Single-parent captive
An insurer formed for the owning organization. Consider control alongside capital, governance, operating expenses and long-term obligations.
Captives & alternative risk
Could you finance risk differently?
Our leadership has experience owning and operating a captive insurer. We help frame the business case before formal feasibility work.
Discuss alternative risk →
The insurance program
Is the business ready?
Loss history, capital and management commitment matter more than a single premium threshold.
Talk through your coverage ↗Loss experience
Credible data, loss development and a clear view of frequency and severity.
Financial capacity
The ability to fund retained losses, operating costs and adverse outcomes.
Risk controls
Management responsibility for prevention, reporting and corrective action.
Governance & time
Willingness to oversee the structure through more than one renewal cycle.
Program fit
Appropriate lines, coverage wording, counterparties and risk-transfer arrangements.
Exit & obligations
Participation terms, collateral, assessments and the treatment of outstanding claims.
The options to consider.
Group or cell structures
Arrangements with different ownership, shared-risk and participation terms. The legal structure, assessment exposure and exit provisions matter.
Deductible & retained-risk programs
A different retention may be appropriate without forming a captive. Review expected losses, liquidity, claims handling and any collateral requirements.
Questions & answers
Good questions to ask.
Is there a minimum annual premium?
There is no single threshold that applies to every structure. Size, loss predictability, fixed expenses, capital and participation terms determine whether an option warrants study.
What would A Squared do?
We begin with the business objectives and existing program. Where further work is appropriate, the scope and roles of captive managers, actuaries, counsel and other specialists should be agreed before formal feasibility or implementation.
Is a captive simply a way to save premium?
It is a risk-financing decision with ongoing obligations. Potential benefits must be weighed against adverse losses, fixed costs, governance, collateral and capital requirements.
What happens in a difficult loss year?
Adverse losses may require more funding, capital or assessments under the arrangement. Model stressed outcomes alongside expected results. Reinsurance and fronting do not eliminate every retained obligation.
Can we exit when the program no longer fits?
Exit may leave obligations for outstanding claims, collateral or assessments. Review participation terms, runoff costs and release conditions before committing.
From our journal
Related articles.
Further reading
North Carolina Department of Insurance: captive insurance overview ↗Educational context only. A specific structure requires appropriate insurance, actuarial, legal and tax advice.
Start with the business case.
Tell us about your current program, loss experience and the question you want to explore.