RENT-A-CAPTIVE

An insurer or reinsurer that rents its capital, surplus and legal capacity to client users. The sponsor, not the policyholder, controls the rent-a-captive and usually provides administrative services, reinsurance, and/or an admitted fronting insurer. The insured’s underwriting account is typically segregated from the other insureds of this entity. This segregation can be achieved by words, through accounting procedures or statutorily. See also protected cell company.