Captive Insurance Company

Dictionary Says

Definition of 'Captive Insurance Company'

A company that provides risk-mitigation services for its parent company. A captive insurance company may be formed if the parent company is unable to find an outside firm to insure against a particular business risk; if the parent company determines that the premiums it pays to the captive insurance company are sufficiently deductible; or that the insurance the captive insurance company provides is more affordable or offers better coverage.

Investopedia Says

Investopedia explains 'Captive Insurance Company'

Whether the parent company will be able to see a tax break from the creation of a captive insurance company depends on the classification of insurance company transactions. The IRS requires risk distribution and risk shifting to be present in order for a transaction to be considered "insurance".

While there are financial benefits to creating a separate entity to provide insurance services, parent companies must also weigh the personnel cost of a captive insurance company. Some types of risk that the captive company might insure against could result in larger expenses than the parent company can afford, and can lead to bankruptcy. Larger private insurers are less likely to be bankrupted by a single event because of a diversified pool of risk.

Search results for

'Captive Insurance Company'

  • Intro To Insurance: Fundamentals Of Insurance | Investopedia

    http://www.investopedia.com/university/insurance/insurance2.asp
    ... There are two types of agents: Captive Agents: Captive agents represent a single
    insurance company and are required to only do business with that one company. ...
  • Becoming An Insurance Agent

    http://www.investopedia.com/articles/financial-careers/08/become-insurance-agent.asp
    ... Insurance agents selling this type of coverage are either "captive" agents, which
    means they only sell insurance from one company, or "non-captive", meaning ...
  • Ethical Investing: Workers' Rights and Human Rights | Investopedia

    http://www.investopedia.com/university/ethical-investing/ethical-investing5.asp
    ... In twelve years, more than 1,000 captive workers had been freed, and ... Other benefits,
    a company might offer, include life insurance, disability insurance ...
  • Mutual Funds: Brand Names Vs. House Brands

    http://www.investopedia.com/articles/mutualfund/08/proprietary-mutual-funds.asp
    ... This includes banks, credit unions, brokerage firms, insurance companies and wealth
    management companies. ... Thirdly, the company has a captive market, which ...
  • Why Investors Can't Get Enough Of Social Media IPOs - Investopedia ...

    http://financialedge.investopedia.com/financial-edge/0711/Why-Investors-Cant-Get-Enough-Of-Social-Media-IPOs.aspx
    ... (Initial public offerings aren't the best option for every company. ... variety of ways
    in which they can make money, because these websites have a captive audience ...
  • David Sokol: Buffett's Former Right-Hand Man

    http://www.investopedia.com/articles/financial-theory/11/sokol-buffet-right-hand-philosophy.asp
    ... through the advice he provides in regard to running a company and adopting a ... MidAmerican
    Energy, which, as a regulated utility, has a captive customer audience ...
  • VCA Antech Cut Down To Value

    http://stocks.investopedia.com/stock-analysis/2011/VCA-Antech-Cut-Down-To-Value-WOOF-PETM-IDXX-MWIV1031.aspx
    ... longs when I used to question the company's valuation and ... issue for vets, nor is
    wrangling with insurance companies ... pets every year and having a captive lab is ...
  • The Series 3 Exam: Creating A Career With Commodities

    http://www.investopedia.com/articles/professionaleducation/08/series-3-commodities.asp
    ... on FCMs to handle their trading operations, but instead of having a captive
    relationship, the ... can also register their firm or set up a sister company to handle ...

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