how to incorporate and start up a new captive insurance program, including basic terminology and the roles different professionals play in running captive programs.

Captive insurance is an intricate yet effective risk management strategy. For guidance in properly establishing a captive, the authors address critical issues evaluated by the IRS, such as risk shifting and distribution, and explore ethical considerations arising out of off-shore captive management, such as how to identify money laundering red flags and how to properly manage the investments of reserves.

Modern Captive Insurance takes an in-depth look at the topics and issues that are common in insurance and in businesses, but are often handled differently for captives, such as:

• Financial statements, investments, and financial ratings
• Policy drafting and coverage
• Risk pools and structuring the pooling arrangement to be valid
• Federal, state and local taxation
• Tax-exempt organizations
• Risk retention groups (RRP)
• Reinsurance, and more

Table of Contents
Chapter 1: Captive Company Formation
Chapter 2: Captives and Capitalists
Chapter 3: Risk Pools
Chapter 4: Financial Statements, Investments, and Financial Ratings
Chapter 5: Policy Drafting and Coverage
Chapter 6: Underwriting and Claims Reserving
Chapter 7: Federal Income Tax and Captives
Chapter 8: State and Local Captive Insurance Issues
Chapter 9: Tax-Exempt Organizations and Captive Insurance
Chapter 10: Risk Retention Groups and How They Work
Chapter 11: Reinsurance
Chapter 12: Workers’ Compensation and the Grand Bargain
Chapter 13: Employee Benefits
Conclusion
Table of Cases and Index

Matthew Queen serves as General Counsel for Venture Captive Management, LLC, in Norcross, Georgia. His practice focuses on corporate regulatory and transactional matters for a variety of captive insurance companies and risk retention groups. He is a regular speaker at domestic and international captive insurance and alternative risk financing conferences. Light Townsend is an attorney with the firm Drummond Wehle Yonge, LLP, in Tampa, Florida, where his clients include small to medium-sized businesses. He focuses on assisting clients in understanding and complying with complex federal tax planning, particularly as it relates to estate planning, business planning, succession planning, wealth preservation, risk management, and asset protection.