A captive is an insurance company that has been formed to provide insurance for the risks of a company or group. A captive comes in several guises: it may be a wholly-owned company that insures the risks and exposures of its parent or affiliates; or it may be owned by unrelated shareholders and insure the risks of any of those shareholders and, subject to certain limits, the risks of unrelated persons.

Historically, captives have been formed by organisations (or groups of organisations) that found the conventional insurance markets failed to meet their financial needs, especially in terms of price, service, cover and capacity for certain types of risk. Many of the traditional reasons for wanting to form a captive and the related benefits apply equally to the operators of a cruise line.

For example, through use of a captive, a company or group is able to reduce costs while increasing cash flow with the retention of underwriting profits and gains that would otherwise be held by a third-party commercial insurer. Even where a captive reduces its exposure by obtaining reinsurance for its risk, the reinsurance market is a wholesale rather than a retail environment and accordingly a captive should be able to obtain coverage at a reduced rate.

Read More

Share
Twitter LinkedIn Email Save as PDF
More Publications
20 Dec 2021 |

A Time Of Regeneration: Bermuda Can Bounce Back Better

Bermuda’s economy is a mixed bag of emerging opportunities and specific challenges. But if all sec...

17 Dec 2021 |

A Rising Tide: And Ships Are Choosing Bermuda

Bermuda must remain innovative, nimble and wary of too much regulation to stay ahead of the game, ac...

17 Dec 2021 |

A Silicon Valley For ILS

As the ILS market continues to innovate and evolve, driven by external forces including ESG, it will...

3 Dec 2021 |

Americas Restructuring Review 2022

This chapter discusses the defining features of Bermuda’s insolvency landscape and the primary ins...

2 Dec 2021 |

A growing hub for the life sector

Bermuda has become a flourishing focal point for long-term insurance and reinsurance, offering the I...

2 Dec 2021 |

Provisional liquidation in Bermuda and the selection of provisional liquidators

In the absence of a formal equivalent to English administration proceedings or U.S. Chapter 11 proce...

Contributors: Sam Riihiluoma
30 Nov 2021 |

Cryptocurrencies and estate planning

When a person dies having made a will, their personal estate is transferred to their personal repres...

26 Nov 2021 |

Whistleblowing issues for employers

In recent years there have been a number of high-profile scandals brought to light by the actions of...

24 Nov 2021 |

Hong Kong Harbours Long-Term ILS Ambitions

The launch of Hong Kong’s first catastrophe bond signals the start of a new era for Asia’s insur...

4 Nov 2021 |

The Insolvency Review – Ninth Edition

The ninth edition of The Insolvency Review offers an in-depth review of market conditions and insolv...