Spring Consulting Group, LLC - Types of Captives

Single Parent (Pure) Captive: A single parent captive is owned and controlled by one owner, typically the parent organization, and is formed as a subsidiary company. The captive subsidiary underwrites policies for the parent, and solely bears the risks of the parent.

Group Captive: A group captive is owned and controlled by multiple insureds. They may or may not be related entities or a part of a homogeneous group like industry or trade groups. Typically, companies of similar size pool their risks in an industry captive with customized insurance plans. Similarly, companies of similar size in different industries can also form group captives to enjoy the benefits of a captive model. More recently, associations have been forming association captive insurance companies to offer captive services as part of their membership benefits.

Rent-a-Captive: In a rent-a-captive setting, a captive sponsor owns the company and manages its operations. The captive company "rents" its services to other parties in exchange for a management fee, and insureds generally do not share each other’s risk. The main purpose of a rent-a-captive is to provide captive facilities to parties that cannot afford the fixed cost of a captive company or are not interested in the ownership and maintenance responsibilities.

Protected Cell Companies: PCCs are essentially rent-a-captive companies that ensure complete separation among program participants. According to the laws of specific domiciles, PCCs generally guarantee complete separation of each cell’s assets, capital, and surplus from each other.

Agency Captive: Agency captives are companies typically owned by groups of brokers or other insurance intermediaries and are typically structured like rent-a-captives.

Captive Resources - What are different types of captives?

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