AM Best identifies European captive growth

European captive domiciles are seeing growth in company formations, according to new analysis from AM Best.

The Best's Market Segment Report, “New Domiciles are Changing the Landscape for the European Captive Insurance Segment”, notes France, which has only recently introduced rules governing the establishment and operation of captives, is leading the way for new captive formations in Europe in 2023 and 2024. 

There have also been several new captive formations in Italy. Separately, new rules are under consideration in the United Kingdom and in Gibraltar designed to attract new captive business.

“European jurisdictions do not report captive numbers in a consistent manner; however, AM Best analysis suggests that Guernsey maintained the top spot among European captive domiciles, with Luxembourg in second place and the Isle of Man in third,” the rating agency said in a statement.

According to AM Best the main points of their analysis include:

- New European captive domiciles are seeing growth in company formations, including redomicilations from other jurisdictions

- Where captives are successful, they have a clear understanding of the risks and requirements of their parent companies and are able to appropriately assess the risk and provide suitable covers, particularly for large risks such as cyber, property and business interruption

- Captives have generally navigated the challenging reinsurance renewals well given their largely favourable claims history. Capacity has been available to captives with a good track record of underwriting discipline, albeit prices have typically been higher

- New regulation coming into force is likely to bring both relief and challenges for the European captive segment

To access a complimentary copy of this market segment report, please contact AM Best.

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