White paper explores the risks and benefits of forming a captive
NEW YORK (May 24, 2010) — The Risk and Insurance Management Society (RIMS) and Ernst & Young announce the release of Thinking of Forming a Captive? Don’t Get Caught Short, the latest installment of Risk Insights, their ongoing series of white papers. The paper weighs the pros and cons of forming a captive and guides the risk professional through the evaluation process.
The use of captive insurers to insure the risks of a parent group has grown in popularity worldwide and, for some companies, is a major component of their risk management and financing strategy. With many factors in play, including a company’s size, risk appetite and risk exposures, to determine whether forming a captive is the right answer, risk managers should know how to conduct a captive feasibility analysis. Thinking of Forming a Captive? Don’t Get Caught Short leads the risk manager through preparing for, conducting and evaluating such an analysis.
The paper delves into:
- how to determine where a captive could reasonably participate in the assumption of risk
- the process of managing the capital necessary for forming a captive
- steps for conducting an actuarial analysis
- how to perform a relevant tax analysis
- alternatives to captives, and much more.
The paper was authored by James Bulkowski, an executive in the insurance and actuarial advisory services practice of Ernst & Young LLP’s Financial Services Office.
This issue of Risk Insights is available to RIMS members free of charge here. Launched in 2008, this white paper series will continue through 2010.
Note: Members of the media who would like to obtain a copy of the paper may contact Amy Benson at abenson@RIMS.org or (212) 655-6059.