Finance, Investments, and Accounting
In the captive feasibility study, according to Rob Walling, principal and consulting actuary with Pinnacle Actuarial Resources, Inc., a business or group of businesses may be investigating forming a captive insurance company.
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.
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.
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.