Captive Insurance


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Overview

Anderson Kill’s attorneys have decades of experience in the organization and operation of captive insurance companies, whether included within a controlled corporate group or owned by and serving otherwise unaffiliated entities. We have advised on a variety of legal, structural, and regulatory issues that arise in the formation of captives. We assist in transforming a client’s financial risk into insurance financial risk transfer through the formation of a captive. We advise on fronted, direct and reinsurance structures and review capital deployment strategies and deal with various captive types and structures.

Anderson Kill stands alone among other law firms in its ability to provide conflicts-free advice to policyholder-owned captives, given the firm’s longstanding commitment to representing only policyholders and not insurance companies.

The team is headed by Marshall Gilinsnky, who handles the insurance litigation issues and Andrew Walsh, who is responsible for corporate issues.

Our captive insurance services are comprehensive and include handling:
  • Risk distribution and risk-shifting analyses;
  • Captive formation for property and casualty coverage;
  • TRIA, earthquake, nuclear and other disaster perils and coverages;
  • Captive corporate governance;
  • Captive insurance company audits;
  • Trust agreements and collateral arrangements;
  • “Cell” captives/planning with respect thereto;
  • Dissolution and winding-down of operations through tax free reorganizations;
  • Liquidations of captives via merger involving IRC Section 965 requirements for one time dividend repatriation;
  • “Stop-loss” group accident and health plan coverage;
  • Disputes against reinsurance companies, fronting insurance companies, and insurance company owned captive managers regarding the handling of claims, disbursements, collateral, reserves and terminations or relationships.

Unlike other firms, Anderson Kill’s practitioners approach captive formation and advice from a policyholder’s perspective.  Anderson Kill is the premier policyholder's law firm and our attorneys also have practice and industry experience in domestic and international taxation, insurance coverage, corporate and securities law. Anderson Kill is familiar with registration requirements, industry landscape, operational costs and other crucial factors in the ten or so domiciles in which captives operate, so our clients can make informed decisions and enjoy a smooth transition in the formation and operation of a captive. We understand that companies launch captives for a variety of reasons, so we deliver legal advice based on the needs and business objectives of our clients.

In conjunction with other consultants such as actuaries and CPAs, we assess our clients’ business and legal objectives, historical loss experience, the commercial market availability, capitalization requirements, corporate culture, appetite for risk retention and the client’s overall business goals in order to set a course designed to meet the client’s needs. In this regard, we review business plans and feasibility studies against regulatory requirements, funding and governance matters specific to the domicile in which our clients have chosen to operate the captive, all with the goal of optimizing a client’s captive insurance opportunities. Leveraging our experience with financing entities, we are able to structure very effective contractual relationships with both affiliated parties and third parties. We also have experience in advising with respect to reinsurance agreements and reinsurance matters.

When captives encounter disputes on claims – either with reinsurers, fronting insurance companies or other counterparties – Anderson Kill is able to put its decades of insurance coverage litigation experience to work for our clients. Few law firms have the experience of Anderson Kill in coverage litigation and reinsurance arbitration, or the ability to represent their clients free of insurance industry conflicts of interest. Moreover, no firm can match the extensive database of insurance company briefs, advertisements and other materials compiled since the 1980s by Anderson Kill’s Insurance Litigation Support Services department – materials that frequently expose double-standards employed by the insurance industry when it comes to the handling and payment of claims.

Below is a list highlighting some of our previous Captive Insurance related projects:
  • Advised with respect to (i) trust agreements created by an insurer to provide security to the Company and a Cayman “cell” captive for the insurer’s indemnity or reinsurance obligations and (ii) use of “cell” captives generally.
  • Advised with respect to adequacy of risk distribution and risk-shifting as to policies issued by captive to two brother/sister affiliates.
  • Advised with respect to and organized Bermuda captive, within multi-generational estate plan, to provide property and casualty coverage to 12 family-owned construction companies.
  • Advised with respect to a full range of corporate governance issues.
  • Advised with respect to and organized captive to provide terrorism, earthquake, nuclear and other disaster, and excess liability coverages for the DJ group. Advised as to winding-down of operations through tax free reorganization and surrender of license.
  • Advised with respect to liquidation of Bermuda Captive via merger into dormant Vermont captive so as to effect ultimate distribution of Bermuda funds into Dupont group entity in accordance with Section 965 IRC requirements for one time dividend repatriation from a controlled foreign corporation.
  • Worked and advised on collateral trust agreements for existing captive and worked and advised on formation of a TRIA captive.
  • Advised with respect to the addition of “stop-loss” group accident and health plan coverage to lines written by family-owned captive for family-owned business.
  • Advised with respect to and organized captive to provide terrorism, earthquake, nuclear and other disaster, and excess liability coverages for News Corp.
  • Advised international construction company reformation of a captive insurance company to insure a host of liabilities, warranties and certain benefits. Thoroughly reviewed the business circumstances of our client and customized and implemented a captive program that appropriately fit the needs of the tax, compliance, corporate governance and risk factors involved in addition to wealth-transfer issues.
  • Advised upon dispute between SunTrust's captive and its AIG reinsurer and AIG captive manager regarding the handling of disbursements, reserves and termination clauses.
  • Advised with respect to adequacy of risk distribution and risk-shifting where ultimate ownership of multiple nursing homes is by two individuals operating through several holding partnerships.
  • Advised with respect to feasibility of utilization by asbestos liability (victim claims) trusts to provide director and officer liability insurance to trustees and managers of the trusts.
  • Advised and represented Wyndham's captive insurance company regarding reinsurance claims dispute, claims payment issues and depositions of its executives.