Captives operate at the intersection of insurance law, tax law, accounting, actuarial science, risk management, and asset management. The Captive Manager selected to represent your captive should understand the important role each of these issues play, and serve as the quarterback to all your captive’s service providers. You’ve already got a business to run, the Captive Manager should make owning and operating a captive simple and turn-key for you. Furthermore, Captive Managers work directly with the Domicile Regulators on behalf of your captive, so they must be well respected by, and have a strong working relationship with the Regulators where your captive is domiciled.

Captives often write a number of specialized lines of coverage which are difficult (or impossible) for their related businesses to insure commercially. Selecting a qualified Actuary and Underwriter who have experience working with captives and ERM programs to identify, design, and price the necessary coverages for your business is paramount.

The “left side” of your captive’s balance sheet (assets) must support the “right side” (liabilities). The primary liabilities your captives faces are potential claims, the timing and amount of which are uncertain. Your captive’s Asset Management Advisor should understand the importance of deploying its assets to support its liabilities, resulting in: better financial outcomes, fewer moving parts, increased compliance track records, and a captive that is easier to Regulate and Audit.

Only a small percentage of the nation’s attorneys have experience working with captives, and even fewer are familiar with the intricacies of forming and/or operating them. The Captive Attorney you choose should have both an in-depth knowledge of the ever-changing captive regulation landscape, and the capabilities of designing a captive to meet the needs of your business. Moreover, the Captive Attorney should be independent of all other professionals you’re working with, ensuring their fiduciary duty is not impaired.

Almost all jurisdictions that allow for the formation of captives require annual audits be performed by a prequalified CPA. Captives must report their financials on a hybrid of GAAP and Statutory accounting methods, and your captive’s CPA must understand those complexities. Additionally, the CPA you choose should be unrelated to all other professionals you’re working with to ensure their independence isn’t hampered.

Captives can be formed onshore or offshore, with a growing number of jurisdictions adopting captive enabling legislation every year. The regulatory environment of the Domicile you choose can make all the difference in your captive ownership experience. Too much regulation can be over burdensome, while a lack of regulation can leave your captive vulnerable. The Captive Manager you choose should be able to provide guidance on an appropriate level of regulation for your captive, and the Domicile(s) that meet your needs (link to “Choosing an Appropriate Domicile”).