Definition for : Captive insurance company
A captive Insurance company is an Insurance company set up by a large group that has adopted a Self-hedging policy. A captive Insurance company invests the premiums saved as a result of not buying any external Insurance to build up reserves in order to meet Future claims. In the meantime, some of the Risk can be sold on the reInsurance Market.
(See Chapter 49 Managing working capital of the Vernimmen)
To know more about it, look at what we have already written on this subject