R L Captive Solutions
Cost Control Presentation
by
Travis Lantis
R L Consulting, LLC.
What is a Rent-a-Captive?
Where a sponsor (Captive Insurance Company)
will rent its license & capacity for a fee to other
alternative risk participants
One of the leading insurance alternatives today
Can be used as part of an overall risk
management strategy to help reduce the cost of
commercial insurance by avoiding administrative
overhead and capturing underwriting profits and
investment income
•R L Consulting, LLC.
What are the Benefits?
Long term control of insurance cost
Controlling the claims process
Direct access to reinsurance markets
Better tailor your risk management
needs
•R L Consulting, LLC.
Your Partners
R L Consulting
 KPMG International
 Sitnal Insurance
 International Advisory Services (IAS)
 Gallagher Bassett
 Sparta Insurence

•R L Consulting, Inc.
KPMG International
Global Leader in Audits and Accounting
 Audit
$4.72 billion
 Tax (Legal)
$3.31 billion
 Advisory Services
$2.96 billion

 Total

$12.16 billion
Up 13.4% from 2002-2003
•R L Consulting, LLC.
IAS International Advisory services
LTD .
IAS Was Formed in 1981
 Over 180 Insurance Companies Under
Management
 Over $4 billion in annual written premium
 Over $7 billion in invested assets
 The World’s Largest Independent
Insurance Management Company

•R L Consulting, LLC.
Fronting & Reinsurance

Sparta Insurance
Unbundled Alternative Risk Transfer
 A- (Excellent) rating from A.M. Best






Fronting
Reinsurance
Underwriting
Expertise
Technology Platform
•R L Consulting, LLC.
Other Partners
Who

Consultant – Broker
What
 Experience and Resources Required

Fronting Carrier

Provides Certificate of Insurance
Third Party Administrator  Claims Management
 To Take Excess Risk
 Reinsurance Partners
 Day to Day Accounting Regulatory
 Captive Managing Firm
Compliance


CPA & Actuarial Firm


Outside Legal Firms


Bank & Investment Firm
Audits
Captive & Domicile Corporate
Document
 Banking and Investments
• R L Consulting, LLC.
Importance of our Captive Insurance
Premium Stability
 Greater Flexibility & Risk
Management Control
 Completely Funded Program
 Built in Risk Management
Programs

– Priorities at work
• R L Consulting, LLC.
Disadvantages
Capital Requirements to assume
deductible responsibilities
Obligation of claims management
• R L Consulting, LLC.
Underwriting Profit
Insurance Premium
55%
Expected
Losses
5%
Taxes
40%
Expenses
Conventional Insurance
15%
Profit
40% Actual
Losses
40%
Expenses
5%
Taxes
Insurance Profit Center
•R L Consulting, LLC.
Facts

Work Comp
– Premiums up 50% in the last three years
– 10 to 30% of Work Comp Claims in the Commercial Market Place
are Fraudulent
– Risk Management

Liability
– 2003 $233 Billion Industry Wide was spent on Claims & Lawsuits
– Up 27.4 Billion from 2002
Risk Management
A good risk management program will reduce the above affect
Provided by Tillinghast Accounting & Actuarial Firm
• R L Consulting, LLC.
Lines of Coverage
General Liability
Workers Compensation
Directors and Officers
Professional Liability
• R L Consulting, LLC.
Learn This Lesson
Nothing is a sure thing
Segregated Cells – A Must
Do not jump from carrier to carrier
Stay on top of your loss control
Risk Management is Key
We will provide a comprehensive RISK
MANAGEMENT program for you.
• R L Consulting, LLC.
Premium
WC
Liability - Case
Study
Loss reserve fund
 Capital
 Expenses
 Total funding
 Large Ded.
 Aggregate

$2,320,000
$ 580,000
$ 2.1 million
$ 5.0 million
$ 100,000 per claim
$ 2.9 million
•R L Consulting, LLC.
Results
WC
Results
Liability
Study

Claims Paid
Loss Reserve
IBNR Reserve
Reinsurance
Fronting Co.
Expenses
Total

Underwriting Profits






-$ 880,000
-$ 672,000
-$ 448,000
-$ 750,000
-$ 900,000
-$ 1,150,000
-$ 4,800,000
$ 200,000
•R L Consulting, LLC.
Long Term Care WC Study
2000 Mod rate 1.36
 $12,000,000 Payroll
 $1,020,000 Premium
 $367,200 Mod Calculation
 $1,387,200 Including Mod

•R L Consulting, LLC.
Long Term Care WC Study






2005 Mod rate .69
Implementation of our Risk Mgmt. program
$14,000,000 Payroll
$1,190,000 Premium
-$368,900 Mod
$821,100 With Mod Calculation
•R L Consulting, LLC.
Underwriting
Profits
Dividends





The first date a possible disbursement will be
considered is 36 months after each policy
effective date
Based on underwriting and loss reserves
Disbursements are subject to board approval
One disbursement per year will be considered
Option to reinvest to lower premiums
•R L Consulting, LLC.
End of the Day
Identify your opportunities, assess the
risks and qualify the return
Make sure your loss control is in place
Have a good idea as to the function and
probable structure
Find and employ excellent partners
Manage the big picture while
understanding the details.
Have fun
• R L Consulting, LLC.
R L Consulting Team
We bring a host of personnel to the
table to make this a one stop
shopping for your insurance
solution. The professionals we are
partnered with bring a wealth of
experience to you and are
entrenched in the captive
marketplace. Let ReRide be the
solution for you!
• R L Consulting, LLC.
The Next Step






Complete a Comprehensive analysis to
determine if you qualify for this Risk
Management Strategy?
We will Require :
5 years loss runs (valued within 3 months of policy inception)
Audited Financial Statements last 2 years
Details of Large Claims over $25,000
Historical and prospective exposure information
Risk Management Program Information
Should you qualify-more information will be
required at that time
• R L Consulting, LLC.