Also, reinsurance companies may require a support letter of credit. Being among the oldest financial institutions in the U. First Horizon Bank understands the financial needs of sponsors wishing to form their own captive.
This decision takes research, planning and trusted relationships. First Horizon Bank has established contacts with professionals who can help you decide if a Captive fits your business objectives.
Types of Captives | Capstone Associated Services
Beyond the resources found here, for more information on captive insurance companies in Tennessee, consider the following resources:. Build a stronger, more efficient financial back office with our treasury management solutions. Find out if forming a captive insurance company is right for your business by exploring the resources and information provided below. What is a Captive? Types of Captives There are several types of captives, depending on business need, type, industry, etc.
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Single Parent Pure Captive — a Pure Captive or "single owner captive" is owned and controlled by one company and insures only the risks of the parent or the parent's subsidiary operations. Branch Captive — a branch captive is an onshore U.
The brand is regulated as a pure captive, is taxed only on the branch writings and is required to use an onshore trust for the protection of U. Special Purpose Financial Captive — a special purpose captive is a reinsurance company that issues reinsurance contracts to their parent and cede the risk to the capital markets by way of a bond issue. It is owned or controlled by a parent company and may only insure the risk of its parent. Association Captive — an association captive has two or more owners and is typically owned by members of an industry or trade association.
This type of captive is designed to insure the risks of that industry with participation generally limited to members of the association.
Industrial Insured — an industrial insured captive is one formed to insure the risks produced by a group of industrial entities. Sponsored Captive Protected Cell — sponsored captives are a type of rent-a-captive, allowing for assets and liabilities of one captive program to be legally segregated from the assets and liabilities of other captive programs. Sponsored Captives allow an entity to insure its own risks without establishing its own captive structure.
Predominantly, organisations use captives as a strategic risk management tool that facilitates greater control over their risk programme, particularly around policy terms and conditions. Other reasons for establishing a captive include; cost efficiencies, reduction of insurance premiums, access to the reinsurance market and tax optimisation.
However, before deciding to establish a captive, companies need to carefully consider the capital commitment, the risks of adverse results, operating costs and the commitment required from the management team. For this reason, Aon has put together this introductory guide to captives, which will help you to:.
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