Captive Management

A captive is a wholly-owned subsidiary insurance company of a non-insurance parent corporation whose primary purpose is to insure or reinsure the risks of the group of which it is part. The use of captive insurers significantly increased following the turmoil experienced in the global insurance market in 2001.

With guidance from Kingsbridge's experienced practitioners a captive is not difficult to establish and the process can be completed within months.

Kingsbridge can provide the following services:

• Captive feasibility studies
• Establishment of Captives
• Management of Captives in Guernsey
• Feasibility and establishment of PCCs
• Captive management offshore in other worldwide domiciles

There are a number of advantages to forming a captive and if designed correctly captive should enable the owners of parent companies to realise important financial management advantages including:

• Better loss control
• More efficient taxation management (albeit a declining benefit)
• Improved cash flow from lower premium volumes and captured investment returns
• Enhanced risk management capacity and flexibility
• Direct access to the reinsurance market
• Ability to customise cover.

For those companies which do not have the size or capital resources to establish a captive, the introduction of Protected Cell Companies (PCC) in 1997 has expanded the range of companies for whom captive insurance is a commercial option. By grouping together with other entities, small companies may self-insure via a captive PCC without having to bear the full costs of running the captive.

A PCC provides an economic method of ring fencing capital in a corporate structure. Shares in a PCC are divided into classes, linked to specific assets. Each cell of assets is protected from the liabilities affecting other assets of the company. Therefore creditors of one cell have no rights of recourse against assets held in other cells. English law does not recognise the concept of the PCC, necessitating their establishment offshore.

For more information also click on www.kingsbridgeriskmanagers.co.uk