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Captive Types

Association Captive A captive insurance company owned by members of a common industry or trade association in order to share the risks of that industry among its members.
Branch Captive A unit of an existing offshore (alien) captive, licensed in Vermont to write employee benefit business for its owners and affiliates onshore. The branch is regulated as a pure captive, is taxed only on the branch writings and is required to use an onshore trust for the protection of US policyholders and ceding insurers.
Captive Insurance Company A closely held insurance company whose insurance business is primarily supplied by and controlled by owners, and in which the original insureds are the principal beneficiaries. The insureds have a direct involvement and influence over the company's major operations, including underwriting, claims, management policy, and investments. There are currently over 6,600 captives licensed worldwide, that service their parents' risk financing needs. In Vermont, that figure is more than 500.

Vermont's captive owners represent a wide range of industries including multinational corporations, associations, banks, municipalities, transportation and airline companies, power producers, public housing authorities, higher education institutions, telecommunications suppliers, shipping companies, insurance companies and manufacturers, among others.
Group Captive A captive insurance company owned by multiple, non-related organizations and is designed to insure the risks of these different entities.
Reciprocal An unincorporated association; reciprocal insurance is that which results from an interchange among subscribers of reciprocal agreements of indemnity, the interchange being effectuated through an attorney-in-fact common to all subscribers.
Risk Retention Group (RRG) An entity created under the federal Liability Risk Retention Act, and licensed in any one state to write liability insurance; is regulated as a captive insurance company; and, may operate nationwide, provided it properly registers with each state in which it proposes to solicit or write insurance.
Single-owner Captive Also referred to as "pure captive", insures only the risks of the owner or the owner' subsidiary operations.
Sponsored Captive One that uses the capital provided by an insurer or reinsurer while providing fronted insurance coverage to discrete and usually unrelated entities. The sponsored captive can be either a licensed insurer, an authorized reinsurer, or a fronted Vermont captive insurer (except RRG).
Agency Captive An agency captive is a reinsurance company controlled by an insurance agency or brokerage. Through a reinsurance agreement with a traditional insurer, the agency captive receives a share of the premiums written, and is obligated to pay its share of claims.