If a separate captive is not feasible, other options to consider include insurance pools rent a captive and rent-a-cell programmes that allow insurance business to be written without setting up a separate captive. Another key decision is whether a 'pure captive' is suitable, or if some unrelated business will be written, requiring a different license.
After selecting service providers, the captive owner will need to front initial costs, including legal fees, incorporation fees, licensing fees and other consultation fees. Captives must maintain a minimum capital level, which varies depending on its license. In Bermuda, a single-parent captive writing only related business is required to maintain a minimum capital starting at $120,000. The capital outlay for a captive is important because of the 'cost of capital' to the owner, who may not immediately receive dividends and a return on investment.
As the captive accumulates capital and surplus from profitable operations, it will be able to support additional business, or pay dividends to the captive owner, subject to meeting solvency and minimum capital rules.