Insurance & captive
accounting specialists.

Form 1120-PC is filed by property and casualty insurance companies and Form 1120-L by life insurance companies. The distinction is not cosmetic — each carries its own reserve computations, special deductions, and taxable income definitions. P&C filers deal with discounted loss reserves and unearned premium reserve adjustments under Section 832, while life filers handle reserve computations and policyholder dividend treatment under Section 807. Filing on the wrong form or applying the wrong reserve rules is a common and expensive error.

Yes. Section 846 requires P&C insurers to discount unpaid loss reserves using IRS-prescribed discount factors and loss payment patterns by line of business. The statutory reserves on your annual statement are not the deductible amount for tax purposes. The gap between statutory and tax reserves is one of the largest reconciling items on a P&C return, and it must be computed line by line and documented.

Section 831(b) allows qualifying small insurance companies to be taxed only on investment income rather than underwriting income, subject to an annual written premium limit. It is a legitimate election, but the IRS scrutinizes micro-captives closely and has designated certain arrangements as transactions of interest. Qualification turns on genuine risk distribution, real risk shifting, arm's-length pricing, and documented business purpose. We assess whether a captive genuinely qualifies before recommending the election.

ASC 740 requires computation of current and deferred income taxes, evaluation of deferred tax asset realizability through valuation allowance analysis, assessment of uncertain tax positions, and a rate reconciliation explaining the difference between statutory and effective rates. For insurers the deferred inventory is unusually complex because of reserve differences, deferred acquisition costs, and unearned premium adjustments. We prepare provisions documented to withstand auditor review and delivered on your close calendar.

Statutory accounting principles (SAP) are prescribed by the NAIC and adopted by state insurance regulators, and they exist to measure solvency rather than earnings. SAP is deliberately conservative: certain assets are non-admitted, acquisition costs are expensed immediately rather than deferred, and reserve conventions differ from GAAP. Most insurers must maintain both bases and reconcile between them. We prepare statutory-basis statements and annual statement support alongside GAAP reporting.

Yes. We work with captives from feasibility analysis and domicile considerations through formation, then handle ongoing tax filings, 831(b) election management where appropriate, statutory reporting, and coordination with your captive manager and actuary. Captives fail on administration far more often than on concept, so the annual discipline matters as much as the initial structure.

Because insurance taxation is a specialty and the returns are unforgiving. Loss reserve discounting, unearned premium adjustments, the proration rules, and statutory-to-GAAP-to-tax reconciliation are not work a generalist encounters. A firm learning Form 1120-PC on your engagement is a risk you are paying for. We have done this work for years and know where the exposure sits.