AM Best: captives continue to demonstrate financial stability in evolving risk landscape

AM Best-rated US captive insurance companies not only continued to outperform their counterparts in the commercial market but also provided a less costly route that generated an estimated $8.2 billion in savings for their organisations over the past five years, according to a new Best's Market Segment Report.

The principal takeaways of the report include: 

• The underwriting performance of US captives rated by AM Best continues to outperform commercial casualty peers, and we expect the outperformance to continue

• Even as more affordable capacity increases in the commercial market, the captive market continues to exhibit sustained growth, evidenced by new formations and the expansion of coverage into new lines. This trend reinforces the view that captives are increasingly regarded as long-term strategic risk-financing mechanisms

• From 2021 to 2025, AM Best-rated captives generated an estimated $8.2 billion in savings ($4.1 billion in surplus growth and $4.1 billion in dividends) for their own organisations that would have otherwise gone to the commercial market.

For more information, or a copy of the report, contact AM Best.

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