A captive is an insurance company set up by its owners primarily to insure its own specific risks. This is an alternative form of risk management that is becoming a. It is essentially an in-house insurance company with a limited purpose and is not available to the general public. It is created and owned by its policyholders and designed to.Captive insurance is insurance or reinsurance provided by a company that is formed primarily to cover the assets and risks of its parent company or companies. Then in a popular structure called a вЂњmicro-captive,вЂќ the eligible captive company (which writes annual premiums of $1.2 million or less) elects under IRC В§831(b) to be taxed only on its investment income, excluding all premium income from its taxable income each year, resulting in significant tax savings! Transactions of InterestA Captive insurance company is a risk transfer alternative to traditional insurance companies. The business expenses 100% of the premiums paid to the captive.

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Captive Insurance Company Definition