Business situations and structures change daily, but often captive insurance companies are left to run their course once setup. Coverages are often on “auto-renew” status, changes in a domicile's view of captives are ignored, regulations change without your knowledge and sometimes what you think is happening with your captive isn’t.
Additionally, on December 18, 2015, President Obama signed the PATH Act, which will increase the premium limitation on captives electing treatment under Section 831(b) as well as create a new diversification requirement to limit a captive’s ability to be used as a wealth transfer vehicle.
Further, recent activity indicates that that the IRS is interested in captives that are not correctly structured or may be perceived as setup purely for tax avoidance.
RK Advisors, LLC can conduct a strategic review of your captive called a Captive Check-Up to ensure all of your bases are covered. This comprehensive assessment will help ensure:
Compliance with current Domicile regulatory requirements
Business Plan is on file with Domicile and Captive is in compliance with Business Plan
Annual Reporting Requirements are being met
Investment Portfolio (including loans and life insurance) are within acceptable parameters
Collateral/Capitalization method and amount remain appropriate
Policies issued reflect risk being retained by captive
Compliance with IRS Requirements to ensure proper tax treatment
Elements of Insurance, Risk Transfer, Risk Shifting and Risk Distribution are being met, with specific emphasis on Third Party Risk
Ownership structure will be compliant with PATH Act Diversification requirement
Review of current “hot-topics”
Current coverage remains appropriate and within risk-tolerance of owners
Maximization of premium limitations
New revenue opportunities are reviewed
Additional risk management opportunities are being explored
Are performing in accordance with their agreements and charging an amount within industry norms.
Have appropriate policies and procedures in place to ensure the safe and effective operation of your captive
After a thorough review of your captive, RK Advisors will provide you with a detailed analysis of our findings and may further provide a list of suggested improvements, an implementation plan for those suggestions and provide benchmarks for future review against the performance of the captive.