Possible End of Bush Era Tax Cuts Leaves Businesses with Few Choices According to Attainium Capital Development Advisors

Share Article

Captives, a Unique Type of Insurance Coverage, Remain the Silver Lining in the Cloud.

As the end of 2012 draws near, businesses and professional firms are scratching their heads wondering what they can do to mitigate the erosion of their wealth from potential taxation and future litigation. Fortunately, there is a solution for these companies. Congress enacted regulations which afford profitable businesses and professional firms the ability to develop their own small insurance companies, otherwise known as captives.

Captives can provide insurance coverage for fortuitous risks that are typically self-insured. Examples include loss of revenue stemming from a breach of contract, uncollectible accounts receivable, weather-related events, a loss of customers, regulatory changes, subcontractor default and nearly any type of adverse impact to a business’ supply chain. They are most beneficial for companies that have a $5 million - $350 million in revenues, and that have a desire to build insurance protection and wealth outside of their operating company.

Captives are guided by the US tax code. At their core, captives enable businesses to develop needed insurance reserves in a self-insured manner. Generally, a business’ premiums are tax deductible and may even grow tax-free, as long as they are properly priced and comport with the clearly defined regulations, revenue rulings and jurisprudence.

“Captives may be owned or controlled by clients, yet are treated separately from clients’ operating companies,” says Brad Barros, Managing Director and co-founder of Attainium Capital Development Advisors, LLC (Attainium). “They have their own capital, surplus, and reserves. Liabilities previously maintained on a business’ balance sheet could be transferred to the captive, with premiums paid to develop reserves for future possible contingencies. If the captive has a successful underwriting experience and is profitable, it may be liquidated in the future, in a manner similar to that of other corporations (capital gains).”

So if you are one of those companies scratching your head this season, consider captives as a solution to your problems.

About Brad Barros:
Brad Barros is Managing Director and co-founder of Attainium Capital Development Advisors, LLC (Attainium). Over the past 35 years, Attainum’s founding principals have worked with hundreds of successful privately and publicly held businesses, designing and implementing benefit, insurance and risk-management solutions effectuating more than $4 billion of benefits with programs involving more than $300,000,000 of recurring annual insurance premiums.

Contact: Kate Connors

Share article on social media or email:

View article via:

Pdf Print

Contact Author

Kate Connors
Email >
Visit website