Pure Captive: An insurance company that insures the risks of its parent, the parent’s affiliated companies, and the risks of controlled unaffiliated business entities. It has a minimum capital and surplus requirement of $250,000 and can be formed as a stock company, a mutual, a nonprofit, a limited liability company, or a reciprocal insurer. A pure captive is not subject to restrictions on allowable investments and uses generally accepted accounting principles.
Industrial Insured Captive: An insurance company that insures the risks of the industrial insured group, the industrial insured group’s affiliated companies, and the risks of controlled unaffiliated business of an industrial insured or its affiliates. To qualify as an industrial insured, each member must meet the following three requirements. First, they must procure their insurance of any risk by use of a full-time employee acting as an insurance manager or buyer. Second, their aggregate annual premiums for insurance on all risks must be at least $25,000. Third, they must employ a minimum of 25 full-time employees. An industrial insured captive has a minimum capital and surplus requirement of $500,000 and can be formed as a stock company, a mutual, a nonprofit, a limited liability company, or a reciprocal insurer. It uses generally accepted accounting principles, and it has investment limitations as established by the commissioner by rule.
Branch Captive: An alien captive company authorized to transact the business of insurance in this state through a business entity with its principal place of business in this state. The alien captive must apply to the secretary of state for a certificate of authority to transact business in this state. Minimum capital and surplus requirements are the same as required for the organizational form of the alien captive company. A branch captive has no restrictions on allowable investments and uses generally accepted accounting principles.
Protected Cell Captive: A captive company with the minimum capital and surplus provided by one or more sponsors, that insures the risks of separate participants through participant contracts, funds the company’s liability to each participant through one or more protected cells, segregates the assets of each protected cell from the assets or other protected cells, and from the protected cell captive company’s general account. It typically has a minimum capital and surplus requirement of $500,000 but can be reduced to $250,000 if the protected cell company does not assume any risks, the risks insured by the protected cells are homogenous, and there are no more than ten cells. The protected cell captive must be formed as a stock company, a mutual, a non-profit, or a limited liability company. It has no restrictions on allowable investments and uses generally accepted accounting principles.
Special Purpose Captive: A captive company that is formed or authorized under Iowa Code 521J that does not meet the definition of any other type of captive in this section or that is formed by, on behalf of, or for the benefit of a political subdivision of this state. The minimum capital and surplus requirement are determined after giving consideration to the business plan, feasibility study, pro forma documents, and the nature of the risks to be insured. A special purpose captive can be formed as a stock company, a mutual, a nonprofit, a limited liability company, or a reciprocal insurer. It has no restrictions on allowable investments and uses generally accepted accounting principles.
Risk Retention Group: An alternative risk transfer entity formed pursuant to the Liability Risk Retention Act of 1986. The group is restricted to writing only liability coverage. The group may be licensed in a single state yet operate nationwide provided it properly registers with all other states in which it proposes to solicit or write insurance. A risk retention group is considered a type of Industrial Insured Captive.