In 2015, our executive team made the decision to re-domicile the CapAlt program to Puerto Rico. The reason for this decision was oriented on the rising scrutiny of the IRS on 831(b) filing-status captives, combined with the unquestionable benefits that Puerto Rico offers our clients. Puerto Rico has a unique insurance structure written into their insurance code called a Segregated Asset Plan (SAP): these are insurance policy-linked funds which do not hold their own juridical power; meaning, the insured does not own the SAP nor can the SAP make its own business decisions. It is simply a fund. Consequently, this demarcates the SAP as no longer functioning as an insurance company in its own right, but participates in the reinsurance process of an independently owned reinsurance company, Madison Re. Consequently, the benefits exceed what any 831(b)s can offer and this is why we call it a “Private Insurance Structure.”
While CapAlt has always been compliant regarding the issues that have arisen in recent court cases (such as the use of independent actuarial services to determine premiums using professionally accepted actuarial methodologies, the implementation of the key insurance mechanics of risk transfer, risk sharing, and risk distribution, and the use of third-party claims management services), the decision to move away from the 831(b) model into this unique Puerto Rico structure was a clear win-win: a better product for our clients, and a move away from the scrutiny of the Internal Revenue Service.
To the right, you can find a PDF document which summarizes the main differences between an 831(b) elected captive and our Private Insurance model. If you would like to learn more, or discuss your particular situation, I would be happy to set up a call or webinar.
Director of Business Development