CJM Fiscal Management offers captive insurance services

Highly profitable businesses and professional firms looking for another way to address higher income tax rates, while achieving better asset protection and wealth management should give serious thought to captive insurance. That's the recommendation of Charles Massimo, president of CJM Fiscal Management, an independent wealth management and financial advisory firm. According to Massimo, captive insurance is a powerful risk and wealth management tool that has been become even more advantageous due to recent regulatory rulings. It's a tool that the Fortune 500 companies have been using for years. "By creating a captive insurance company, a business or professional firm can replace its existing insurance and/or insure risks that are currently being self-insured," said Massimo. "As an added benefit, it affords some tax advantages for effective estate planning." He continued, "A key benefit of a captive insurance company is that insurance premiums are tax deductible. Instead of paying premiums to a large insurance company, the captive insurance company invests the premiums for the business/professional firm with the profits earned generally treated as long-term capital gains. With the proposed increase in tax rates on higher income individuals, finding more deductions will be even more beneficial." Here's how it works. A business, guided by their financial advisor and an experienced captive insurance manager, creates a captive insurance company to insure its risk. This captive can issue property and casualty insurance, as well as collect and invest premiums, and pay claims. Decisions regarding what risks to insure, how to invest premiums and pay claims are entirely up to the business. The company also decides how it wants the ownership of the captive insurance company structured and how profits should be distributed based on the owners' estate planning goals. In sum, a captive insurance company gives businesses some definite benefits. They include: * A reduction in insurance costs; * Cash flow improvements by retaining insurance premium dollars within the business and increasing investment income; * Better risk management and underwriting flexibility and profitability; * Wealth accumulation through its role in estate planning and asset protection; and * Tax savings as derived through the favorable tax treatment afforded insurance companies under Section 831(b) of the Internal Revenue Code. Not every business qualifies for a captive insurance company. Massimo noted that they benefit companies that are highly profitable, with taxable income in the $1.5 to $100 million range, and which have significant commercial insurance, and $250,000 or more of self-insured or uninsured business risk.