Captive Resources (CRI) has frequently had members and prospective members express interest in collateral and premium financing options. To address this need, we introduced a program with AFCO Capital that can finance both premium costs and collateral requirements for members of the captives we support.
Financing Highlights
- Competitive interest rates.
- Attractive terms — typically 12 equal installments with no prepayment penalty (subject to member company financial statement approval).
- Short term financing available.
- Optional collateral financing, typically for one year of collateral requirement (subject to member company financial statement approval).
- Collateral must be financed with premium; the option to finance standalone collateral is not available (collateral will require a higher financing rate and down payment).
- Ability to finance assessments, audits, and share purchase (equity).
- Quick credit underwriting and approval process; collateral financing will require additional underwriting time (5 to 7 business days).
- Option to finance ancillary policies (e.g., Umbrella, Property, and D&O).
- Members’ loss funds will be invested at the beginning of the policy period in lieu of being ceded quarterly. Investment income may help offset financing costs.
Premium Financing FAQs
Are the collateral financing rates the same as the premium financing rates?
Collateral financing rates and terms (deposit and number of payments) will depend upon the individual member’s financials. Collateral is unsecured financing and will not be returned if there is a cancellation for non-payment of premium. Typically, collateral financing rates would range up to 1 point more than the premium financing rate.
Are the payment terms for collateral financing the same as premium?
The payment terms can be the same as the premium payment terms, but the terms could be adjusted to a larger deposit or shorter duration of payments after reviewing the member’s financials. The terms of financing will be evaluated on a case by case basis.
Can I finance just my collateral?
No, AFCO requires the financing of premium to finance collateral.
Can I finance short term policy periods?
AFCO can finance short-term policies (as low as 2 to 3 months) with the expectation of financing the renewal premium.
Can I get the same rate and terms for financing my ancillary policies as I get for the captive program policies?
Yes, the rate and terms will be the same unless the ancillary policies have minimum premiums or cancellation requirements that differ from the captive program. If the terms differ, the payment schedule, deposit amounts, and financing rate could be adjusted for the ancillary policies.
Can I finance my audits and assessments?
Yes, only if there is a current AFCO contract in place. Approval may be subject to financial review.
Do you anticipate that it will be difficult for most members to qualify for the benchmark rate indicated and the 12 equal installments?
AFCO, the financing company, reviewed the independent financial analyst report for a 300-member heterogeneous captive (company names withheld) and estimated that most would likely qualify for the benchmark rate and 12 equal installments for standard premiums.
Do you anticipate that it will be difficult for members to qualify for collateral financing?
AFCO, the financing company, reviewed the independent financial analyst report for a large 300-member heterogeneous captive (company names withheld) and estimated that a large portion of members would qualify for collateral financing. Collateral financing will require additional underwriting time (typically 5 to 7 business days) and data.
Are there any restrictions on the amount of collateral I can finance?
Typically, collateral financing will need to be no more than 35 percent of the total premium financed. This will usually equate to financing one year of collateral with the captive premium.