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Captive Value Added

Captive Value Added (CVA)

Definition

The financial benefit to an organization resulting from participation in a captive program as a shareholder and/or an insured. One formulaic approach to calculating CVA uses net present value (NPV) program cost comparisons to show a captive's contribution to an organization's retention ability—that is, the capacity creation effect—as well as the lower after-tax cost, compared to self-insurance or commercial insurance. The "value added" approach can also be used to recognize subjective as well as objective benefits.

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