Micro-Captive Insurance Companies

Benefits:

  • Mitigates risks for which insurance is too expensive or not available
  • Helps protect assets from business creditors and litigation claims
  • Potential for tax savings and wealth transfer

Who's most likely to benefit:

  • Companies with uninsured risks such as high deductibles, policy exclusions, product recall, product warranty, litigation, environmental or loss of key suppliers and customers
  • Companies with significant and stable cash flow (typically annual taxable income of $1 million or more and gross revenues of $10 million or more)
  • Closely held, privately owned businesses

Micro-captive insurance companies are small, privately owned insurance companies formed by an organization to cover risks which may be too expensive or impossible to cover with conventional insurance. Often owned by the same individuals who own the operating company, the micro-captive is a separate entity which is paid (tax-deductible) annual premiums of up to $1.2 million from the operating company to cover its business risks.

Flexibility in ownership of the micro-captive insurance company, management of investments and distributions create opportunities for favorable tax treatment to the owner(s), transfer of wealth to future generations, or benefits for key executives of the operating company.

AGH’s professionals can help companies understand when micro-captives can be beneficial, what the risks and opportunities are, and walk owners and executives through the process of creating and administering a micro-captive.