Most of you reading this are already quite familiar with what a captive insurance company so this article will focus on a bit of fun, mainly the best things about having an captive insurance group.
1. Just as with any traditional insurance company, a captive insurance company definitely has the ability to amass a giant war chest of cash and assets. This can be particularly helpful if the owner of the main business needs to tap it to avoid a potentially much bigger disaster. While there are certainly tax disadvantages if someone chooses to “cash out the captive”, the fact remains that the possibility is still there to do so, which can give the smart business a huge leverage in an all too common unlevel playing field.
2. The captive insurance group can be used to aid in retaining top employees. This is done because if a key employee is offered a stake in the main company, it can often get messy, particularly when it comes to other employees. However, the usual case is that the only people who pay heed to the captive are the owners themselves. By offering a stake in the captive, the same benefits can be gleaned with less of a messy result.
3. Maintaining a captive insurance group is quite possibly one of the best strategies for protecting assets that man ever devised. This is because for each dollar that goes to the captive from the parent business, there is a reduction of that same dollar in the assets of the original business, but the assets are still owned by the same people. But since they are not technically the same business, they cannot be confiscated by creditors.
These are just a few of the great reasons why having a captive insurance group is a wonderful idea and a favorite thing of business owners everywhere!