1. Captives 101: Stabilizing Your Organization’s
Future Through Captive Formation
Theresa Severson, Vice President of Insurance & Risk at RPAI HOLDCO Management, LLC
Megan Ogden, SVP at Marsh Captives Solutions
Anne Marie Towle, Global Captive Team Leader, Hylant

2. Captive Insurance Defined
A captive insurer is generally defined as an insurance company that is wholly owned and controlled by its insureds; its primary purpose is to insure the risks of its owners, and its insureds benefit from the captive insurer’s underwriting profits.
Captive insurance is utilized by insureds that choose to put their own capital at risk by creating their own insurance company, working outside of the commercial insurance marketplace, to achieve their risk financing objectives.
Captives are essentially a form of self-insurance whereby the insurer is owned wholly by the insured. They are typically established to meet the risk-management needs of the owners or members.
Captive insurance companies have been in existence for over 100 years

3. A Captive is not …..
A magic solution to every insurance problem
A tax planning solution
A piggy bank
A quick fix

4. Captive Advantages and Opportunities
Reduce Insurance Costs:
Retention of underwriting profits
Claims settlements
Casualty premiums are deductible
Risk Management
Customize Coverage
Claims Management
Loss control and monitoring
Balance Sheet Preservation
Asset Protection
Owner control of pure captive
Flexible ownership structure
Investment Opportunities

5. Common Captive Coverages
Workers’ Compensation Employment Practices Liability
General Liability Liquidated Damages
Products Liability Cyber Risk
Auto Liability Excess Liability
Property, including wind and quake Intellectual Property
Professional Liability Medical Stop Loss
Subcontract Default Employee Benefits
Pollution Terrorism
Warranty

6. Types of Captives

7. Types of Captives

8. Captive Development Process

9. Captive Feasibility Study

10. Company Data

11. Industry Information Insurance Industry Commercial Rates
Development Patterns
Loss Ratios
Benefit Level Change Factors
Other
Inflation Trends
Specialized Expertise; eg NOAA, Ponemon Institute

12. Insurance Program Design

13. Domicile Selection

14. Domicile Selection

15. Captive Application Process
License
Captive Owner
Meeting with DOI
Service providers
Board of Directors
Biographical affidavits
Start up fees
Captive Manager
Captive Application
Business Plan
Application assembly
Task manager
Attorney
Name reservation
Article of Incorporation
Bylaws
FEIN
Corporate Agreements
Domicile
Insurance
Department
Actuary
Loss/Funding Projections
Financial Forecasts

16. Operating a Captive

17. Operating a Captive – Service Team
Client
Banker
Actuary
Insurance Brokers
Department of Insurance
Captive
Manager
Claims Administrators
Auditor
Tax Advisors
Legal Counsel
Investment Advisors

18. Questions?