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  Home> Solutions > Risk Financing & Reinsurance > Captive Affiliate > Overview      
         
       
 



A captive is an autonomous and licensed subsidiary established to cover part or all of the risks of its parent. It can be formed either by commercial, industrial or financial organizations. Captives can act as insurance or reinsurance companies; however the latter is the most commonly used as it is less constraining in terms of capital and regulatory requirements.

Main types of captives:

  • Single owner captives, underwriting only the parent-company's risks (but can be extended to parent-company's customers). They are recommended for large companies with high insurance expenses or for smaller companies with high costs in one particular class of risk. This is the most frequently used type of captive.
  • Rent-a-captives, underwriting risks from many different insureds but with isolated compartments and ring-fenced economic assets. Their main targets are smaller companies as the capital needs and fees are lower. They can also be used as a temporary accumulation fund prior to the establishment of the single-owner captive. Although this type of captive structure is quite widespread, it requires precautionary measures with regard to corporate governance, transparency rules and bankruptcy legislations.
  • Association captives, usually formed by a group of insureds with a common risk. They are recommended for groups of companies within the same industry which have problems in finding cost-effective or adequate cover in the traditional market for a specific risk. This structure is however not in widespread use since it requires very close risk management policies and strong convergence of interests.
On our website emphasis is placed on the most frequent structure: the single owner reinsurance captive but you can contact us for additional information regarding any other structure.
 
 
 
 
 
   
 
   
   
 
 
     

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