Captive Insurance & Captive Insurance Company Services by WMS,LLC  Captive Insurance Management , Captive Insurance Taxation , Captive Insurance Feasibility Studies , Captive Insurance Risk Pools , Captive Reinsurance , Captive Insurance Underwriting , Captive Insurance Accounting , IRS Letter Rulings, Turnkey Captive Insurance Services

Captive Insurance Company Start-Up and Operating Costs    

Captive Start-Up Costs Breakdown	Fee
Captive Feasibility Study (Business Plan) w  5 Year Pro Forma Financials	Included
Development of Insurance and Reinsurance Policy Forms, Premiums & Reserves	Included
File all Applications and Business Plans for Captive Incorporation and Licensing	Included
Domicile Fees for Captive Insurance License Application	Included
Incorporate Captive in Domicile	Included
File Form SS-4  and obtain a Federal EIN for Captive	Included
File an IRC section  953 (d) Election for the Captive	Included
Open a Bank Account for the Captive in a state where you conduct no business now	Included
Establish an US Office for Captive in a state where you conduct no business now	Included
Captive Start Up Cost Total	$    16,995
Annual Ongoing Operation Costs (excluding reinsurance and claims)	Fee
Annual Insurance License Renewal	$     1,500
Annual Corporate Registration Renewal	$        500
Annual Captive Management	$   14,995
Provide Registered Agent/Office in Domicile	included
Perform Annual Policy Issuance and Administration	included
Accept Contracts on behalf of Captive in Domicile	included
Maintain all books and records of captive in Domicile	included
Prepare & File Required Reports & Certifications with Insurance Regulators	included
Ensure ongoing compliance with all Insurance laws & regulations of Domicile	included
Perform Minimum Required Solvency Margin and Capitalization Analysis	included
Assist your CPA in preparation of Captive's Annual Financial Statements	included
Assist CPA in preparing Captive's summary version NAIC Annual Statement	included
Assist your CPA in preparing the Captive's annual Form 1120-PC tax return	included
Annual CPA Audit of Captive's Financial Statements 1	negotiable
Annual Operating Expense Total	$    16,995
Initial Capitalization of Captive (in an US Bank Account)	$  100,000
Annual Reinsurance and Claims Costs	%
Stop Loss & Other Reinsurance. as a % of  Written Premiums 2	6.0% - 8.0%
Loss Claims Expense as a % of  Written Premiums 3	See note
IRS Private Letter Ruling Request	Fee
WMS, LLC recommends that all client's request a PLR (Private Letter Ruling) for their Captive from the IRS pursuant to Rev. Proc. 2002-75 which affirms in writing that the IRS will treat the Captive as an insurance company pursuant to IRC section 831 and that all premium payments will be tax deductible as business expenses per IRC section 162. 4  ( payable to WMS, LLC ) IRS User Fee for Obtaining a Private Letter Ruling  (payable directly to IRS) 4 Total Cost for Obtaining an IRS  Private Letter Ruling	$     15,000  $     14,000  $     29,000

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¹ Some insurance domiciles waive the annual requirement to have the Captives Financial Statements audited by a CPA Firm. In such cases, the annual Audit fee would be zero. Otherwise, an annual audit should cost between $1,500 and $5,000.

²  In order to satisfy IRS Safe Harbor Rules governing the Taxation of Captive Insurance Companies, virtually every Captive will require at least some amount of Reinsurance. A Captive Insurance Company with annual written premiums of $1,000,000 or more should realistically expect annual Reinsurance Fees and Expenses to be 6.0% to 8.0% of its annual written premiums.          (WMS Captive Reinsurance Pools and Captive Reinsurance Services)

³  The Loss Claims Expense of the Captive will approximate your related risk loss % over time since you will be participating in a reinsurance pool class where all insureds of a particular Class have substantially similar historical loss ratios. Note, your actual annual related risk and unrelated risk loss cost ratios will be different, however, over the long- term, the average loss cost ratios of the related and unrelated risks which are insured by the captive should be approximately the same.

⁴  This fee represents the cost of having WMS draft and submit the PLR request on behalf of the captive and its related taxpayers. It does not include the payment of an IRS User Fee which is payable directly to the  IRS in order to obtain a Private Letter Ruling. The IRS User Fee is billed at cost and is subject to change each year at the sole discretion of the IRS. The IRS User Fee during 2011 is $14,000.  (Learn more)           

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