Ohio
21 November 2014
Reporter: Stephen Durham

Schroeder: so much more to captives than that


Setting up a captive insurance programme primarily for tax purposes could get owners and managers into serious trouble, according to president of Roundstone Insurance, Michael Schroeder.

These comments follow in the wake of news that, as of fiscal year 2015, Healthcare Services Group (HSG) will transition its workers’ compensation and certain employee health and welfare insurance programmes to HCSG Insurance, its wholly owned captive insurance subsidiary.

The resulting tax benefit of doing so has been claimed by HSG to be its main motivation, in the hopes that it will “favourably impact on cash and marketable securities by approximately $20 million upon full funding of the captive”.

The captive was originally formed in January 2014 to provide Healthcare Services Group with “greater flexibility and cost efficiency” in meeting its property and casualty and health and welfare needs, including health insurance requirements for individual client facilities mandated by the Affordable Care Act.

Additionally, upon completion of its reorganisation, the group said that it expects to accelerate, also for tax purposes, the deductibility of estimated current and future insurance claims.

Schroeder commented: “As opposed to going self-insured completely, with a captive you gain broader access to the reinsurance markets, which for workers’ compensation is very important.”

“Also, by forming a captive you bring some discipline into your claim reserving and claim management functions. Claims, loss control, underwriting, or actually pricing the risk to your operating companies—all of those things come with owning an insurance company and that’s what a captive is.”

HCSG Insurance currently provides general liability coverage to HSG. It did not respond to requests for comment.

More news
The latest news from Captive Insurance Times
Join Our Newsletter

Sign up today and never
miss the latest news or an issue again

Subscribe now
AIG to acquire Validus
22 January 2018 | New York | Reporter: Ned Holmes
AIG has agreed to acquire all outstanding common shares of Validus, the provider of reinsurance, primary insurance and asset management services, in a deal worth $5.56 billion
South Carolina welcomes 15 new captives
19 January 2018 | Charleston | Reporter: Becky Butcher
The South Carolina Department of Insurance has licensed a total of 15 new captives in 2017
A.M. Best withdraws SARRG ratings
19 January 2018 | Oldwick | Reporter: Ned Holmes
A.M. Best has withdrawn the credit ratings of SARRG, after the company requested to no longer participate in the rating agency’s interactive rating process
Regions Insurance promotes Mike Breedlove
19 January 2018 | Alabama | Reporter: Ned Holmes
Regions Insurance has appointed Mike Breedlove as its new executive vice president of property and casualty operations
Advantage opens Vermont office
18 January 2018 | Vermont | Reporter: Ned Holmes
Advantage Insurance has opened a new office in Vermont to support its growing captive insurance services business
Tennessee captive premiums exceed $1 billion mark in 2017
18 January 2018 | Nashville | Reporter: Ned Holmes
Tennessee-domiciled captive insurance companies exceeded $1 billion in written premiums in 2017 for the first time, according to year-end figures from TDCI
JLT IM hires new senior account manager
17 January 2018 | Vermont | Reporter: Ned Holmes
JLT IM has appointed Jocelyn Lyman as a new senior account manager