What Is a Captive Insurance Company (hereafter “Captive”)?
A Captive is a closely held insurance company whose insurance business is primarily supplied by and controlled by its owners, whereby the owners of the Captive insure their business entity. The owners of the Captive have direct involvement and influence over the company’s major operations, including underwriting, claims management, policy and investment. The Captive will issue property and casualty insurance, collect and invest premiums, and pay claims.
What is a Series Captive?
A Series Captive is a special purpose captive that acts as an umbrella company for series business units (“SBUs”), each of which insure a different company or a different risk for the same company. The lower start-up and operating costs of SBUs provide the benefits of a traditional captive for smaller companies and professional practices.
The SBU owns and operates an independent insurance company, which is managed by the Series Captive for tax and legal purposes. The SBU insurance company can be owned by the operating company as a wholly-owned subsidiary.