Virtual Captive Solutions
Article information and share options
An insurance agreement that simplifies the setup of a captive approach for risk financing by moving it to our balance sheet.
What is the difference between a virtual captive and a traditional captive?
|
Virtual Captive |
Traditional Captive |
|---|---|
|
The insurance agreement is between you and Swiss Re Corporate Solutions |
The insurance coverage is agreed upon by the insured and the captive |
|
Covers a multi-year period; finances risks over time |
Set up to exist for many years or indefinitely, finances risks over time |
|
We provide coverage through the agreement and handle all solvency aspects through our already efficient and existing infrastructure |
All regulatory aspects are handled by the captive management and contracted third parties |
|
The agreement considers the risk appetite of the insurer, (i.e. the amount of risk transfer capacity provided in the insurance agreement) |
The captive's capital is carrying the risk |
|
Remaining funds are paid through: Low Claims Bonus (LCB) to the customer |
Remaining funds are paid through: a dividend to the parent |
|
The call for Additional Premium (AP) likely extends the insurance agreement period |
Additional funds: A call for capital injection by parent with the intent to continue operating the captive |
How is a virtual captive structured?
A multi-year insurance agreement between you, the customer, and Swiss Re Corporate Solutions. The mechanics of a captive stay, but the agreement replaces the legal entity and eliminates the regulatory complexities of the traditional setup.
Is a virtual captive right for you?
- Are you prepared to self-finance a larger part of your insurance coverage? A virtual captive ≠ a reduced premium on a single year basis. The reduced cost of risk plays over multiple years, essentially by way of Low Claims Bonus at the end of the agreement.
- How much loss are you ready to finance? Assess self-financing risk appetite for a 1-, 3-, or 5-year period.
- Have you evaluated the optimal retention on the relevant lines of business within current insurance market?
- Have you consulted with Finance/ Accounting/Tax to ensure understanding and support?
If your answer is yes, contact us today!
Download materials for more information
Contact
Thomas Keist
Jan Bachmann
Robert Nusslein
Andrea Baer
