R L Captive Solutions Cost Control Presentation by Travis Lantis R L Consulting, LLC.

R L Captive SolutionsR L Captive Solutions

Cost Control PresentationCost Control Presentationbyby

Travis LantisTravis Lantis

R L Consulting, LLC.R L Consulting, LLC.

What is a Rent-a-Captive? What is a Rent-a-Captive?

Where a sponsor (Captive Insurance Where a sponsor (Captive Insurance Company) will rent its license & capacity for Company) will rent its license & capacity for a fee to other alternative risk participantsa fee to other alternative risk participants

One of the leading insurance alternatives One of the leading insurance alternatives today today

Can be used as part of an overall risk Can be used as part of an overall risk management strategy to help reduce the management strategy to help reduce the cost of commercial insurance by avoiding cost of commercial insurance by avoiding administrative overhead and capturing administrative overhead and capturing underwriting profits and investment income underwriting profits and investment income

•R L Consulting, LLC.R L Consulting, LLC.

What are the Benefits?What are the Benefits?

Long term control of insurance Long term control of insurance costcost

Controlling the claims processControlling the claims process

Direct access to reinsurance Direct access to reinsurance marketsmarkets

Better tailor your risk Better tailor your risk management needs management needs


Your Partners Your Partners

R L ConsultingR L Consulting KPMG InternationalKPMG International Sitnal InsuranceSitnal Insurance International Advisory Services (IAS)International Advisory Services (IAS) Gallagher BassettGallagher Bassett Sparta Insurence Sparta Insurence

Your Partners Your Partners

•R L Consulting, Inc.R L Consulting, Inc.

KPMG InternationalKPMG International

Global Leader in Audits and AccountingGlobal Leader in Audits and Accounting Audit $4.72 billionAudit $4.72 billion Tax (Legal) $3.31 billionTax (Legal) $3.31 billion Advisory Services $2.96 billionAdvisory Services $2.96 billion

Total $12.16 Total $12.16 billionbillion

Up 13.4% from 2002-2003Up 13.4% from 2002-2003


IAS International Advisory IAS International Advisory services LTD . services LTD .

IAS Was Formed in 1981IAS Was Formed in 1981 Over 180 Insurance Companies Under Over 180 Insurance Companies Under

ManagementManagement Over $4 billion in annual written Over $4 billion in annual written

premiumpremium Over $7 billion in invested assetsOver $7 billion in invested assets The World’s Largest Independent The World’s Largest Independent

Insurance Management CompanyInsurance Management Company


Fronting & ReinsuranceFronting & Reinsurance Fronting & ReinsuranceFronting & Reinsurance

Sparta Insurance Sparta Insurance Unbundled Alternative Risk TransferUnbundled Alternative Risk Transfer A- (Excellent) rating from A.M. BestA- (Excellent) rating from A.M. Best FrontingFronting ReinsuranceReinsurance UnderwritingUnderwriting ExpertiseExpertise Technology PlatformTechnology Platform


Other PartnersOther Partners

WhoWho Consultant – Broker Consultant – Broker Fronting CarrierFronting Carrier

Third Party Administrator Third Party Administrator

Reinsurance PartnersReinsurance Partners Captive Managing FirmCaptive Managing Firm

CPA & Actuarial FirmCPA & Actuarial Firm Outside Legal FirmsOutside Legal Firms

Bank & Investment FirmBank & Investment Firm

WhatWhat Experience and Resources Experience and Resources

RequiredRequired

Provides Certificate of Provides Certificate of InsuranceInsurance

Claims ManagementClaims Management To Take Excess RiskTo Take Excess Risk Day to Day Accounting Day to Day Accounting

Regulatory ComplianceRegulatory Compliance AuditsAudits Captive & Domicile Corporate Captive & Domicile Corporate

DocumentDocument Banking and InvestmentsBanking and Investments

• R L Consulting, LLC.R L Consulting, LLC.

Importance of our Captive Importance of our Captive Insurance Insurance

Premium StabilityPremium Stability Greater Flexibility & Risk Greater Flexibility & Risk

Management ControlManagement Control Completely Funded ProgramCompletely Funded Program Built in Risk Management Built in Risk Management

ProgramsPrograms– Priorities at workPriorities at work


DisadvantagesDisadvantages

Capital Requirements to Capital Requirements to assume deductible assume deductible responsibilitiesresponsibilities

Obligation of claims Obligation of claims managementmanagement


Underwriting ProfitInsurance Premium

55%Expected

Losses

40%Expenses5%

Taxes

15%Profit

40% ActualLosses

40%Expenses 5%

Taxes

Conventional Insurance Insurance Profit Center


FactsFacts

Work CompWork Comp– Premiums up 50% in the last three yearsPremiums up 50% in the last three years– 10 to 30% of Work Comp Claims in the Commercial Market 10 to 30% of Work Comp Claims in the Commercial Market

