Pro Forma Financials' Place in the Captive Formation Process

Billy Onion

June 24, 2020

Billy Onion

A new Captive Thought Leader Video featuring Billy Onion, associate actuary, Milliman, titled "Pro Forma Financials for Captives," has recently been added to the Captive.com video library.

Pro forma financials are a significant part of the captive formation process and provide an assessment of the expected financial results for the proposed captive insurance company, according to Mr. Onion.

They are typically prepared on a gap basis and generally include a balance sheet and income statement, a statement of cash flows, and other financial schedules to evaluate the expected performance for the captive, says Mr. Onion.

Pro forma financials are based around some key assumptions, including initial capital, expected premium, loss ratios, investment returns, and expenses, Mr. Onion says. Among other things, the pro forma financials project future expected income and surplus levels for the proposed captive, explains Mr. Onion.

Whether the audience is internal management or regulators, pro forma financials are a great tool for captives, according to Mr. Onion.

(Mr. Onion is pictured above.)

June 24, 2020