The Universal Captive

These notes embrace the concept of using a captive insurance company to cover all of the risks that are insured by the parent corporation.What are the advantages?The third solution is to use Americap’s proprietary solution, the Americap Line Slip. This is a proven solution that is only available to Americap’s clients and we will be happy to discuss it with corporations that are committed to our services.The next stage would be to adjust the risk retained in the captive. Depending on the level of capitalization and on the appetite for exposing capital to risk, the amounts retained in the captive could be increased or decreased. Decreases might occur in property insurance where traditional insurers had imposed high deductibles to windstorm cover. Increases would be in lines where claims are usually small and can be more easily predicted.There is no reason, in theory, why a corporation should not place all if its insured risks in its captive. There are several ways in which this could be done.The Universal CaptiveAll of the advantages of captive insurance companies obviously apply to a universal captive as well. The main difference is that the savings and flexibility would apply to the entire insurance program. Thus the savings will be greater, the additions to the bottom line will be larger, the captive will be in a stronger position to negotiate with reinsurers and the ability to cover those uninsurable risks is increased. There will be greater flexibility, improved cash flow and higher levels of investment.

Source: The Universal Captive

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