License # 0522677

Group Captive Insurance ProgramsGroup Captive Insurance Programs

What is a Group Captive?

A reinsurance company owned by its stockholders/policyholders

Proven method for managing risk

Insurance with a predefined best case and worst case (risk/reward)

What a Group Captive is Not

Self Insured Group There is no “Joint and Several Liability”

exposure

A solution for companies with excessive claims

Benefits of Group Captives

Complete transparency• Know where every penny of every dollar

is spentThe ability to control costs of insurance

• Workers’ Comp, Liability & Auto Reduced Premiums over time

AND……

The Greatest Benefit of a Group Captive

The ability to turn the expense of insurance into an asset

Dividends are paid with unused premium

Can be returned to the company or stockholders

Conventional vs. Captive

PREMIUMS100%

Claims Fund61%

Conventional Captive

Captive Structure

Premium

Operating costs

Claims Fund (“A” Fund and “B” Fund)

Operating costs

Insurance policy, re-insurance, claims

management, loss control, captive

management

Captive Structure, con’t.

Claims Fund = “A” Fund and “B” Fund

“A” Fund $0-$125,000 Frequency layer 75% of total Claims Fund

“B” Fund $125,000-$350,000 Severity layer Risk sharing layer 25% of total Claims Fund

Best Case vs. Worst Case

Best Case:

No claims; pay Operating Costs only

Worst Case:

Pay Operating Costs

+ “A” Fund

+ “B” Fund

+ Additional “A” Fund

Claims & PremiumsTransparency ($300k premium example)

Operating Costs$117,000

Claims Fund $183,000

“A” Fund $135,000

“B” Fund $ 48,000

39% 61%

Example of Earning Equity (Claims Fund of $183,000)

Paid claims•Year 1: $ 25,000•Year 2: $ 1,000,000•Year 3: $ 10,000•Year 4: $ 25,000•Year 5: $ 50,000

Equity•Equity Retained: $158,000•Equity Retained: ($0)•Equity Retained: $173,000•Equity Retained: $158,000•Equity Retained: $133,000

For any one year:Premium Minimum Cost: $117,000Premium Maximum Cost: $435,000

Total Equity in 5 years: $622,000

Year 2 Assessment Example

“A” Fund assessment $135,000 (pd quarterly)

50% paid 1st year after assessment

30% paid 2nd year after assessment

20% paid 3rd year after assessment

In the conventional market, your ex mod would rise 52 points for three years at a cost of $153,000 a year, or

$495,000!

FinancialsEquity Summary Feb. 2014

44003 44005 44010 44012 44027

Capital 36,000 36,000 36,000 36,000 36,000

Cash Sec 0 39,558 0 220,288 137,062

Inv. Income 28,727 40,589 12,313 106,434 44,273

________________________________________________________________________________

64,727 116,147 48,313 362,722 217,335

Underwriting

2008/9 (32,488) (35,451) (29,290) (18,731) 0

2009/10 41,462 12,058 18,056 12,716 (7,330)

2010/11 38,403 67,857 12,293 (10,976) 3,404

2011/12 (4,442) 35,815 61,567 5,142 (23,293)

2012/13 86,648 54,442 113,732 18,807 103,908

2013/14 91,683 49,682 125,602 94,585 464,163

Financials, con’t.

44003 44005 44010 44012 44027

Total Equity 285,947 300,550 350,273 437,483 758,186

Less unpaid assmt. 9,612 (5,938) (7,922) (131,702) (119,082)

Less closing costs 0 0 0 0 0

Letters of credit 290,628 55,448 170,162 0 595,189

Dividend payable 0 0 0 0 0

Due from shareholder 0 0 0 0 0

Net Equity 586,187 350,060 512,513 305,781 1,234,293

Captive Member Commitments

Premium: Paid quarterly

Risk Control Workshops: two annual workshops

Shareholder Meetings: two annual meetings

Captive Membership Cost

One-time Capitalization $35,900 Preferred Share, $100 Common

Share

Collateral (2x your “A” Fund)

Cash Security, letter of credit, or

combination

* Capitalization, cash security, and premium earn interest income

What sets Owen-Dunn Apart?

More than a decade of experience working with alternative risk programs

Access to more than 30 alternative risk programs

Have placed more than 100 clients into alternative risk programs

Our agency’s single largest focus

Service Providers