What is a captive ?
A captive insurance company originated as one that only insured the risks of it’s parent. However, now the term refers to any insurance company set up in a captive jurisdiction and not regulated as a regular insurance company. The main types of captive are:
Single Parent Captive – an insurance or reinsurance company insuring only it’s parent or affiliated companies.
Group Captive – an insurance company that insures or reinsures the risks of a group of potentially unrelated companies which have a common goal.
Association Captive – a company formed and owned by a trade association or group of service providers to provide insurance for it’s members.
Segregated Portfolio Company “SPC” – a company which is set up with various segregated cells taking the insurance risk. The assets and liabilities of each cell are segregated from each other. This is commonly utilized by those groups preferring not to set up their own captive.