Houston Captive Insurance
Since 2005, CIC Services, LLC has helped business owners in Houston, TX keep more of their hard earned profits by owning their own insurance company, known as a captive insurance company.
The core benefits of a captive insurance company are:
- Improve Overall Risk Management Strategy
- Keep More Of Your Hard Earned Money
- Amass Significant Wealth
- Protect Assets
- Enjoy Favorable Tax Treatment
- Potentially Pass Wealth To Heir
Consider a “rainy day fund.” A “rainy day fund” is certainly preferable to having no “rainy day fund.” These funds are usually be set aside as retained earnings in the business or as savings by the owner or owners. In either case (retained earnings or savings) both are set aside using after-tax dollars. A “rainy day fund” can be reserved to cover risks or threats to the business. This approach to risk management can also be described as informally self-insuring risk. In essence, informally self-insuring risk is choosing to take the risk and risk “taking the hit” should a loss or adverse situation occur.
The formation of a captive insurance company can help business owners because captive insurance companies are real insurance companies, and they operate like real insurance companies. As such, their reserves set aside to pay claims are not taxed. Small insurance companies, defined as receiving annual premiums of $1.2 million or less, may make an 831 (b) tax election and are not taxed on their reserves for claims or their underwriting profits. Hence a business or business owner is able to formally insure risk via a captive insurance company, pay $1.2 million in premiums annually to the captive insurance company, and the $1.2 million paid to the captive is not taxable.
Assuming a combined tax rate of 50% (federal and state), a business or business owner can essentially double the funds set aside in a captive insurance company versus the funds set aside in a “rainy day fund” to pay for losses incurred by the business. This enables the business owner and the business to keep more of their hard-earned money.
Reach out to us by phone or e-mail to discuss if a captive is right for your business.