Big Premium Hike For Captives

Captive insurers rated by AM Best have recorded their largest premium increase in ten years, according to Best’s market segment report, titled “Feasibility and Utility Sustain Captives’ Excellent Profitability.” The captives also outperform commercial casualty insurers significantly  —  the captive composite’s five-year average combined ratio of 83.9 compared to the casualty composite’s 98.0. Best says this has led to growth in captives’ surplus, their retained earnings, and billions of dollars in savings for captive owners. After years of flat growth, direct premiums written rose year over year by 21 percent, due to rate increases from inflationary pressures and the hardened reinsurance market. The captive also doubled pre-tax operating income over the previous year. “As the market landscape continues to evolve, captives remain a reliable and effective solution for managing risks and optimizing financial outcomes,” says the report.