Captive Insurance Companies are insurance companies with the specific objective of insuring risks emanating from their parent groups. If you own a business with revenues of $10M and larger, you could potentially benefit from owning a captive. A captive provides the business owner with many advantages when executed correctly. Premiums paid from the parent corporation are treated as expenses, and the first $1.2M in premium income to the captive is received tax free with the right IRS election. With a third party administrator, claims are handled diligently, and the funds can be invested in certain portfolios which can have further tax benefits. Once reserves have been released, any excess net premiums belong to your captive and can be invested and either saved for retirement or distributed to the captive owners, you! This strategy is a powerful way to grow assets that would normally be considered ‘profit’ for your insurance company. Captives can also be a useful estate planning tool, and loans can be taken against the funds within the captive. To learn more please contact us and we would be happy to discuss if a captive is right for you and your company.

This is for informational purposes only, Gordian is not a tax advisor. For further disclosures please visit our disclosure page.