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captive value added (CVA)

Captive value added (CVA) refers to the financial benefit to an organization resulting from participation in a captive program as a shareholder and/or an insured.

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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.