This document provides information about group captive insurance programs. A group captive is a reinsurance company owned by policyholders that allows them to manage risk and control insurance costs. Key benefits include transparency of costs, reduced premiums over time, and the ability to build equity from unused premiums. The structure involves paying annual premiums to cover operating costs and claims through "A" and "B" funds. Unused premiums can be returned as dividends or kept as equity. The Owen-Dunn agency specializes in alternative risk programs like captives, with over a decade of experience placing over 100 clients.

1. License # 0522677
Group Captive Insurance
ProgramsGroup Captive Insurance Programs

2. What is a Group Captive?
A reinsurance company owned by its
stockholders/policyholders
Proven method for managing risk
Insurance with a predefined best case and
worst case (risk/reward)

3. What a Group Captive is Not
Self Insured Group
 There is no “Joint and Several Liability”
exposure
A solution for companies with excessive
claims

4. Benefits of Group Captives
Complete transparency
• Know where every penny of every dollar
is spent
The ability to control costs of insurance
• Workers’ Comp, Liability & Auto
 Reduced Premiums over time
AND……

5. The Greatest Benefit of a Group
Captive
The ability to turn the expense of insurance
into an asset
 Dividends are paid with unused premium
 Can be returned to the company or
stockholders

6. Conventional vs. Captive
PREMIUMS
100%
Claims
Fund
61%
Conventional Captive

7. Captive Structure
Premium
 Operating costs
 Claims Fund (“A” Fund and “B” Fund)
Operating costs
 Insurance policy, re-insurance, claims
management, loss control, captive
management

8. Captive Structure, con’t.
Claims Fund = “A” Fund and “B” Fund
“A” Fund $0-$125,000
 Frequency layer
 75% of total Claims Fund
“B” Fund $125,000-$350,000
 Severity layer
 Risk sharing layer
 25% of total Claims Fund

9. Best Case vs. Worst Case
Best Case:
No claims; pay Operating Costs only
Worst Case:
Pay Operating Costs
+ “A” Fund
+ “B” Fund
+ Additional “A” Fund

10. Claims & Premiums
Transparency ($300k premium example)
Operating Costs
$117,000
Claims Fund
$183,000
“A” Fund $135,000
“B” Fund $ 48,000
39% 61%

11. Example of Earning Equity
(Claims Fund of $183,000)
Paid claims
•Year 1: $ 25,000
•Year 2: $1,000,000
•Year 3: $ 10,000
•Year 4: $ 25,000
•Year 5: $ 50,000
Equity
•Equity Retained: $158,000
•Equity Retained: ($0)
•Equity Retained: $173,000
•Equity Retained: $158,000
•Equity Retained: $133,000
For any one year:
Premium Minimum Cost: $117,000
Premium Maximum Cost: $435,000
Total Equity in 5 years:
$622,000

12. Year 2 Assessment Example
“A” Fund assessment $135,000 (pd quarterly)
50% paid 1st
year after assessment
30% paid 2nd
year after assessment
20% paid 3rd
year after assessment
In the conventional market, your ex mod would rise 52
points for three years at a cost of $153,000 a year, or
$495,000!

13. Financials
Equity Summary Feb. 2014
44003 44005 44010 44012 44027
Capital 36,000 36,000 36,000 36,000 36,000
Cash Sec 0 39,558 0 220,288 137,062
Inv. Income 28,727 40,589 12,313 106,434 44,273
________________________________________________________________________________
64,727 116,147 48,313 362,722 217,335
Underwriting
2008/9 (32,488) (35,451) (29,290) (18,731) 0
2009/10 41,462 12,058 18,056 12,716 (7,330)
2010/11 38,403 67,857 12,293 (10,976) 3,404
2011/12 (4,442) 35,815 61,567 5,142 (23,293)
2012/13 86,648 54,442 113,732 18,807 103,908
2013/14 91,683 49,682 125,602 94,585 464,163

14. Financials, con’t.
44003 44005 44010 44012 44027
Total Equity 285,947 300,550 350,273 437,483 758,186
Less unpaid assmt. 9,612 (5,938) (7,922) (131,702) (119,082)
Less closing costs 0 0 0 0 0
Letters of credit 290,628 55,448 170,162 0 595,189
Dividend payable 0 0 0 0 0
Due from shareholder 0 0 0 0 0
Net Equity 586,187 350,060 512,513 305,781
1,234,293

15. Captive Member Commitments
Premium: Paid quarterly
Risk Control Workshops: two annual workshops
Shareholder Meetings: two annual meetings

16. Captive Membership Cost
One-time Capitalization
 $35,900 Preferred Share, $100 Common
Share
Collateral (2x your “A” Fund)
 Cash Security, letter of credit, or
combination
* Capitalization, cash security, and premium
earn interest income

17. What sets Owen-Dunn Apart?
More than a decade of experience working
with alternative risk programs
Access to more than 30 alternative risk
programs
Have placed more than 100 clients into
alternative risk programs
Our agency’s single largest focus

18. Service Providers