In this episode of The Edge of Risk Podcast by IRMI, Joel Appelbaum speaks with Derek Freihaut, principal and consulting actuary at Pinnacle Actuarial Resources, for a detailed discussion on how captive insurance companies evaluate risk transfer and risk distribution. Drawing on Pinnacle's published research—including its case study on expected adverse deviation (EAD)—Mr. Freihaut explains how actuaries use objective tools to measure distribution, identify downside exposure, and document insurance characterization for regulatory and tax purposes. The conversation also explores the role of expected reinsurer deficit (ERD) in risk transfer testing, the impact of quota share versus excess-of-loss reinsurance structures, and how captives can align retentions, limits, and coverage mix with risk appetite. Mr. Freihaut shares practical examples of how EAD modeling informs program design, capital planning, and emerging-coverage decisions—giving captive owners a clearer view of how different structures influence long-term stability and performance.