Straight answers to the questions we get asked.

Any operating business with casualty risks that regular commercial insurance does not cover well. That spans dealerships, construction, dairies, distributors, energy, equipment dealers, farm and ranch, healthcare, hospitality, manufacturing, mining, physician and dental groups, professionals, real estate development, restaurants, and service providers, among many others.

No. Your commercial policies stay in force. The captive supplements them, filling the gaps left by deductibles, exclusions, and limitations. Cancelling commercial coverage in order to inflate premiums to a captive for the same coverage is improper, and we will not structure it that way.

No. Ownership of a captive can carry estate-planning benefits, but that alone never justifies forming one. The decision is made solely on the management of business casualty risk. Any estate-planning benefit is incidental to the insurance purpose.

Better control of risk, an incentive to control losses, access to coverage the market will not write, diversification of risk, the capacity to honor warranties, and a fund for future casualty losses that belongs to you.

The actuary's study typically takes two to three weeks once the questionnaire and documents are in. Forming the company typically takes two to four weeks after that. The full sequence is on the How It Works page, and once you are a client it is a live board in your portal.

Business casualty risks that cannot be adequately covered by regular commercial insurance. Among them: brand protection, business interruption, construction defects, crop, cyber and data breach, deductibles, employment practices, policy exclusions, food-borne contaminants, independent-contractor exposure, legal expense, litigation defense, loss of a key customer, employee, or supplier, mold, pollution, products liability, professional liability, regulatory risk, reputation, supply chain interruption, and warranties.

Personal risks. Employee risks such as disability, which are personal in nature. Life and health insurance. And routine business decisions: an inaccurate bid, a poor hire, the wrong marketing agency. Those are judgments, not casualties.

Credentialed actuaries review the risks and exposures, decide which are appropriate for the captive, set the premium for each using insurance-industry data, and issue a written report. Premiums are based on risk, never on the income of the insured business.

No. Premiums are based on risk and set by the actuary. They cannot be altered late in the year in response to the insured company's income projections. This is one of the clearest markers of a properly managed captive.

Real risk. A captive that does not genuinely bear risk is not insurance. The actuary's study, the pooling arrangement, and the claims process all exist so that the captive's risk is genuine, plausible, and reasonably possible, which is what the courts and the regulators look for.

A small insurer that qualifies under the relevant section of the Internal Revenue Code and makes the election pays federal income tax only on its investment income. Underwriting profit is not taxed, which is what allows an insurer to build reserves. The requirements must be met every year, and the premium limit is indexed and changes over time. Ask us for the current figure rather than relying on anything printed.

Yes. An annual federal return on the specialized form for insurance companies, prepared and filed by the insurance manager. The small-insurer election is made with the first return and applies going forward as long as the requirements are met each year.

Yes, and they matter most when family members are involved. In broad terms, if family members own both the operating business and the captive, the ownership of the two must mirror each other within a small tolerance, with attribution rules for ownership through trusts and entities. Non-family co-owners generally satisfy the test easily. Ownership structure is decided with counsel before formation, not after.

A captive formed in a domicile outside the United States can elect to be taxed as a U.S. corporation, computing its federal income tax exactly as a domestic company would. The election is made once, overseen by the insurance manager.

The captive is a corporation with a board and officers. The owners elect the board, the board oversees the officers, and the officers select one or more suitable investment advisors. For most clients that advisor is the one they already trust.

Investments appropriate for an insurance company, which means safety and liquidity first: government and corporate bonds, preferred and common shares, letters of credit, certificates of deposit, money-market funds, within concentration limits and the liquidity standards regulators expect of insurers.

No. Life insurance is not an appropriate investment for a reinsurer. It impairs the liquidity the company needs to pay claims.

Insurance profits may be distributed to the owners of a captive. Distributions of insurance reserves or unearned premium are not appropriate. The distinction is kept by the insurance manager's books.

A licensed third-party administrator. It forms and licenses the company, prepares the business plan and financial statements for the regulator, files the tax return and the elections, keeps the reserves, monitors the accounts, administers claims through a claims committee, and serves as the company's liaison with the regulator.

Claims are submitted to the insurance manager and reviewed by a claims committee under an established process. They are never handled ad hoc, which is what distinguishes an insurer from a savings account.

Fortress consults: we assess whether a captive fits, design the structure, and shepherd the formation. Fortress does not provide legal, accounting, actuarial, underwriting, or investment services. Those are performed by the independent professionals named on every page of this site.