A captive insurance company is a formalized form of self-insurance with the specific objective of insuring risks emanating from their insured/sponsor group (or groups) and in some instances the risks of the group's customers. The captive insurance company's insureds have direct involvement and influence over the captive's major operations, including underwriting, claims management, and investment policy.
Forming a captive insurance company is an alternate form of risk management by which companies have more control over how they are insured.
The State of Tennessee recently adopted legislation establishing Tennessee as an onshore domicile for captive insurance companies. If your goals could be advanced by the formation of a Captive Insurance Company, we stand ready to support you throughout this process.
There are several types of captives, depending on business need, type, industry, etc.
So why should you consider forming a Captive? There are several key benefits to consider, including:
First Tennessee can provide a wide range of financial products and services to help facilitate Captives – from deposit accounts and letters of credit to investments and trust services. Our location is key because Tennessee offers several favorable benefits to the creation of Captives, including:
Working with a number of other Tennessee-based Captives today, First Tennessee believes we have the experience and first-hand knowledge to help you as you form a cost-effective Captive to serve the risk management needs of your business.
First Tennessee provides products and services to help facilitate the formation of Captives domiciled in Tennessee and other states, including the following financial solutions:
BizEssentials Cash Management Package
BizEssentials Cash Management Package conveniently combines BizEssentials Checking with options for important treasury management services to serve the Captive's specific and unique business needs. Each BizEssentials Cash Management Package is built around the simplicity and convenience of one of four checking products based on the Captive's average number of transactions per month and unique requirements for Service Options.
A Premium Rate Option for excess liquidity reserves is available in a BizEssentials Savings Account through a daily sweep feature from and to the checking account.
Depository Agreement Account
First Tennessee understands that minimum regulatory capital must be maintained by a Captive Insurance Company. These requirements can be met by placing securities in a First Tennessee custodial account or depositing funds in a BizEssentials Savings Account with a Premium Rate Option. First Tennessee will file periodic reports with the Tennessee Department of Commerce & Insurance concerning assets held in these accounts.
Letters of Credit
Many Captives choose to meet their dedicated minimum capital requirements temporarily with a letter of credit instead of a cash or securities deposit. Also, reinsurance companies may require a support letter of credit.
Being among the oldest financial institutions in the U.S., First Tennessee is able to structure a credit facility to meet your specific letter of credit needs in a quick and cost effective manner at commercial reasonable terms.
Additionally, our experienced commercial bankers work with professionals who support the Captive Insurance Industry such as Captive Advisory/Management Companies, attorneys specializing in the formation of Captives, and with CPAs/Actuaries.
First Tennessee understands the financial needs of sponsors wishing to form their own captive. This decision takes research, planning and trusted relationships. First Tennessee has established contacts with professionals who can help you decide if a Captive fits your business objectives. Beyond the resources found here, for more information on captive insurance companies in Tennessee, consider the following resources:
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