The Fifth Circuit's affirmation of the Tax Court's decision in Swift v. Commissioner represents a watershed moment in captive insurance jurisprudence, establishing new precedents that extend far beyond the micro-captive arrangements at issue. This decision not only continues the IRS's perfect litigation record against questionable captive structures but also introduces significant analytical shifts that will reshape how courts evaluate all captive insurance arrangements for federal income tax purposes.
This vertically integrated, Miami-based real estate company specializing in the acquisition, development, and management of multifamily and single-family rental communities. Founded in 1996 the company has owned and operated over 30,000 multifamily units valued at more than $5 billion across the United States. Their current portfolio includes more than 12,000 multifamily units in eight states, with a total valuation exceeding $2.9 billion and over $1.1 billion in equity under management.
This insured is a fully integrated real estate development and investment management firm specializing in the creation of market-rate workforce housing across the Sun Belt region of the United States. Their business model focuses on delivering high-quality, affordable multifamily housing to meet the growing demand in rapidly expanding markets. The client, in collaboration with their broker and captive manager, engaged Captives Insure (C.I.) to secure a robust and lender-accepted general liability captive insurance solution.
A Texas based property management/development company turned to Captives Insure (“C.I.”) for an alternative means of procuring their General Liability and Property coverage. Even with excellent claims history and risk management efforts, the commercial market was unwilling to give them the credit they deserve and administered rate increases and higher retentions.
One of the largest U.S. based specialty construction and infrastructure companies works with C.I. to procure excess liability coverage. Taking a $5m xs $15m quota share position, this client will retain over $2.5m within their captive and still satisfy all lender requirements. With a historical loss ratio of 0% in this layer, this insured is now able to take control of their insurance program and gain underwriting profit that was a sunk cost in the commercial market previously.
A large international industrial client approached C.I. to perform a comprehensive Enterprise Risk Assessment to uncover any risks their business may be exposed to. Their primary concern being the exposure to international trade credit risk to protect the insured businesses from losses related to buyers’ non-payment of commercial debts.
A nearly loss-free Texas-based industrial client with both domestic and international exposures worked with C.I. to provide a captive solution for their property exposures. Even with excellent loss history and proper risk management strategies in place, the standard market still imposed rate increases year over year.
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