Specific and Aggregate
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Reinsuring Captives

The Concept of the Gap

As with any self-insured organisation a captive assumes risk by accepting the first portion of any individual loss.

Reinsuring Captives - The Specific and Aggregate Approach

Captives can be divided into two basic types, these are either pure captives owned and used by a single parent or group, association and rent-a-captives which have multiple owners and users.

Aggregate Reinsurance

Aggregate reinsurance is designed to protect a captive's overall loss ratio over a period of time.

Catastrophe Reinsurance

Whilst quota share and risk excess reinsurance respond to individual losses there is always the risk that a loss ratio may be impacted by an accumulation of losses. Catastrophe reinsurance provides protection for such an eventuality, which arises from a single event or occurrence.

Risk Excess Treaty Reinsurance

Also known as Specific Coverage, Risk Excess reduces a captive's exposure on any one individual risk excess of a pre-determined amount.

Quota Share Treaty Reinsurance

Using the quota share method a captive cedes a pre-agreed percentage of its premium to a reinsurer who in turn agrees to pay the same percentage of claims.