Can a captive go dormant instead of shutting down?

0:00HostIs there any regulation for a dormant captive in Utah? For example, if a company sits up a captive and then the, you know, commercial insurance rates in the market soften tremendously and they want to just buy all their coverage from the commercial market rather than the captive that year. What is, what's the process for that

0:19Travis Wegkamp? Yeah, we, altered or, amended our code a few years back to allow for that for, dormancy for these captives that experience situations just like you mentioned there. And, they just aren't ready to shut the captive down yet because that could turn around at any moment. And the, cost and the expense of, doing a whole new company, captive and, feasibility study and business plan is, pretty extensive compared to just, well, let's go dormant and okay, let's come out of dormancy sort of thing. So it

0:49Travis Wegkampis a, an app, a bit of an application process. They apply to go dormant. We'll make sure that there are no existing policies and that all claims have, currently been extinguished or taken care of in, whatever fashion. And that they're, up to date compliant with all the other code requirements. And then we'll allow them to go, we'll, issue them a certificate of dormancy, allow them to go dormant. And just about

1:17Travis Wegkampall requirements then are, kind of put on hold. They still need to maintain a captive manager, which I, assume or expect that they would be able to negotiate reduced fees given the significantly fewer amount of filings and things they'll need to do. But anyway, so I'll need that captive manager because the, two reports they still need to submit annually would be that annual statement and the statement of economic benefit to the state

1:47Travis Wegkampof Utah. They do not need to do an audit or a statement of actual opinion. Unless we find something of concern in the annual statement that we want to get a verified by an independent CPA to take a look at that. The annual license fee is reduced by half and the minimum capitalization requirement, assuming for a pure 250,000 is reduced to 10

2:13Travis Wegkamp% of that. So it'd be 25,000 that they'd need to maintain. And then the, rest of the, filing requirements and the things essentially go away during that dormancy status. So

2:29Hostthere's, a way and that's really, I think helpful for a business owner looking to set up a captive because you never know what the commercial markets are going to do. And it's nice to have an all kind of a pause if needed

2:43Travis Wegkamp. If I can start jumping again real quick, I guess then the point comes, well, coming out of dormancy then is more or less just kind of a submit to us a new current business plan, what you want to do. It could be the same as it was before. And then recap, if you reduce the capital, recapitalize up to the 250,000 and we'll confirm that. And then essentially let's just start writing again. So fairly, quick and easy as opposed

3:13Travis Wegkampto creating a whole new captive for sure

3:15Stephanie Liu. And also, I think it

3:17Stephanie Liu's great to mention that we, sorry, we're used to have a limitation on how many years you can stay dormancy used to be five years max. So now we just remove that limitation