What Does Special Purpose Vehicle Mean?

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What does Special Purpose Vehicle mean? Read on to discover the definition & meaning of the term Special Purpose Vehicle - to help you better understand the language used in insurance policies.

Special Purpose Vehicle

Special Purpose Vehicle

A company created by (but not owned by) an insurer or reinsurer for the sole purpose of issuing debt (usually in the form of a catastrophe bond). The use of SPVs is restricted to off-shore domiciles to be able to maintain the issuer's (the U.S.-based insurer or reinsurer) U.S. tax and accounting treatments with regard to such transactions.

We hope the you have a better understanding of the meaning of Special Purpose Vehicle.

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