Get to know what I do (Group Benefits/Group Investments)
Bestvan Consulting Presentation 07 2015
1. Bestvan Consulting : A better idea.
Committed to doing the right things
right with alternative risk for you
Presentation for:
2.
3. 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
4. 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.
5. 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.
6. 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
7. 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
8. 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
9. Captive Formation Steps
0-30 Days
90 – 180
Days
Begin Operations!
Capitalization
Front Company
If Needed
Engage Bestvan Consulting
Organization
Documents
Preparation
Name
Selection &
Incorporation
Open
Bank Account
Reinsurance
If Needed
Business Plan
& Financial
Projections
Meeting
With Captive
Regulators
File Captive
Application
Timeline
30-60 Days
60-90 Days
10. 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
11. 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!
12. 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.
13. 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
14. Employer Owned Group Life Example
Individual Employee Group PolicyEmployer Paid
Premium
$55,000,000
$550,000
Group
Limits
$50,000 Policy Limit
Per Each Employee
AT
RISK
AGGREGATE
RISK
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
15. 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.
16. Liability Coverage Example Model
Individual Claim Policy Premiums
$250K
$850K
AT
RISK
Premium
Income
$1M Per
Occurrence
Policy Exposure
$1M
$3M Policy
Aggregate
Limits
AGGREGATE
RISK
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.
17. 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.
18. Workers’ Comp Example Model
Individual Claim Annual Exposure Policy Premiums
$250K
$750K
$680K
$1M
Statutory
Limits
Statutory
Limits
AT
RISK
AT
RISK
TOTAL
Premium
Income
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.
19. 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.
20. Risk Participation Example Model
Individual
Claim
Total Premiums
$50K
$1M
Per Occurrence
Limits
AT
RISK
Premium
Income
Total Written
Book
$1M
$10M
AT
RISK
TOTAL
$10M
The risk participation model provides a long term growth
opportunity to participate in a profitable book of business
with proper risk distribution.
21. Bestvan Consulting Orchestration
Role
Captive Setup
Investment
Plan Setup
Ongoing
Administration
Off Shore
Incorporation
Captive
Licensure
Banking
Setup &
Relationship
Operational
Captive
Captive Model
Analysis
Policy / Plan
Design
Filings &
Regulatory
Setup
Financial /Treasury
Transactions
Back Office
Administration
Audits &
Loss Control
Actuarial
Analysis
Financial Filings
& Compliance
Bestvan Consulting manages the entire life cycle of the
captive and provides continuous monitoring and adjustments
as needed.
22. 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.
23. 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
Admin
Plan
Design
Setup