Captive Insurance Industry Market Status Report

A.M. Best has released its 2014 review of the US captive insurance sector and has scheduled a webinar to review the “State of the Captive Insurance Market” today, August 4, 2015, from 2 p.m. to 3 p.m. EDT.

The Best's Special Report, titled “Group Captives Feeling the Squeeze, Single Parent Captives Winning the Race,” concludes “… captive insurers (captives) rated by A.M. Best continue to outperform the commercial sector in most key financial measures.” This continues to be the case despite a 12-point deterioration in the loss and loss adjustment expense (LAE) ratio to 69.4 percent. The good news in the report is the underwriting expense ratio decreased for the second consecutive year to 14.1 percent.

The A.M. Best special report on the US captive sector is an excellent benchmarking tool. Among the exhibits included in the report are profitability analysis, financial indicators, sources of earnings and surplus growth, investment and liquidity analysis, underwriting/operating ratios and product line loss experience, underwriting leverage and reserve analysis, asset composition, and asset allocation. Charts include annual data for each of the past 5 years for captives and 5-year and, in selected instances, 10-year averages for comparison with the commercial industry.

Both 5- and 10-year captive average operating ratios (loss and LAE ratio + expense ratio – investment income ratio) have outperformed commercial insurance industry.

The report also includes key ratios versus commercial composite for the most recent 5 years and a similar 5-year comparison of single-parent captives with the industry.

Read the A.M. Best press release and find information on how to obtain a copy of the report.