Captive Insurance Services and Solutions - WMS, LLC , Captive Insurance Planning , Captive Insurance Taxation , Captive Insurance Feasibility Studies , Captive Insurance Risk Pools , Captive Reinsurance , Captive Insurance Management , 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 w Multi-Year Cost/Benefit Analysis, etc.	$     4,995
Development of Insurance and Reinsurance Forms, Limits and Premiums	$     3,750
File all Applications and Business Plans for Captive Incorporation and Licensing	$     3,750
Domicile Fees for Captive Incorporation and Issuance of an Insurance License	$     4,115
Misc. out of pocket expenses	$        385
File Form SS-4  and obtain a Federal EIN for Captive	$          25
Open an US Bank Account for the Captive	$          30
Establish an US Office for Captive in a state where you conduct no business now	$        250
File the 953 (d) Election for the Captive	$        195
Less:  Promotional Incentives and Group Discounts	$    (2,500)
Sub Total	$    14,995
Ongoing Operation Costs (excluding reinsurance and claims)	Fee
Annual Insurance License Renewal	$     1,500
Annual Corporate Registration Renewal	$        500
Annual Captive Management	$   12,000
Provide Registered Agent/Office in Domicile	included
Prepare Annual Financial Statements	included
Prepare NAIC Annual Statement	included
Prepare & File Required Reports & Certifications with Insurance Regulators	included
Prepare annual Form 1120-PC tax return with CPA review	$       995
Annual CPA Audit of Captive's Financial Statements (1)	negotiable
Sub Total	$    14,995
Initial Capitalization of Captive (in an US Bank Account) (2)	$  100,000
Annual Reinsurance and Claims Costs	%
Stop Loss & Other Reinsurance. as a % of  Written Premiums (3)	5.5% - 8.0%
Loss Claims Expense as a % of  Written Premiums (4)	See note
Request a PLR (Private Letter Ruling) for the 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 deductible as business expenses per IRC section 162. (5)	$     25,000

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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 5.5% to 8.0% of its annual written premiums.

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. It also includes the payment of a $10,000  User Fee to the IRS for reviewing and issuing a PLR. 

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