Owned Captive Vs Segergated Cell

What works for you or your client?

Owned Captive vs. Non Owned (segregated cell)

Forming and owning your own captive has several disadvantages to using our Segregated Cell approach. They are as follows:

1) After tax dollars for the capitalization is required. This can be substantial.
2) As premiums written are increased, additional capital is require to meet the premium to surplus requirements.
3) A formal business plan needs to be filed in the domicile chosen. This is time consuming and expensive, requiring an audited claims report, lawyers, and accountants filing the plan.
4) Each domicile assesses taxes or fees on the captive.
5) Each year a certified audited financial statement needs to be filed in the domicile.
6) The domicile requires local directors and/or officers.
7) The owners will be required to declare the ownership on their U.S. Federal Income Tax forms.
8) Underwriting profits and investment income are taxable in the year earned. Just like ordinary U.S. corporations.

We will structure your lines of coverage whereby you will determine how much risk you want to take. That risk will be funds in a Segregated Account within the Bank of Butterfield (International Bank). The funds are not taxable while in the Segregated Account. Further, the funds are protected by an Act of Parliament known as the Segregated Accounts Act of 2000 (copy attached).

Since you are using our licensed insurance carriers, none of the items required for an owned captive, listed above, are necessary. You pay us a predetermined fee taken from the net premiums you will cede to our Bermuda facility. For that, we provide all services to include banking fiduciary, quarterly financial statements, interfacing with your claims adjusters, and maintaining proper compliance.

Our method is far simpler, less expensive, and more tax advantageous that getting involved with ownership of a captive. Of course, if you reasons why you want to choose the owned captive route we will form and manage it for you. Our captive management company is the largest independent manager in the World.