Going round in circles

With captives there are several sine qua nons. This article focuses on two of them; namely that a captive must be able to operate – and indeed does operate – as an independent entity (separate and apart from its insureds or owners), and that it must rest on a sound financial footing.

In Moline Properties (319 U.S. 436 (1943)), the US Supreme Court sets forth the still vibrant rule that unless a corporation is a sham it must be viewed and respected as a
separate taxable and corporate entity, and that transactions between related parties must be recognised as valid if there is some economic substance to the transaction and
the essential elements of arm’s length bargaining are present.