11 March 2018Analysis

Captive formation stats don’t give full picture on group captive growth

While overall growth in captive formations has been nominal - less than 1 percent annual growth for total captives worldwide - there are group captive programmes which have experienced significant growth, with certain group programmes 50 percent growth in membership in the last five years, according to analysis in a Strategic Risk Solutions webinar.

The webinar, “The State of the Captive Insurance Market,”  was presented by Patrick Theriault, managing director of Strategic Risk Solutions; Ron Sulisz, president of Strategic Risk Solutions International; and Stuart King, president of SRS Europe.

In analysis carried for domiciles in which SRS operates along with other key domiciles, the active number of captives in in 2017 sat at 5,551, a reduction of 30 captives or down 0.5 percent year-on-year.

The number of cells was 2,999, an increase of 3.3 percent or 97 cells.

Altogether, the total number of risk bearing entities (RBEs) was 8,550, an increase of 0.8 percent or 67 RBEs.

Theriault noted that medical stop loss captives have been growing actively, with reinsurers getting more comfortable with the idea of this and looking at potentially forming their own captives.

“Medical stop loss continues to be very active, and will be a driver of growth in 2018 and beyond,” he said.

There is a similar story with group captives and RRGs, where there has been limited formation activity, but existing programmes continue to see new members and formations.

“We are pretty lucky in SRS where there are a few group programmes have been very lucky 50 percent growth in membership in last five years,” said Theriault.

And especially this is the case with medical stop loss - over the last 5 years the number of members in group captives has almost tripled - with their premiums growing almost six times.

Against a backdrop of on-going scrutiny and additional tax reporting requirements, there has been a pull back in small captives which have been driving captive growth over the past few years.

US domiciles had seen some growth while offshore and international domiciles experienced a small decrease in captive numbers.