Capstone Associated - Avrahami v. Commissioner

Articles

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Why Cash Flow Is Key for Captive Insurers

Cash is king. This is especially true for captive insurers, since they typically have fewer margins for error. Captive board members should understand their captive's cash flow, so let's discuss some key areas for exploration and understanding.
May 17, 2018 Read More
Lynn Sheils-SF

Watch Out for this Captive Insurance Claims Handling Pitfall

Lynn Sheils, general counsel of EWI Reinsurance, warns that the most obvious pitfall a captive management team can run into is paying claims that are not covered under the captive policy. There is often an overlap of staff, directors', and officers' responsibilities between the captive owner (parent) and the captive itself. Second, the captive insurer exists at the discretion of the parent, and it is often difficult for the captive to tell the parent that a claim is not covered.
May 14, 2018 Read More
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Inflation: Captive Insurers, Beware of What You Wish for

Beware of what you wish for—captive insurers are impacted by inflation in a number of ways, and the results are typically not good. The benign inflation of the past 5 years may have led captive insurers to become complacent. Here is why you need to reexamine your inflation risk mitigation strategy.
May 10, 2018 Read More
Michael Maglaras-SF

Brexit and Lloyd's: Is this the Beginning, or Is It the End?

Michael Maglaras, president of Michael Maglaras & Company, considers what Brexit means for the Lloyd's of London market and for those with captive insurance companies in the Lloyd's market. While Mr. Maglaras believes that Lloyd's is not going anywhere, he expects some changes.
May 07, 2018 Read More
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5 Reasons We May Never See Another Hard Insurance Market

Five reasons we may never see another hard market: an intellectual discussion all captive insurers should be having. For captive insurers that came of age during hard market conditions, the end of market cycles, if true, has significant implications. This blog post, reprinted with permission of James Twining, offers a peek into the factors driving this possibility.
May 02, 2018 Read More
Bruce Wright

Insights into the Avrahami and Feedback Decision

On August 21, 2017, the US Tax Court decided two companion cases, Avrahami v. Commissioner and Feedback Insurance Company v. Commissioner, involving various issues surrounding the formation and operation of a captive insurance company in Saint Kitts. Bruce Wright of Eversheds Sutherland reviews the federal analysis by the Tax Court.
April 30, 2018 Read More
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Expected Adverse Development as a Measure of Risk Distribution

Risk distribution is a prerequisite for an insurance transaction to be deemed to have occurred and therefore achieve deductibility of premium for tax purposes. Captive owners seeking to determine whether their captive has sufficient risk distribution have a new methodology to consider in expected adverse development.
April 25, 2018 Read More
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Nevis as a Captive Domicile: An Insider's Perspective

Atlas Management provides an insider's point of view for those considering the Caribbean island of Nevis as an offshore captive domicile. As a captive domicile, Nevis has many advantages compared to other offshore jurisdictions says Atlas Management.
April 23, 2018 Read More
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Strategy and Risk: 5 Key Questions for Captive Insurers

One of the major roles that a captive insurer's board of directors fills is setting the correct strategy and risk profile for the entity. But many boards struggle with this responsibility. Our 5 key questions can help your board get a better understanding of how to deal with these issues.
April 18, 2018 Read More

Recent News

John English Named CEO of Aon Captive and Insurance Management

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Effective June 1, 2018, London-based John English will become the CEO of Aon Captive and Insurance Management. Mr. English is currently the chief operating officer of Aon Captive and Insurance Management and managing director of Aon Captive and Insurance Management of Europe, the Middle East, and Africa.
May 18, 2018 Read More

New Vermont Law Allows for Affiliated Reinsurance Companies

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A new law in Vermont offers an onshore affiliated reinsurance alternative to insurance companies affected by the recent imposition of the Base Erosion Anti-Abuse Tax on reinsurance ceded to offshore affiliates. The law provides for a more favorable reinsurance alternative for US companies conducting business in offshore jurisdictions.
May 18, 2018 Read More

