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Captive Studies

Captive Feasibility Study

We are well qualified to perform all actuarial work for your captive. Hayden Burrus, Principal Actuary, is authorized to certify captive reserves by the Vermont and South Carolina Insurance departments. In addition, we have worked with captives domiciled in many other jurisdictions.

The first step a company takes when forming a captive is a captive feasibility study. A captive feasibility study is a projection of the future balance sheets and income statement of the captive insurance company made by an actuary. The projections are based on data and information gathered from the executives forming the captive as well as publicly available sources. The primary audience for a captive study is the regulator, rather than the company executive team.  Each regulatory jurisdiction has its own concerns with regard to captive insurers. Most of those concerns center around solvency. Regulators want to be assured that the captive insurer is formed with a sound business plan that will enable it to pay all of the insurance claims as well as other financial obligations it is responsible for.  The captive feasibility study is submitted to the insurance regulator before the captive is permitted to write any insurance business.

Each year a captive insurance company is required to contract with an actuary to prepare a Statement of Actuarial Opinion (SAO). This statement accompanies  an actuarial analysis that calculates the amount of insurance reserves that are required to pay all of the insurance claims that the captive insurer will be responsible for. The analysis must even consider insurance claims have not yet been filed for accidents that have already occurred. The SAO  is a letter from the actuary to the regulator stating whether the actuary believes that the insurance reserves of the captive are adequate to pay all of the outstanding insurance liabilities of the captive.

Our tagline is “Complex Calculations Made Easy to Understand”. We know that it is not enough to provide accurate, sound results. We also make them understandable. Understandable results allow business executives to easily share our conclusions with other key stakeholders.

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