Captive Insurance Programs

A captive is a bona fide insurance or reinsurance company. Its business is primarily supplied by and controlled by its owners, which are also normally the principal insureds. These owners/insureds participate in controlling the underwriting, claims and investment decisions of the insurance company. 

Types of Captives

 A number of different types of captives exist:

  • Single parent or group
  • Direct writing or fronted
  • Onshore or offshore
  • Agency captive
  • Risk retention group
  • Property/casualty only or life/benefits only (sometimes a mix of the two)
  • Writers of related business or some unrelated business
  • Primary or excess layer captive
  • Stock, mutual or reciprocal
  • Rent-a-captive, cell captive or sponsored captive.


All entities called “captives” are not the same. In fact, some are not considered captives in the strict sense, including:

  • Agency (or program business) captives: Sometimes called producer-owned reinsurance companies (PORC), these captives are frequently offered by insurance companies to keep their better agency clients or are formed by insurance agents and industry associations to align the financial interests of their groups with insurers. The owners and the insureds are not the same in fact the insureds may not even know that their risk is reinsured by a PORC.
  • Special-purpose or transformer vehicles: These are offshore entities that transform insurance exposures such as catastrophes into marketable securities such as investment-grade bonds. These vehicles use the capital markets, not the insurance markets, to finance risk.