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Dividends

Dividends

Definition

A partial return of premium to the insured based on the insurer's financial performance or on the insured's own loss experience. Insurers cannot legally guarantee the payment of dividends. In the captive arena, there are two kinds: policyholder dividends are paid back through the insurance premium process to the insureds. They are before-tax expenses for the captive. Shareholder dividends are paid to the captive's shareholders after tax (and are then taxed again to the shareholder).

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