P. Bruce Wright Videos

Bruce Wright

Nationally recognized as an authority in the captive insurance industry, Mr. Wright counsels companies on a wide range of tax and insurance law issues, including formation of commercial offshore privately and publicly held entities.

Contact Info

The Grace Building, 40th Floor
1114 Avenue of the Americas
New York, NY 10036
BruceWright@eversheds-sutherland.com
(212) 389-5054

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Nationally recognized as an authority in the captive insurance industry, Mr. Wright counsels companies on a wide range of tax and insurance law issues, including formation of commercial offshore privately and publicly held entities. He also works with clients on the development of structured financial products such as securitizations, swaps, options, and similar products used as alternatives to conventional risk financing mechanisms such as “rent-a-captives” and “cell companies.”

Representing domestic and foreign-based clients, Mr. Wright advises property and casualty insurance companies, guides the formation of single-parent/group captive insurers, and counsels risk retention groups. With more than 4 decades of experience, he has helped clients successfully navigate an array of complex federal income tax issues such as debt or equity characterization, engaging in U.S. trade or business issues, continuity of interest, passive foreign investment company status, controlled foreign corporation status, limitations on the use of net operating losses, cancellation of indebtedness income, consequences of debt modification, original issue discount, federal excise tax, and state premium tax on premiums paid to foreign investors.

Mr. Wright also holds the Chartered Property Casualty Underwriter (CPCU) designation and speaks regularly at captive industry conferences.


  • Why Is Tax-Deductibility of Captive Premiums Important?

     
    Captive Tax Issues | P. Bruce Wright | Partner | Eversheds Sutherland (US) LLP

    Tax-deductibility of premiums is a key issue for captive insurance companies, and in this video P. Bruce Wright of Eversheds Sutherland (US) LLP discusses why. In most situations, if the premium collected by a captive insurance company is not considered to be part of an insurance contract (as far as the Internal Revenue Service is concerned), the result is an inability for the captive insurance company to write off its reserve—which is taken out of that premium—as a deduction. This generally means that the benefit from that deduction is spread out in time, which is less desirable. For 831(b) captive insurance companies, the benefit of being able to write off reserves as a deduction is lost.



  • Tax-Deductibility of Captive Insurance Premiums

     
    Captive Tax Issues | P. Bruce Wright | Partner | Eversheds Sutherland (US) LLP 

    As discussed in the video “Why Is Tax-Deductibility of Premiums to a Captive Important?” by P. Bruce Wright of Eversheds Sutherland (US) LLP, captive insurance companies would prefer their premium to be tax-deductible. This video explains that in order for any insurance premium to be tax-deductible, the insurance contract must have all of the attributes of an insurance policy and the subject of the policy must be insurable for tax purposes. Also, an actual economic transfer of the burden of risk must take place, and the insurer must have sufficient risk distribution to allow payment for losses to come from that premium.



  • “Insurance Risk” as a Tax-Deductibility Requirement

     
    Captive Tax Issues | P. Bruce Wright | Partner | Eversheds Sutherland (US) LLP

    As touched on in the video “Requirements for Tax-Deductibility of Captive Insurance Premiums” by P. Bruce Wright of Eversheds Sutherland (US) LLP, it is important to determine whether or not the exposure being "insured" is indeed insurable for tax purposes. One of the most important factors in this undertaking is whether or not there is an insurable interest on the part of the "insured," which is not the case for situations involving derivatives, for example. Several other instances that would not be considered insurance from the point of view of the Internal Revenue Service are coverage for business risks (which are completely under the control of the "insured"), residual value, or retroactive insurance.



  • Risk Shifting as a Tax-Deductibility Requirement

     
    Captive Tax Issues | P. Bruce Wright | Partner | Eversheds Sutherland (US) LLP

    As touched on in the video “Requirements for Tax-Deductibility of Captive Insurance Premiums” by P. Bruce Wright of Eversheds Sutherland (US) LLP, there must be an actual economic transfer of the burden of risk for an exposure to be considered insurable for tax purposes. At the same time, the insurer must have sufficient risk distribution, either via a certain percentage of unrelated business or via a certain minimum number of subsidiaries, as determined by the Internal Revenue Service and the courts, to adequately cover payment of losses with the premium collected. Several high-profile cases that have significantly impacted the way that this requirement is interpreted, and likely will result in further clarification in the courts of the involved issues, are also reviewed in this video.



  • Taxation of 831(b) Microcaptives and IRS Concerns

     
    Captive Tax Issues | P. Bruce Wright | Partner | Eversheds Sutherland (US) LLP

    In this video by P. Bruce Wright of Eversheds Sutherland (US) LLP, the special case of taxation of microcaptive insurance companies is addressed. Section 831(b) of the Internal Revenue Code applies to companies with less than $1.2 million in premium income (microcaptive insurance companies) that are less likely to have enough risk distribution via unrelated business and more likely to need pooling arrangements with other companies. These companies do not pay taxes on their underwriting income and do not take a deduction for their losses. All of the requirements normally in place for a captive insurance company’s premium to be tax-deductible also apply to 831(b) companies. Additionally, recent concerns have become a focus within the Internal Revenue Service, such as the types of exposures being insured by these companies, as well as whether there is an actual transfer of risk in these situations.



  • Taxation of Cell Captives

     
    Captive Tax Issues | P. Bruce Wright | Partner | Eversheds Sutherland (US) LLP

    P. Bruce Wright of Eversheds Sutherland (US) LLP discusses the evolution of taxation for cell captive insurance companies in this video. This issue has been problematic for the Internal Revenue Service (IRS) to deal with, so much so that the IRS has actually requested comments from concerned parties about proposed regulations on taxation of the individual cells in a cell captive insurance company, while deductibility of premiums for those companies would be handled by separate regulations. Domestic cell captive insurance companies are treated differently from offshore companies. Many of these issues have yet to be resolved by the IRS at this time.