Place are FraudulentPlace are Fraudulent– Risk ManagementRisk Management

LiabilityLiability– 2003 $233 Billion Industry Wide was spent on Claims & 2003 $233 Billion Industry Wide was spent on Claims &

LawsuitsLawsuits– Up 27.4 Billion from 2002Up 27.4 Billion from 2002

Risk ManagementRisk Management

A good risk management program will reduce the above A good risk management program will reduce the above affectaffectProvided by Tillinghast Accounting &

Actuarial Firm• R L Consulting, LLC.R L Consulting, LLC.

Lines of CoverageLines of Coverage

General LiabilityGeneral Liability

Workers CompensationWorkers Compensation

Directors and OfficersDirectors and Officers

Professional LiabilityProfessional Liability


Learn This LessonLearn This Lesson

Nothing is a sure thingNothing is a sure thingSegregated Cells – A MustSegregated Cells – A MustDo not jump from carrier to carrierDo not jump from carrier to carrierStay on top of your loss controlStay on top of your loss controlRisk Management is KeyRisk Management is Key

We will provide a comprehensive RISK We will provide a comprehensive RISK MANAGEMENT program for you.MANAGEMENT program for you.


Premium WCPremium WC Loss reserve fund $2,320,000Loss reserve fund $2,320,000 Capital $ 580,000Capital $ 580,000 Expenses $ 2.1 millionExpenses $ 2.1 million Total funding Total funding $ 5.0 million$ 5.0 million Large Ded. $ 100,000 per Large Ded. $ 100,000 per

claimclaim Aggregate $ 2.9 million Aggregate $ 2.9 million

Liability - Case StudyLiability - Case Study


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

Results Liability Study Results Liability Study


Long Term Care WC StudyLong Term Care WC Study

2000 Mod rate 1.362000 Mod rate 1.36 $12,000,000 Payroll$12,000,000 Payroll $1,020,000 Premium$1,020,000 Premium $367,200 Mod Calculation$367,200 Mod Calculation $1,387,200 Including Mod$1,387,200 Including Mod


Long Term Care WC Study Long Term Care WC Study

Long Term Care WC StudyLong Term Care WC Study

2005 Mod rate .692005 Mod rate .69 Implementation of our Risk Mgmt. Implementation of our Risk Mgmt.

programprogram $14,000,000 Payroll$14,000,000 Payroll $1,190,000 Premium$1,190,000 Premium -$368,900 Mod-$368,900 Mod $821,100 With Mod Calculation$821,100 With Mod Calculation


Long Term Care WC Study Long Term Care WC Study

DividendsDividends

The first date a possible disbursement will The first date a possible disbursement will be considered is 36 months after each be considered is 36 months after each policy effective datepolicy effective date

Based on underwriting and loss reservesBased on underwriting and loss reserves Disbursements are subject to board Disbursements are subject to board

approvalapproval One disbursement per year will be One disbursement per year will be

consideredconsidered Option to reinvest to lower premiumsOption to reinvest to lower premiums

Underwriting Profits Underwriting Profits


End of the DayEnd of the Day

Identify your opportunities, assess Identify your opportunities, assess the risks and qualify the returnthe risks and qualify the returnMake sure your loss control is in Make sure your loss control is in placeplaceHave a good idea as to the function Have a good idea as to the function and probable structureand probable structureFind and employ excellent partnersFind and employ excellent partnersManage the big picture while Manage the big picture while understanding the details.understanding the details.Have fun Have fun


R L Consulting TeamR L Consulting Team

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


The Next StepThe Next Step Complete a Comprehensive analysis Complete a Comprehensive analysis

to determine if you qualify for this to determine if you qualify for this Risk Management Strategy?Risk Management Strategy?

We will Require :We will Require : 5 years loss runs (valued within 3 months of policy 5 years loss runs (valued within 3 months of policy

inception)inception) Audited Financial Statements last 2 yearsAudited Financial Statements last 2 years Details of Large Claims over $25,000Details of Large Claims over $25,000 Historical and prospective exposure information Historical and prospective exposure information Risk Management Program InformationRisk Management Program Information

Should you qualify-more information Should you qualify-more information will be required at that timewill be required at that time


R L Captive Solutions Cost Control Presentation by Travis Lantis R L Consulting, LLC.

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Transcript of R L Captive Solutions Cost Control Presentation by Travis Lantis R L Consulting, LLC.