Page 177 - RISK Management IC 86

The Insurance Times

company is prepared to invest initially. One should find
out if that fund is adequate to provide cover to an adverse
series of losses or single major loss.

It should be clarified if the company would be able to
supply additional funds if necessary. The percentage
return required on capital invested in the captive and
how quickly the target can be reached are also two
important points to be considered. The answer to all the
above questions can clarify the management objectives.

Size and Nature of the Insurance Portfolio -The analysis
of the organisation's risks and current financing
arrangements and the recommendations regarding the
capitalization of the captive company, will provide the
framework within which the company will be able to
operate. Irrespective of any statutory solvency
regulations, the recommended size of the company's
retained portfolio should be dependent on the company's
capital and reserve funds.

If recommendations suggest that the company should
write only on net lines, inevitably that should be followed.
Its gross acceptance should then be increased, and

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