831(b) Captives

831b captive insuranceCapstone specializes in forming captives for the mid-market under the 831(b) tax election. Forming an 831(b) captive insurance company allows businesses to build a dedicated asset base to fund risk financing needs, to improve cash flow, provide investment income and to level the playing field with large companies that use their captives to gain a competitive advantage. Forming a captive also helps to redirect focus on loss control and the building of a consolidated company-wide risk management strategy.

831(b) captive insurance companies are the perfect option for mid-market companies that qualify.

New Captive Insurance Services831(b) - Tax on Insurance Companies Other Than Life Insurance Companies
IRC Section 501 – Exemption From Tax On Corporations, Certain Trusts, Etc.
More Sec. 831 Information

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Who is the Ideal 831(b) Captive Insurance Client?

Privately-owned businesses in the energy, transportation, construction, manufacturing, medical industries and others can cover risks specifically designed for their business operations using 831b micro captives. Profits resulting from effective loss control measures, reduced expenses and favorable loss experience can be retained by the captive, paid out as dividends or loaned as part of a comprehensive investment portfolio.

Qualifications for forming 831(b) captives:

  • A closely-held, profitable business
  • Pre-tax profits of $2 million+ per year
  • Business built with after-tax dollars
  • Desire to decrease ownership “what ifs”
  • Desire to increase income tax efficiencies
  • Desire to increase ownership benefits

Does this sound like you? Contact us to get started.

What Kinds of Coverages Can I Have?

Many types of insurance policies are available in the conventional marketplace, but they often carry substantial exclusions. Owning an 831(b) captive insurance company means that you have control over what coverages are written into your policy. Risks that are considered uncommon or industry-specific can be covered without standard exclusions. The comprehensiveness of captive insurance is a draw for many companies that are serious about covering risks while improving cash flow.

831(b) Captive Insurance Regulation

831(b) captive insurance companies must operate according to different sets of regulatory provisions: 1) the Internal Revenue Code and 2) the domicile where the insurance company has been established

The formation and ongoing management of 831(b) captives must be overseen by experienced professionals that understand the insurance, tax, and legal aspects of the captive. Because the captive is a regulated insurance company, our clients uniformly prefer to have a third party administer the captive on a turnkey basis, which has developed familiarity with the issues, laws, and guidelines needed to ensure its success. For the same reason, regulators demand ongoing professional management.

Individuals who are familiar with captive insurance have heard the term “captive manager” used quite often. A captive manager provides administrative services for the regulators—they don’t draft insurance policies for the captive, which is generally the function of a senior insurance or corporate lawyer.

They do not price policies, which is typically done by a property & casualty underwriter. They also do not purport to be responsible for state or federal tax issues—the function of a tax lawyer. The Capstone Team offers these services as part of its turnkey solution. We have expanded to become the #1 captive planning services provider for the mid-market. We fully support our clients in every facet.

Other Statutes Under the Internal Revenue Code

Capstone will work with each client to assess their business and level of risk. We will determine which statute the business falls into under the Internal Revenue Code—Sections 831(a), 831(b), 501(c)(15) or 501(c)(6).

Capstone Associated is the leading 831(b) micro captive insurance planning company for mid-market businesses. Call us today at WEB_TEL or complete the short form below to learn more about our turnkey services.

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