R L Captive Solutions

1
R L Captive Solutions

• Cost Control Presentation
• by
• Travis Lantis

R L Consulting, LLC.
2
What is a Rent-a-Captive?

• Where a sponsor (Captive Insurance Company) will
  rent its license capacity for a fee to other
  alternative risk participants
• One of the leading insurance alternatives today
• Can be used as part of an overall risk management
  strategy to help reduce the cost of commercial
  insurance by avoiding administrative overhead and
  capturing underwriting profits and investment
  income

• R L Consulting, LLC.

3
What are the Benefits?

• Long term control of insurance cost
• Controlling the claims process
• Direct access to reinsurance markets
• Better tailor your risk management needs

• R L Consulting, LLC.

4
Your Partners
Your Partners

• R L Consulting
• KPMG International
• Sitnal Insurance
• International Advisory Services (IAS)
• Gallagher Bassett
• Sparta Insurence

• R L Consulting, Inc.

5
KPMG International

• Global Leader in Audits and Accounting
• Audit 4.72 billion
• Tax (Legal) 3.31 billion
• Advisory Services 2.96 billion
• Total 12.16 billion
• Up 13.4 from 2002-2003

• R L Consulting, LLC.

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IAS International Advisory services
LTD .

• IAS Was Formed in 1981
• Over 180 Insurance Companies Under Management
• Over 4 billion in annual written premium
• Over 7 billion in invested assets
• The Worlds Largest Independent Insurance
  Management Company

• R L Consulting, LLC.

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Fronting Reinsurance

• Sparta Insurance
• Unbundled Alternative Risk Transfer
• A- (Excellent) rating from A.M. Best
• Fronting
• Reinsurance
• Underwriting
• Expertise
• Technology Platform

• R L Consulting, LLC.

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Other Partners

• Who
• Consultant Broker
• Fronting Carrier
• Third Party Administrator
  
• Reinsurance Partners
• Captive Managing Firm
• CPA Actuarial Firm
• Outside Legal Firms
• Bank Investment Firm

• What
• Experience and Resources Required
• Provides Certificate of Insurance
• Claims Management
• To Take Excess Risk
• Day to Day Accounting Regulatory Compliance
• Audits
• Captive Domicile Corporate Document
• Banking and Investments

• R L Consulting, LLC.

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Importance of our Captive Insurance

• Premium Stability
• Greater Flexibility Risk Management Control
• Completely Funded Program
• Built in Risk Management Programs
• Priorities at work

• R L Consulting, LLC.

10
Disadvantages

• Capital Requirements to assume deductible
  responsibilities
• Obligation of claims management

• R L Consulting, LLC.

11
Underwriting Profit
Insurance Premium
15 Profit
55 Expected Losses
40 Actual Losses
40 Expenses
40 Expenses
5 Taxes
5 Taxes
Conventional Insurance
Insurance Profit Center

• R L Consulting, LLC.

12
Facts

• Work Comp
• Premiums up 50 in the last three years
• 10 to 30 of Work Comp Claims in the Commercial
  Market Place are Fraudulent
• Risk Management
• Liability
• 2003 233 Billion Industry Wide was spent on
  Claims Lawsuits
• Up 27.4 Billion from 2002
• Risk Management
• A good risk management program will reduce the
  above affect

Provided by Tillinghast Accounting Actuarial
Firm

• R L Consulting, LLC.

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Lines of Coverage

• General Liability
• Workers Compensation
• Directors and Officers
• Professional Liability

• R L Consulting, LLC.

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Learn This Lesson

• Nothing is a sure thing
• Segregated Cells A Must
• Do not jump from carrier to carrier
• Stay on top of your loss control
• Risk Management is Key
• We will provide a comprehensive RISK MANAGEMENT
  program for you.

• R L Consulting, LLC.

15
Premium WC
Liability - Case Study

• Loss reserve fund 2,320,000
• Capital 580,000
• Expenses 2.1 million
• Total funding 5.0 million
• Large Ded. 100,000 per claim
• Aggregate 2.9 million

• R L Consulting, LLC.

16
Results WC
Results Liability Study

• Claims Paid - 880,000
• Loss Reserve - 672,000
• IBNR Reserve - 448,000
• Reinsurance - 750,000
• Fronting Co. - 900,000
• Expenses - 1,150,000
• Total - 4,800,000
• Underwriting Profits 200,000

• R L Consulting, LLC.

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Long Term Care WC Study
Long Term Care WC Study

• 2000 Mod rate 1.36
• 12,000,000 Payroll
• 1,020,000 Premium
• 367,200 Mod Calculation
• 1,387,200 Including Mod

• R L Consulting, LLC.

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Long Term Care WC Study
Long Term Care WC Study

• 2005 Mod rate .69
• Implementation of our Risk Mgmt. program
• 14,000,000 Payroll
• 1,190,000 Premium
• -368,900 Mod
• 821,100 With Mod Calculation

• R L Consulting, LLC.

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Dividends
Underwriting Profits

• The first date a possible disbursement will be
  considered is 36 months after each policy
  effective date
• Based on underwriting and loss reserves
• Disbursements are subject to board approval
• One disbursement per year will be considered
• Option to reinvest to lower premiums

• R L Consulting, LLC.

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End of the Day

• Identify your opportunities, assess the risks and
  qualify the return
• Make sure your loss control is in place
• Have a good idea as to the function and probable
  structure
• Find and employ excellent partners
• Manage the big picture while understanding the
  details.
• Have fun

• R L Consulting, LLC.

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R L Consulting Team

• We bring a host of personnel to the table to
  make this a one stop shopping for your insurance
  solution. The professionals we are partnered
  with bring a wealth of experience to you and are
  entrenched in the captive marketplace. Let
  ReRide be the solution for you!

• R L Consulting, LLC.

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The Next Step

• Complete a Comprehensive analysis to determine if
  you qualify for this Risk Management Strategy?
• We will Require
• 5 years loss runs (valued within 3 months of
  policy inception)
• Audited Financial Statements last 2 years
• Details of Large Claims over 25,000
• Historical and prospective exposure
  information
• Risk Management Program Information
• Should you qualify-more information will be
  required at that time

• R L Consulting, LLC.