Captive Tax Benefits

The premiums paid to your captive insurance company you’ve created are tax deductible.  This reduces the taxable income for the business owner.  Premiums received by the captive insurance company are tax exempt up to $2.3MM per year. This unique benefit is available to small insurance companies through the 831(b) tax election.  Premiums and underwriting profits can be invested to earn investment income.  Additional income can be generated from offering warranty and insurance programs to customers.  This provides competitive advantages and additional add-on income from core sales.

Captive-Tax-Benefits-Over-10-Years

Captive Core Benefits

Now You Can Offer Insurance and Warranties!

Captive insurance provides you the ability to offer insurance and warranty services to your clients.  Captive insurance companies provide greater opportunity to diversify revenue streams for business owners by providing businesses an opportunity to offer insurance and warranty protections for their core products and services.

Captive Insurance and Warranties

New Profit Center

Warranty and insurance services are very profitable as it is an easy add on to the product or service you already provide.  Whether you buy an airline ticket or TV, warranties and insurance is usually an option. Now, you can provide that same level of service to your clients.  All administration and management of the insurance and warranties are handled by Captive Nation leaving you with financial and competitive advantages without any of the administrative work.  Should someone need to make a claim on their insurance or warranty, you are covered because we backup through reinsurance so you protected on the upside and downside.

Competitive Edge

Whether you charge your client for insurance or warranties or provide it as part of your price, you have a competitive advantage over your clients.  This is also another way to separate yourself from your competition by providing client protection benefits, something your competitors do not have access to.  If customers have the choice to buy two products of the same price, and one company offers a warranty while the other does not, they’re going to buy the product with protection.

Buyer Protection

Clients want to feel good about their purchase and eliminate the possibility of something going wrong that create buyer’s remorse. This is why insurance and warranties are so popular.  This provides additional incentive for the client purchase your products and services while providing them assurance that they are covered in case something goes wrong.

Coverage Beyond Commercial

New Revenue from Insurance Warranties

Captive insurance companies provide greater opportunity to diversify revenue streams for business owners.  Small and medium size companies can effectively manage risk and provide their own protection warranty plans and service contracts.  Not only does this create a new revenue line for the company, it also provides a new product or service to it’s customers.  This is another example of how owning a captive can turn a companies risk into profit.

Asset Protection

As with any insurance company, captives tend to accumulate a considerable amount of assets in reserves.  These assets back the policies issued by the captive insurance company. However, a portion of the assets may be available to the business owner should the business need funds to overt a potential larger catastrophe.  Rather than paying premiums to a commercial carrier and increasing their reserves, you essentially are creating your own reserves for future needs.

Pricing Stability & Reduced Insurance Cost

Owning your own captive allows your business to access coverage specific to your business needs without additional inflated costs paid to a commercial carrier for high agent and executive compensations, marketing and advertising, and other unrelated overhead. Owning your own captive not only helps reduce insurance costs, it also makes your costs more predictable.

Tax Benefits

Captives can play a significant role in a company’s tax strategy.  Insurance premiums paid by a company to the captive are tax deductible.  Since insurance companies are subject to special tax rules, captives can take deductions for loss reserves. This results in differed taxation and even better, some captive programs qualify to exclude all insurance profits from taxable income.  Tax advantages were put into place by congress so that captives can accumulate assets and reserves quicker. As a result, the company is better prepared in case of a catastrophic event.

Access Reinsurance Market & Premium Recovery

Reinsurance is referred to stop-loss insurance or insurers’ insurance.  Owning your own captive gives you access to the reinsurance markets that aren’t available to the general public. This access allows for direct access to the underwriter by removing the middle-man and give you wholesale level pricing with more flexibility of insurance coverage.

Leverage Capital & Increased Investment Income

A company needs financial capital in order to operate and grow its business. The significant insurance costs and special tax savings generated from a captive formation directly results in additional profits.  These additional reserves allow for more accessible funds that can help your business leverage it’s capital.  Our staff not only manages our client’s insurance companies from issuance of premiums to monthly financial reporting, it also assures suitable tax and audit treatment.  Our experienced finance team is positioned to support all financial functions for maximizing tax savings, increased cash flow, and investment returns.

Coverage Beyond Commercial

New Revenue from Insurance Warranties

Captive insurance companies provide greater opportunity to diversify revenue streams for business owners.  Small and medium size companies can effectively manage risk and provide their own protection warranty plans and service contracts.  Not only does this create a new revenue line for the company, it also provides a new product or service to it’s customers.  This is another example of how owning a captive can turn a companies risk into profit.

Asset Protection

As with any insurance company, captives tend to accumulate a considerable amount of assets in reserves.  These assets back the policies issued by the captive insurance company. However, a portion of the assets may be available to the business owner should the business need funds to overt a potential larger catastrophe.  Rather than paying premiums to a commercial carrier and increasing their reserves, you essentially are creating your own reserves for future needs.

Pricing Stability & Reduced Insurance Cost

Owning your own captive allows your business to access coverage specific to your business needs without additional inflated costs paid to a commercial carrier for high agent and executive compensations, marketing and advertising, and other unrelated overhead. Owning your own captive not only helps reduce insurance costs, it also makes your costs more predictable.

Tax Benefits

Captives can play a significant role in a company’s tax strategy.  Insurance premiums paid by a company to the captive are tax deductible.  Since insurance companies are subject to special tax rules, captives can take deductions for loss reserves. This results in differed taxation and even better, some captive programs qualify to exclude all insurance profits from taxable income.  Tax advantages were put into place by congress so that captives can accumulate assets and reserves quicker. As a result, the company is better prepared in case of a catastrophic event.

Access Reinsurance Market & Premium Recovery

Reinsurance is referred to stop-loss insurance or insurers’ insurance.  Owning your own captive gives you access to the reinsurance markets that aren’t available to the general public. This access allows for direct access to the underwriter by removing the middle-man and give you wholesale level pricing with more flexibility of insurance coverage.

Leverage Capital & Increased Investment Income

A company needs financial capital in order to operate and grow its business. The significant insurance costs and special tax savings generated from a captive formation directly results in additional profits.  These additional reserves allow for more accessible funds that can help your business leverage it’s capital.  Our staff not only manages our client’s insurance companies from issuance of premiums to monthly financial reporting, it also assures suitable tax and audit treatment.  Our experienced finance team is positioned to support all financial functions for maximizing tax savings, increased cash flow, and investment returns.

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