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A captive insurance company is a company that is established with the primary objective of insuring or reinsuring the risks arising from the operating business of its owners.
Owning your own insurance company gives your business the opportunity to retain favorable, i.e. profitable, risks within the captive, and transfer the less favorable risks to the traditional insurance marketplace.
A captive insurance company, an insurance company owned by your business, or by you personally, allows for a more tailor-made policy that covers the exact risks of your business at a much lower cost than traditional third party insurers.
As an added bonus, the captive premium expense is tax deductible to your business and the premium income of the captive is favorably taxed, if at all. Over time, as these premiums accumulate, they can be invested to generate additional income which can then be distributed back to the shareholder.
In short, payments which were once a sunk cost can be turned into a new source of income.
Asset Protection: A captive is a very effective asset protection tool as the funds that you accumulate in your captive are insulated from creditors.
As underwriting profits accumulate within your captive it can issue a loan to your underlying business at much more favorable terms than those of a traditional business loan from the market.
With a captive you dictate the terms of your policy, hire your own attorney and administer your own claims. You can tailor your insurance policy to cover the real risks threatening your business which the retail insurance market might not be willing to cover or will not do so at a reasonable cost.
If you don’t want your captive to cover a certain risk (i.e. loss of business income due to natural disaster) you can access the reinsurance market directly and purchase coverage for these risks at much more competitive rates than by going to a third party insurer. You effectively cut out the middlemen who pad the costs to cover their overhead.
The Bahamas offers a number of advantages as a jurisdiction of choice to captive insurance companies.
The Insurance Commission of The Bahamas (ICB) has enacted accommodating insurance legislation that facilitates a variety of captive structures, including group captives, pure captives and cell captives. The ICB has a dedicated staff overseeing the establishment and ongoing regulation of numerous captive insurance companies..
Virtually any business of sufficient size, across a broad range of industry sectors, can implement a captive insurance company to more effectively finance the risks of its operations.
Museums/Jewelers
Private equity
Construction
Real Estate
Energy/Power
Retail
Food and beverage
Telecommunications
Healthcare
Trading
Heavy industry
Transportation
High tech/Biotech
Utilities
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Headquartered in The Bahamas, Allied is an independent financial services group that delivers bespoke solutions to meet our clients’ unique needs. The Alliance group of companies includes Allied Bank & Trust Limited, Allied Fund Services Limited and Allied Investment Advisers Limited, Allied Securities Ltd. and Alliance Bank & Trust Limited.
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by the Financial Services Authority.
