Captive Insurance

View as PDF
Overview

Our Clients

Katten's Captive Insurance attorneys handle all aspects of captive insurance programs for closely held businesses. We advise all types of captive insurance companies, including single-parent and pure captives, association captives, group captive programs, risk purchasing, and sponsored and branch captives.

Our Services

Our familiarity with the goals and needs of owners of closely held businesses and how a captive insurance program assists the business from a risk management perspective allows us to guide clients through each phase of establishing a captive insurance program. Our work includes the following areas below.

  • Conceptualizing and designing a captive insurance company to provide the most effective and efficient risk management technique available.
  • Identifying income, gift and estate tax efficiencies that are not present with other risk management techniques.
  • Reviewing the feasibility study and structure of the insurance company and determining which domiciles (both domestic and foreign) should be considered.
  • Finalizing the application for the selected captive domicile and implementing the program upon approval by the domicile.
  • Reviewing and designing insurance policies specific to the program including facultative or treaty reinsurance arrangements.
  • Interpreting policies when claims are made and assisting the captive manager, auditor and actuary with annual filings.
  • Appropriately dissolving and liquidating a captive insurance company in compliance with regulatory authorities if a business owner decides the company is no longer needed.

Our knowledge of the insurance regulatory and compliance area, combined with our heritage as a provider of sophisticated transfer tax strategies for high-net-worth and ultra-high-net-worth clients, distinguishes us as a national service provider with access to international securities, benefits, litigation and tax attorneys, and authorities on all types of alternative risk management techniques. Our relationships with key regulators worldwide, including the domiciles of Delaware, Nevada, Vermont, Utah, the District of Columbia, the Cayman Islands and Bermuda, ensure that we understand the perspective of the regulator before we submit an application for a client. We advise on:

  • structuring solo captive programs for an operating business and its affiliated companies where there is no need for the captive to join a risk pool;
  • building homogenous sponsored captives for specific industries, achieving appropriate levels of risk distribution;
  • creating associations as a means of allowing a group of industry-related business owners to form a captive insurance program to cover their unique risks that commercial carriers may not insure in an affordable manner; and
  • forming risk retention groups (RRGs), when appropriate, to facilitate multistate liability programs.

If a client already has a captive insurance program or is participating in a sponsored or group captive program, we consult with the client on the arrangement to determine if the program can be enhanced to better serve the needs of the business.

Katten's Captive Insurance group consults with clients on the income tax considerations associated with a captive insurance program from both federal and state perspectives. We counsel our clients on the key components the Internal Revenue Service (IRS) and the courts look to in determining whether a captive insurance program will be respected for federal income tax purposes. We also advise on various insurance-related elections that may be available—particularly the 831(b) election for small captive insurance companies and the 953(d) election for foreign companies to be treated as US taxpayers. At the state level, our team counsels business owners on the application of self-procurement rules and the potential application of the direct procurement rules to the captive insurance company.

Our attorneys spend substantial time with clients addressing the ownership aspects of a captive insurance company. We design insurance programs to minimize any gift tax consequences of the transaction, allowing for an amount of leverage that is rarely found in transfer planning techniques. We also advise clients on how to use the ownership of a captive insurance company as a management incentive tool for key personnel and as a means to encourage implementation of significant risk management practices in the company.

Recognition

Insurance Law (National), 2014–2016
Insurance Law (Chicago), 2014–2017
Previous Next

Recognition

Insurance Law (National), 2014–2016
Insurance Law (Chicago), 2014–2017
Katten Websites   Careers  |  Alumni  |  Mobile Site
Contact Us   Offices  |  Media Center  |  People  |  Email
Legal Notices   Disclaimer  |  Privacy Policy  |  Attorney Advertising
Contact Us