Captive domiciles both in the U.S. and abroad began reporting their 2011 year-end results, and most posted growth numbers reflective of an uncertain and still stagnant global economy.
Here in the U.S. many states that have captive legislation reported little or at best nominal growth in new captive formations and associated premiums.
However, one bright spot in an otherwise dismal 2011 performance has been the continued growth of the 831(b) captive, or “mini captive,” which has become the captive of choice for middle market companies for their alternative risk planning needs.
Captives have been around for over 50 years and are no longer considered a cutting edge planning tool. It is estimated that over 90% of Fortune 500 companies utilize captives, and nearly half of all U.S. states now permit captives to domicile in their jurisdiction. Over the last two decades, one specific type of captive, the 831(b) captive, which is closely related to the larger, 831(a) captive and commonplace among Fortune 500 companies, continues to gain traction among middle market businesses
As more middle market companies incorporate alternative risk planning into their operations, the result has been an uptick in formations of 831(b) captives and the U.S. domiciles that regulate their operation. Delaware, for example, a top 10 U.S. domicile for captive formations, breached the 100 captive mark in early 2011, with most new formations being 831(b) captives. Utah and Vermont, also top U.S. domiciles, similarly reported a significantly high ratio of 831(b) formations for 2011. As reported in the industry publication Captive Review for their 2011 Survey, Top 10 Leading Captive Domiciles, “Many of the emerging domiciles are growing off the back of 831(b) captives.”
Capstone Associated Services, Ltd. is a turnkey captive services provider and captive insurance manager that specializes in the formation and management of 831(b) captives. Capstone is among the top former of 831(b) captives in the nations, and among the top formers in domiciles such as Delaware, for example. The company continues to realize continued growth among middle market clientele.
“In today’s challenging economy and uncertain tax climate, a captive insurance company offers middle market businesses multiple benefits,” says Stewart Feldman, CEO and General Counsel for Capstone. “Capstone has long been recognized as experts in alternative risk and captive insurance planning, who offer middle market companies many advantages, including lowering insurance costs, enhancing control over cash flows and investments, improving risk management and loss control, and providing a tax-efficient mechanism for funding future losses.”
“2011 was another record setting year for Capstone’s middle market insurance division, where the combined total premiums breached the $50M threshold among the CAPTIVE_FORMATIONS
small captive insurance company’s we manage on a turnkey basis,” says Clete Thompson, Director of Business Development for Capstone. “The year concluded with the licensure of 13 new 831(b) captive insurance companies. This number bested that of 2007 when the division licensed 12 new captives.”
“The formation of captives among middle market companies over the past decade has been consistent and incremental,” said Thompson.
The owners of Capstone’s captives are located in 28 different states, with insured operations throughout the United States.
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