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Steps in Forming

What is involved in forming a captive?

Step I. Research and Gather Information

  • Gather underwriting information
  • Incorporate underwriting information into a financial model to determine proposed captive’s financial viability
  • Review all financing options
  • Obtain commitment of management
  • Know objectives
  • Determine level of risk retention
  • Have sufficient premium volume

Step II. Due Diligence and Decision Making

  • Engage outside consultant/manager and actuary to develop financial models that will provide suggested retention limits and capitalization requirements
  • Begin preparing thorough feasibility study
  • Develop business plan to include marketing, financial, and operational sections
  • Determine qualified underwriting partners and begin discussions (if applicable)
  • Have initial meeting with regulator(s)

Step III. Organization and Licensing

  • Complete and file captive’s license application with Kentucky
  • Key Elements
  • Contract with captive management company
  • Complete licensing application
  • Formation documents
  • Feasibility study and business plan
  • Proforma financial statements 
  • Reinsurance documents or commitments (if applicable)
  • Incorporate and capitalize captive

Step IV. Begin Operations

  • Capitalize
  • Company receives certificate of authority
  • Begin business