Surgical Captive

Captive Insurance Companies

Frequently Asked Questions

Answering Your Questions About Captive Insurance

Surgical Captive is available to answer your questions about Captive Insurance. We're here to serve you with a full range of advisory and management services. If you would like to learn more about the exciting opportunities afforded by this innovative risk management solution, call our office today!

  • Does the Internal Revenue Service (IRS) really allow these tax savings?

    The Internal Revenue Code sections that address the Captive Insurance Company approach have been in place for over 50 years. These sections were recently assessed and amended by Congress in 2004. Two years prior, the “Safe Harbor” Revenue Rulings that allow the benefits were issued and reaffirmed in rulings in 2004 and the following year.

  • Is a Captive Insurance Company a “tax shelter”?

    While many may get confused in this area, a Captive Insurance Company is not a tax shelter. A tax shelter, specifically by definition, does not include this type of transaction, so it does not fall into this category. Recent rulings have affirmed the IRS’ viewpoint that a Captive Insurance Company is not a “tax shelter” or “abusive transaction” in any way.

  • Does my business qualify to establish a Captive?

    When an owner decides to form a Captive, they must first understand how the Captive works in order to properly blend it with their company’s economic and overall goals. This includes the benefits it will provide and issues it may resolve. Surgical Captive provides assistance to business owners in determining if a Captive is right for their business. We begin by performing a feasibility study, tailoring our findings to the unique needs and goals that you have as a business owner. This allows you to gain an in-depth overview of all potential costs and benefits of forming a Captive Insurance Company.

    The feasibility study includes:

    • An adaptive business purpose and multi-year cost benefit analysis
    • Tax analysis
    • Identification of the lines, limits, rules, rates, and policy forms
    • Domicile selection and Captive structure selection

  • Is there a limit on the amount of money my business can transfer to my Captive?

    This will depend on several factors such as the risks that will need to be insured, as well as the premium amount required to provide coverage for those specific risks. A third-party actuarial team will help determine premium amounts that are tailored to meet your company’s cash flow and available funding options.

  • Am I allowed to use the funds inside the Captive?

    Yes. The funds inside of the Captive may be used for investing in a number of different options available to the owners. Investments may vary, but typically cover stocks, bonds, mutual funds, and marketable securities that are highly liquid. Keep in mind, different jurisdictions may have differing requirements for investments. Surgical Captive will advise owners on making appropriate investments to obtain the most favorable economic treatment.

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