A captive insurance company is created to insure the risks of a specific business. Even though a business can transfer risk to an insurance carrier, exclusions in conventional insurance contracts often force business owners to absorb the hefty costs of a claim. Fortunately, owning a captive can minimize or even eliminate these exclusions.
To create a captive, an individual typically hires an attorney or an experienced captive management firm who establishes an insurance company. Once licensed, the captive functions just as most insurance companies do. It can sell insurance coverage (but generally such sales are only made to its owners), receive premium dollars, invest those premiums to pay claims and, when needed, approach the reinsurance market to purchase reinsurance to cover losses. These coverages allow the owner to simultaneously manage its risk and potentially minimize its current insurance cost by having the captive assume that risk.
If its insurance claims are low, the captive could accumulate significant money, thus creating a profit center for its owner. The structure of the captive will determine the manner in which the income of the captive is taxed during both the accumulation and the payout phases. Of course, a properly structured captive can minimize the tax impact of gains realized by the captive.
Want the key to our captive factory? Management Services International (MSI) was founded with the goal of assisting our clients in certain aspects of their financial lives. We provide the most personalized services available, which has earned us a reputation for excellence in our industry. MSI is an expert in Captive Insurance Companies. We form, manage and provide numerous services for our captive clients.
We offer two tiers of management services so you can focus on your core business:
The Basic Service Suite streamlines the basic services you need in managing your captive. With one point of contact, we manage all Accounting (bookkeeping, reconciliations, monthly financials statements.) Plan Creation of Business plan, including 5‐year projection, Investment policy and all required information per jurisdiction. Annual Underwriting Review Analyzing overall risk, determine exposure and overall benchmark analysis. Claims Management Processing, review and analysis of the claims.
The Full Service Suite gives you the peace of mind knowing every aspect of your captive is managed. With our full service suite we manage all of the above as well as Annual Audits, including Certified Audits Performed Annually by third party licensed CPA firms contracted with our firm, IRS Taxes* Preparation and filling of 1120pc, 7004, 8832, 8886 as well as any other applicable IRS form, review for approval and filling to IRS. Annual Statements for any Jurisdiction and additional form requirements Preparation and filing of jurisdiction annual statements of the Department of Insurance and any other required form. Actuarial Study Preparation**, Statement of Actuarial Opinion (if required) Preparation of Actuarial Study by a group of selected actuary firms. Statement of Actuarial Opinion if requested by the jurisdiction. Ceding Summary and Declaratory Pages Creation of Ceding Summary and Declaratory Pages, including full analysis of IBNR. Premium Gross Tax Returns* Preparation and Filling of Premium Gross Tax Return for the Department of Revenue if applicable.
- *The amount of tax liability will be paid by the client.
- **Prepared by an actuary contracted by our firm.
For more information or to schedule a free consultation, please contact Amye King by phone at 847-284-2969.
Starting January 1, 2017, the limits for an IRC 831(b) election will increase from $1.2 million per year to $2.2 million per year. So, what is an 831(b):
* 831(b) effectively allows a small insurance company currently to receive up to $2.2 million per year in premiums, without paying any income taxes on those premiums.
* The 831(b) election has no effect on the deductibility of the premiums paid by the operating business to the Captive. Premiums are otherwise deductible; they may be deducted by the operating business just like any premium payments to a Captive.
* This creates a current tax deduction of up to $2.2 million for the operating business once premiums are paid to the Captive. In turn, the Captive does not pay any income taxes on the receipt of those premiums.
Management Services International (MSI) are expert captive managers. We manage captive insurance companies which can also be called closely held insurance companies. MSI manages and forms captives both in onshore and offshore domiciles. We work closely to manage risk in these insurance companies by having annual underwriting reviews. These reviews generally consist of analyzing overall risk, determine exposure and overall benchmark analysis. Management Services International specializes in 831b captives while serving as well as a back office for other captive managers by not only preparing their full accounting such as bookkeeping, reconciliations, monthly financial statements but also with Annual Audits, Property & Casualty Insurance IRS Tax forms including 1120pc, 7004, 8832 and 8886 as well as any other applicable
IRS forms for the Captive Insurance Companies. We work closely with the department of insurance as well as other regulatory bodies to form captives for our clients. As captive managers, we work closely with our actuarial firms and underwriters in preparing feasibility studies, pricing memorandums, claims management, ceding summaries and declaration pages for the insurance company. Even though we specialize in small insurance companies (831b), we also manage bigger insurance (831a) companies with the same items mentioned in the previous sentence and more.
MSI has a notable presence in North Carolina where we redomiciled a number of captives from offshore. Our President, Mr. Jeremy Colombik, is an experienced, licensed financial professional. His accomplishments include being named as a Top of the Table member since 2008 for Life Insurance sales as well as a financial specialist for executives & business owners. Having Top of the Table membership is the highest designation that a Life Insurance producer can obtain. He is a graduate of Western Illinois University, having obtained a Bachelor of Business degree with a major in Finance. Jeremy is a licensed CPA and a member of the American Institute of Certified Public Accounts, and the North Carolina Association of Certified Public Accountants. Furthermore, he has been in the captive industry for over 10 years and is a member of the Captive Insurance Companies Association and the North Carolina Captive Insurance Association. In addition, he serves as Chairman for the North Carolina Captive Insurance Association. Jeremy is the President of Management Services International (MSI). MSI currently manages over a hundred businesses that are utilizing a captive insurance company structure. MSI currently is one of the largest captive managers in the state of North Carolina. Jeremy specializes in IRC Sec. 831(b) captives. He is a sought-after speaker for professional groups, such as; CPAs, lawyers and financial advisors, on how a captive structure works and could be a great benefit to their clients. There are many tasks that need to be completed due to client or regulatory requirements and that is why it is important to have an industry leader handling this such as MSI. As a diversified captive manager, we generally work with Pure Captives and Cell captives among other types of captives. MSI services Captive clients nationwide and has offices in Illinois, North Carolina and Puerto Rico.