A Real Life Case Study

Pulling It All Together: A Real Life Case Study    

Benefits for Micro Captives IRC Section 831(b)

Recognizing the importance of managing risk by obtaining insurance, Congress passed IRC Section 831(b) to give smaller and mid-size businesses an incentive to set up a CIC...........................................................

The success of any business depends upon the effective and efficient use of capital. While a Captive Insurance Company is commonly viewed as a disciplined way of retaining and financing risk, it can be a means to better growth and accessing corporate capital as well as implementing broader corporate strategies.

Captive Insurance has become an increasingly important tool used by companies to manage their business risk and promote strategic initiatives. Captives are essentailly a form of self-insurance, with all the advantages of true insurance. These advantages incude: the opportunity to earn an underwriting profit, improve risk management and loss control, coverage for unusual or hard to place risks, direct access to reinsurance and potential tax savings.

A captive insurance company allows successful businesses to reserve for these risks and if properly structured and underwritten. Premiums paid by your business to your captive insurance company, may be tax deductible
as an ordinary and necessary business expense.

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Benefits

There are good business reasons to establish a Captive Insurance Company (CIC). One of the business advantages of establishing a CIC is gaining greater control over risk management..........................................

Is a Captive Insurance Company Right for Your Client?

Setting up a middle market captive can be an expensive and time consuming process if there are not sufficient economic and risk management benefits to your client. If the benefits are there, the costs and time expended will be well worth the effort.....