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GROUP
CAPTIVE / RRG One of the many factors that companies must consider
in deciding where to seek a license is the minimum premium, capital and
surplus requirements of the licensing jurisdiction. For companies or groups who may be
unwilling or unable to satisfy these requirements at the outset, it may be
desirable to consider a so-called rent-a-captive organized by others. Also, if cash flow is an issue, a captive
generally can be capitalized with a letter of credit and it may be possible
for the captive to make loans back to its parent. Finally, a captive should not be
considered unless it will be viable when the insurance business cycle
eventually returns to a soft market.
In addition, the initial organizational costs and the annual operating
costs can be substantial. Those single
parent and group captives that have survived from previous hard markets have
done so only because they made economic sense and provided risk management
and claims control advantages under all market conditions. Captives promise long-term benefits in
terms of stable insurance costs and coverage, and the ability to take control
of your insurance destiny, but only for companies prepared to make long-term
commitments. |
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F.
Darrell Lindsey State
Approved Captive/RRG Manager |
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BACK – USE ARROW TO PRINT USE PRINT PREVIEW |
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