August 05, 2014

From Gary Osborne, USA Risk Group:

We recently formed an agency captive in the BVI in thirty days from start to finish for a South East MGA and the total formation cost was $10,000, capital was $100,000 and an LOC for the GAP to the Front. I disgaree with the "need" to pay monstrous consulting fees for captive formation.

There are many firms like ours that can assist in forming a captive with our compensation mostly derived from prospective management fees, reinsurance and fronting placement commission. We rarely do feasibility studies as the conflict is obvious. I have not seen formation costs on an agency captive exceed thirty thousand unless there is detailed tax planning involved. I would note that a more realistic time frame is three to four months rather than thirty days.

Gary Osborne
USA Risk Group