Captive Insurance

A licensed insurance company established primarily to insure the risks of its owners.

• Lower insurance costs: Captives generally have lower administrative costs and owners retain underwriting profits and investment income
• Increased capacity and coverage: A captive can insure risks that would otherwise be uninsurable or too expensive in the commercial market, plus they can provide broader coverage

Comerica provides banking services (e.g., letters of credit, custody accounts, Regulation 114 Trusts, investment management, etc.) once the captives are up and running.

A letter of credit (also called an LOC) is a document issued by a bank for a fixed dollar amount that is an irrevocable obligation to pay upon presentation. Fronting insurance companies require LOCs to assure that the captive honors its reinsurance obligation and for regulatory purposes.

A Regulation 114 Trust is an alternative to an LOC. It is adopted from the New York Department of Insurance regulations and is a three-party agreement between a captive, a fronting insurance company and a bank. Although usually cheaper than an LOC, investments are generally more restrictive.

That captive's assets are held in an account either onshore or offshore¹ depending on the captive's domicile. Comerica can provide online access to the account at no extra charge.

Comerica has been servicing the special needs of captives for over 15 years and has a dedicated team of captive insurance professionals active in all major domiciles.