Captive Basics

What Are Insurance-Linked Securities?

June 12, 2017

Insurance-linked securities (ILS) are derivative or securities instruments linked to insurance risks. ILS value is influenced by an insured loss event underlying the security. This securitization model was born of efforts to develop an additional source of insurance and reinsurance capacity by transferring insurable risks to the capital markets. As the ILS market has developed, it has provided an alternative source of risk capital, most often for property catastrophe risks such as windstorm and earthquake. Read More

The 3 Categories of Risk Retention Groups

March 28, 2017

A panel discussion on corporate governance of Risk Retention Group (RRG) at the 2017 Captive Insurance Companies Association (CICA) Conference provided a useful way to categorize RRGs. RRGs can be divided into one of three categories based on whether there is a sponsor and, if so, the type of sponsor. Read More

What Is a Reciprocal Insurance Company and How Is It Taxed?

March 1, 2017

A reciprocal insurance company is an arrangement through which mutual promises of the participants are exchanged with respect to their insurance risks. While not a separately incorporated company, it is characterized as an insurance company for federal tax purposes. Read More

Why Do Captives Get Credit Ratings?

February 27, 2017

While the need for ratings by traditional insurers is obvious, it is not so apparent for captives. This article explains why some captive insurance companies go through the credit rating process. Read More

Basics of Loss Development Triangles

February 20, 2017

As a member of the board of a captive insurance company, you have a responsibility to understand the key concepts that underpin how the captive performs. This second in a series of articles continues this educational process, focusing on the concept of loss development. Read More