Over 95% of rated captives are secure

Over 95 percent of captives that are rated by rating agency AM Best are categorised as secure.

This is one of the findings of AM Best’s latest report on captives: ‘The World of Captive Ratings’, which added that the rating agency currently rates over 200 captive ventures, representing a wide range of risk financing structures.

Around 80 percent of Best’s ratings of captives fall within the A range, designated as superior or excellent. However, only 1 percent of captives are rated A++ and 1 percent rated A+.

The rating agency said that this distribution is broadly in line with the overall insurance industry. However, in the case of rated single parent captives, 37 percent of the total portfolio, 93 percent have ratings in the A range.

“This superiority is a measure of the success of these ventures as risk management tools, reducing the total cost of risk of the groups they serve and resulting in high levels of captive capitalisation,” said AM Best.