Risk Finance

Captive structures require the client to both assume and finance risk, which is typically frequent and predictable.  Under certain programs this is a role reversal from traditional insurance.  The client has now become the insurance company.

This change of roles can have a substantial impact on an insured’s financial statement. Traditional loss sensitive programs such as large deductibles require letters of credit or cash collateral but do little to change the accrual requirements for future claim liabilities.  In addition, these arrangements can severely impact a client’s working capital position for long periods.

Keystone’s expertise in captive insurance structures allows us to creatively solve this challenge using a variety of risk financing vehicles including:

• Single Parent Captives
• Segregated Cell Captives
• 831b Captives
• Member Owned Group or Association Captives

These vehicles, when structured properly, can significantly reduce the reliance on letters of credit to satisfy carrier security needs and, for qualifying insureds, can provide a tax efficient method to satisfy future claim obligations.

Keystone has developed proprietary modeling to help agents, brokers and their clients understand the nuances of this approach and effectively compare it to more traditional options they may be considering.

Modeling services include:

• Net present value ultimate cost illustration
• Multi year proforma financial statements
• Return on invested capital (ROIC)