Initially, captive insurance companies were formed for the benefit of either a parent company or professional association, with the parent or association’s own risks being insured. Over time, the concept has broadened and evolved, with many forms of captive insurance companies now available.
The main types are:
• Single Parent (“Pure” Captive)
An insurance or reinsurance company which is a wholly owned subsidiary, formed primarily to insure the risks of its non-insurance parent or affiliates.
• Association Captive
An insurance or reinsurance company owned or sponsored by a trade, industry or service group for the benefit of its members.
• Group Captive
An insurance or reinsurance company jointly owned by a number of typically unrelated companies, created to provide a vehicle to meet a common insurance need.
• Segregated Portfolio Company (“SPC”)
A single legal entity divided into an unlimited number of cells, whose assets and liabilities are legally separated from each other. Popular uses of the SPC structure are rent-a-captives and life insurance.