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How Captives Work

Over 80% of Members in
Garnet-run group captives have
received distributions totaling tens
of millions of dollars. This is
underwriting profit that would have
otherwise been pocketed by the
conventional insurance industry.

How Captives Work

A group captive is an alternative to traditional insurance. Captives provide best-in-class businesses with more control over their insurance costs through long-term pricing stability, fixed cost reductions, and the chance to recoup underwriting profits via distributions. Garnet’s group captives allow business owners to avoid volatile market swings and pay their actual insurance cost, rather than the market rate for their industry.

Program Structure

Garnet’s group captive programs involve a policy-issuing carrier, which issues a policy and collects a premium (1). The predictable portion of the premium is then transferred, or ceded, to the captive (2). As predictable losses are paid (4), the captive reimburses the carrier for the losses. Members earn investment income on the funds held at the captive (3). Once the policy period has expired, the captive returns unused funds to the captive Members over time (5).

Garnet Captive Structure Infographic
If losses exceed the portion of the premium allocated to the captive, the captive Members are required to fund additional amounts. The total liability of the Members of the captive is limited, and is secured with collateral.

Garnet’s group captive programs have a proven track record of returning underwriting profit back to captive Members every year.


For safety-conscious businesses that demonstrate an ability to control their exposures to loss, any point in the insurance market cycle is a
good time to consider a group captive. Garnet’s group captive programs have been profitable in both hard and soft insurance market cycles.

Successful captive candidates share these characteristics:

Better-Than-Average loss history

Better-Than-Average Loss History

Ideal captive candidates have been stuck subsidizing the standard market. Because they consistently pay more in premium relative to their losses, their insurance companies profit. At Garnet, we provide these businesses with an opportunity to recoup that profit through distributions to Members.

Better-Than-Average loss history

Financially Stable

A captive program typically requires a greater level of funding during the first two policy years than a guaranteed-cost program. Many businesses simply cannot afford to dedicate additional capital to an insurance program, even if it leads to lower ultimate costs. The ability to obtain a letter of credit from a bank can greatly reduce the initial cash outlay required.

Better-Than-Average loss history

Superior Safety Program

Owners who prioritize workplace safety often experience fewer insurance claims. In a group captive insurance program, the dollars saved by having fewer insurance claims are returned to business owners.

Better-Than-Average loss history

Desire for Control

Business owners consider captives when they reach a “pain point,” prompted by frustration with the standard market through premium levels that fluctuate for no apparent reason,
a lack of control, or poor service.