CAPITAL

This all-purpose term means one of three different things:

  • The amount initially needed to set up a captive or the initial amount paid in
  • The total of this paid-in capital plus other forms of capital, such as letters of credit
  • The sum of the two forms of capital (listed above) plus accumulated surplus.

The difference between capital in a captive and other forms of insurance capital is that it is usually considered risk capital by the owners, ready to be used up by adverse results of the business.