What is a Captive?
 

A captive insurance company is a closely held insurance company that is owned and controlled by its insureds.

A captive is an insurance company licensed under the laws of its domicile, many of whom have specific regulations applying to captives. Generally a captive does not qualify as an admitted insurer in any US state.

A.M. Best reports[1] that there were 3,861 captives worldwide in 2000, with net written premium exceeding $50 billion, capital and surplus of more than $100 billion and total invested assets of more than $225 billion. Premium growth rates in the captive industry far exceed those in the commercial insurance industry and for the 2003 year, AM Best predicts that the alternative market will comprise nearly 50% of the US commercial market. 

Captive insurance companies vary according to:

• The number of owners: single parent versus group. 

• Legal structure: captives formed by groups of owners in particular can take a number of different legal forms including, stock, mutual insurance company, and reciprocal insurer

• Source of capital: rent-a-captive and sponsored captives allow insureds to create a captive program using a third party's risk capital.

• Scope of risks underwritten: many captives have expanded their focus from the property and casualty risks of their owners to include employee benefits and/or the risks of third parties. 

These differences in captive structures are discussed in the types of captive section of the SRS Guide to Captives.

 

The SRS Guide to Captives contains historical information that may no longer be accurate. It is for informational purposes only and does not constitute advice. No reliance should be placed on the information contained within this portion of the site and guidance should be sought from SRS regarding captives and alternative risk solutions. No information contained in the SRS Guide to Captives may be reproduced or copied in any format without the express permission of SRS.

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