Captive vs. Commercial TCOR Model — Mid-Market Manufacturer

Inputs & Assumptions

Adjust the drivers. Captive figures recalculate live.

Annual commercial premium

Expected annual losses (loss history)

Implied loss ratio:

Commercial SIR / retained losses

Internal admin / risk mgmt (commercial)

Premium trend (annual)

Loss trend (annual)

Captive Structure

Captive retention (annual aggregate)

Captive loss-fund funding factor

Reinsurance load factor (on excess losses)

Reinsurer markup on losses above the captive retention.

Reinsurance base charge (cat layer)

Fixed charge for the catastrophic layer above the captive.

Captive annual admin

Captive setup fees (one-time)

Amortized across the 3-year forecast.

Collateral / LOC requirement

Cost of capital

Investment income rate (reserves)

Surplus returned to parent

Share of unused loss-fund margin returned.

3-Yr Commercial TCOR

—

fully insured

3-Yr Captive TCOR

—

pure captive

3-Yr Net Savings

—

captive vs commercial

Payback Year

—

cumulative savings > 0

Commercial vs. captive, annual + cumulative savings

Commercial Captive Cumulative net savings

3-yr captive TCOR across retention levels vs. the commercial baseline

Captive 3-yr TCOR Commercial 3-yr TCOR Break-even retention

3-Year TCOR Build-Up

Component ($)	Yr 1	Yr 2	Yr 3	3-Yr Total

Model Methodology & Assumptions