Capital Modeling Emerges as a Strategic Imperative for Captive Insurance Companies

As captive insurance companies navigate increasingly volatile markets and more complex risk profiles, capital modeling is no longer viewed as a technical exercise reserved for regulatory or actuarial purposes. Instead, it is becoming a core strategic discipline—one that informs solvency, governance, and investment decision-making across the enterprise.

Insights from a recent industry webinar, "The Strategic Role of Capital Modeling for Captive Insurance Companies," highlighted how capital modeling can help captive owners move beyond siloed assessments of underwriting, reserves, and investments. The discussion underscored how an integrated view of risk can reveal diversification benefits, reduce unnecessary capital buffers, and support more intentional capital deployment.

The webinar, cohosted by Oliver Wyman and Mercer, explored how capital modeling supports boards and management teams in quantifying total insurance risk, aligning assets to liabilities, and embedding decision triggers into governance frameworks. Speakers also examined how modeling outputs can be translated into investment policy, liquidity planning, and board-level communication.

Panelists discussed the types of risks typically included in capital models—such as underwriting, reserve, credit, asset, and catastrophe risk—and why modeling these exposures together can provide a more accurate picture of capital at risk. The session also addressed which captive profiles are most likely to benefit from advanced modeling approaches, particularly those with diverse, multiline programs or long-tail exposures.

The discussion further highlighted how capital modeling is increasingly influencing captive investment strategy, including asset-liability alignment, surplus stability, and the use of investment income to support claims and long-term growth objectives.

More detailed analysis from the webinar, including expert insights on governance, investment strategy, and practical capital modeling considerations, is available to subscribers of Captive Insurance Company Reports (CICR).

Vertafore ReferenceConnect Subscribers

• Insights from a Recent Industry Webinar—"The Strategic Role of Capital Modeling for Captive Insurance Companies"

IRMI Online Subscribers

• Insights from a Recent Industry Webinar—"The Strategic Role of Capital Modeling for Captive Insurance Companies"

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