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Captives Continue To Outperform Their Commercial Peers

Applause-SF
August 08, 2017

Fred Eslami, senior financial analyst for A.M. Best, has reviewed the most recent Best's Special Report on U.S. captive insurers and how they continue to perform when compared with their commercial lines counterparts, mainly due to their loss-control activities and expertise in the coverages that they write.

"The report focuses on U.S. captives that A.M. Best has statutory filings and consistent comparative information for year-to-year," said Mr. Eslami. "These captives continue to outperform their commercial peers, not only this year, but in the prior years. A.M. Best believes that they are going to continue to outperform the commercial market going forward."

Mr. Eslami credits these captives' risk-management practices for their ability to outperform other markets. "They spend a lot of money on training risk prevention, risk mitigation," he said. "They do not have the commission expense and other expenses that the commercial market has."

Mr. Eslami also spoke about a new section in the report that talks about captives writing minimal cyber security and theft—in terms of premium—$8.8 million in 2016 versus $5.4 million in 2015. "That shows the gradual, prudent measures that these companies are taking to include this risk into their captives."

The report, Groundhog Day: More of the Same Strong Performance for the U.S. Rated Captives, is available through subscription only.

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