7 August 2014Actuarial & underwriting

US captives continue to hurdle commercial insurers

The universe of captives rated by A.M. Best continues to outperform the commercial sector in every key financial measure, according to the latest edition of Best's journal.

In 2013, the US captive composite posted a 12.4-point improvement in the loss and loss-adjustment expense ratio over the prior year, aided by a respite from major, outsize property losses.

The report, titled "Rated U.S. Captives Continue Strong Outperformance Over Commercial Insurers," also notes that captives' cousins in the alternative risk space, risk retention groups, also leveraged their focused approach to produce aggregate operating results that outperformed a peer group of commercial casualty writers.

The report also found that U.S. state workers' compensation funds increased their premium volume for the third straight year in 2013 as pricing hardened, the economy improved and greater demand for residual market business appeared likely.

Additionally, Best said in the report that federal terrorism backstop bills would place greater burden on insurers, and predicted that the two bills currently in congress would increase the insurance industry's liability.