Aon Benfield, a reinsurance intermediary and capital advisor, is marketing its CapTivate reinsurance product, which it claims provides captive insurance companies with a less expensive form of collateral than letters of credit (L/Cs).

Captive insurance companies finance risks found in their parent group or groups and may also insure risks of the group's customers too.

Alternative collateral

The reinsurance intermediary says CapTivate reduces the need for captive insurance companies to put up cash or L/Cs as collateral.

Essentially, CapTivate provides captive insurance companies with reinsurance cover as a form of collateral.

Customer approval

One taker of Aon Benfield's new product is industrial captive company, Energi Holdings.

"With the changing financial environment, banks are now requiring L/Cs to be secured by liquid assets, at the same time increasing L/Cs costs to as much as 250 basis points," CEO of Energi Holdings, Brian McCarthy, said in a statement issued by the company.

He reckons CapTivate solution provides "a more cost effective methodology for single parent, group captives, sponsored captives and industrial captives like Energi."

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