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A
Rent-a-captive is a multi-tied captive insurer which underwrites
the risks of a number of unrelated companies. It is the objective
of these companies to provide insurance cover to the various
organisations which are members of the scheme, and to return
the underwriting profit and investment income to these multiple
subscribers. The objective is to offer the company, the same
independence as incorporating a dedicated captive, without the
cost of capitalisation. Often companies who start with a rent-a-captive
and find the concept beneficial, usually then set up their own
dedicated captives. Rent-a-captives usually underwrite reinsurance,
however it is also possible to have a direct writing rent-a-captive.
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