Securitas wins big for captives

Swedish security services firm Securitas AB can deduct $88 million in expenses from a captive insurance arrangement, the US Tax Court has ruled.

Securitas acquired Protectors Insurance of Vermont, a licenced captive insurance company, in early 2000 and established a captive insurance programme to control risk.

The Inland Revenue Service (IRS) hit the US subsidiary of Securitas with around $30 million in deficiencies after it deemed that the parental guaranty mitigated the risk-shifting.

The US Tax Court disagreed and rejected the IRS’ arguments relating to parental guaranties and risk distribution.

“We agree and find that by insuring the various risks of US and non-US subsidiaries, the captive arrangement achieved risk distribution,” said the Court.