Ex-Ch J L. Paige (“Iron Fist”) Marvel leads a microcaptive insurer around by the commnly accepted idea of insurance in Terence J. Keating and Janet D. Keating, et al., T. C. Memo. 2023-2, filed 1/4/24. Yes, there’s a real insurable risk (workers’ comp claims), and the microcaptive was organized and operated in accordance with the law of its domicile (Anguilla).

But the backdated documents, sliding-scale and exorbitant premiums, nonexistent or at best slapdash underwriting, roundtripping cash, and loans to principals of the captor seriously unmoor the captive from the Section 831(d) safe harbor. It isn’t insurance as commonly understood. And the microcaptive is a standalone corporation, so the captors can’t claim whatever legitimate cash it holds as a reserve for self-insured claims.

Ex-Ch J Iron Fist collates all the past microcaptive learning, from Rent-A-Center to Avrahami to Caylor Land to Reserve Mech. to Syzygy. I’ve blogged them all (or almost all), but ex-Ch J Iron Fist saved me the trouble of finding my blogposts, and you the trouble of reading them.

This opinion sets forth exactly how not to do it.