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

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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

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.   

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 does not include the payment of an $11,500  User Fee directly to the IRS for reviewing and issuing a PLR. 


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