Fitch: US Property Casualty Insurers Set for Improved Performance

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Following a rough 2017, US property and casualty (P&C) insurers are positioned for better performance this year in the commercial insurance market sector, according to Fitch Ratings' new report, "U.S. Commercial Lines Market Update (Underwriting Loss Should Reverse in 2018)." Fitch said that commercial lines represent approximately 41 percent of US P&C industry net written premiums.
May 17, 2018 Read More

Microsoft Captive Insurer Ordered To Cease and Desist

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The Washington State Office of the Insurance Commissioner has ordered an Arizona captive owned by Microsoft that provides coverage to the Microsoft group of companies to cease and desist transacting insurance business in the state and soliciting and writing insurance coverage for Washington insureds.
May 16, 2018 Read More

Connecticut Agency Captive Bill Sent to Governor for Signature

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Connecticut's General Assembly recently passed Senate Bill 377, authorizing agency captive insurance companies. Specifically, the bill states that agency captives are owned or controlled by licensed insurance agents or producers to insure risks that are sold, solicited, or negotiated through the captive's owners or controllers.
May 16, 2018 Read More

XL Group Announces Leadership Details Ahead of AXA Integration

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XL Group recently shared new details surrounding plans affecting XL Catlin and AXA leadership. Full details of the proposed leadership team will not be available until after the AXA-XL deal closes in the second half of 2018. As reported in March 2018, AXA will acquire 100 percent of XL Group Ltd.
May 15, 2018 Read More

Ocean Risk Management: Aligning Public Policy with Business Interests

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XL Catlin and the Stimson Center are creating a predictive model to help identify the developing coastal nations that are most at risk from climate change. The joint effort seeks to better understand how governments and businesses should respond to ocean risks by mapping existing and projected oceanic changes.
May 15, 2018 Read More

Fitch: Global Reinsurers Expected To Rebound from Catastrophe Losses

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The sector outlook for global reinsurance remains negative given intense market competition, the influx of alternative capital that continues to pressure pricing, and persistently low investment yields that strain reinsurer profitability. Reinsurer profitability is expected to improve, reflecting the normalization of catastrophe losses and marginally improved pricing, according to Fitch Ratings.
May 14, 2018 Read More

OOIDA Risk Retention Group Wins LRRA Preemption in Georgia

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On May 7, 2018, in a unanimous decision, the Georgia Supreme Court affirmed in Reis v. OOIDA Risk Retention Group, Inc., that the Liability Risk Retention Act (LRRA) preempts state insurance laws that regulate the business of foreign risk retention groups in Georgia.
May 11, 2018 Read More

Severe April Storms in US Result in $1.5 Billion in Catastrophe Claims

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Aon Benfield's monthly "Global Catastrophe Recap" report reveals that five separate storm systems caused severe thunderstorms across the United States during April 2018. Total combined economic losses from convective storm-related damage in the United States during the month were estimated at $2.3 billion.
May 11, 2018 Read More

JLTIM Beefs Up Captive Practice with 4 New Senior Executives

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JLT Insurance Management (USA) LLC (JLTIM) recently announced the addition of four new senior executives to its US team. Stacy Riley arrives at the firm as assistant captive practice leader, while Susan Muscat, Rob Ramos, and Mary Richards all join as senior account executives.
May 10, 2018 Read More

The VCIA Captive Conference Registration Is Open!

VCIA Annual Conference 2018  
The Vermont Captive Insurance Association (VCIA) invites you to its annual captive insurance conference set for August 7–9, 2018, in Burlington, Vermont. VCIA will host 1,100 people from all over the world to experience its high-quality educational offerings and take advantage of its numerous networking opportunities.
May 09, 2018 Read More

Cayman Islands Government Displeased with Anti-Money Laundering Bill

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The Cayman Islands government is unhappy with the Sanctions and Anti-Money Laundering Bill amendment that was recently accepted by the House of Commons. The amendment requires the British Overseas Territories, but not the Crown Dependencies, to establish public registers of beneficial ownership information by no later than December 31, 2020.
May 09, 2018 Read More