OLDWICK, N.J.--(BUSINESS WIRE)--
U.S. captive insurers rated by A.M. Best continue to outperform
the commercial sector in every key financial measure. Of note in 2013
was a 12.4-point improvement in the loss and loss-adjustment expense
ratio over the prior year, mainly due to the lack of any major, outsize
property losses. The 2012 results were driven largely by Superstorm
Underwriting expenses improved to a five-year low in 2013. Captivesí
expenses are normally lower than conventional insurance markets, mainly
because they have lower overhead and associated expenses, and most if
not all of them do not rely heavily on items such as agentsí commissions.
Over the longer term, the five-year average combined ratio for the
captive composite of 85.2 continues to compare extremely favorably with
the commercial compositeís average of 103.2. The captivesí operating
ratio over the same five-year period is tighter, with the captives
generating a five-year operating ratio of 69.7 versus 88.3 for the
commercial composite. It is well known, given that the majority of
single-parent captives use loan-back instruments with their parents,
that captivesí investment portfolios tend to be significantly more
conservative, and therefore generate less income, than typical
investment portfolios for commercial companies.
The captive companies analyzed by A.M. Best for this report were taken
from a subset of more than 200 captive companies, all of which currently
are rated. Those companies range in size from $2 million in surplus to
more than $3.5 billion. These captive companies write (in size order)
medical malpractice, inland marine, general and automobile liability,
property, workersí compensation and other lines. A.M. Best has used the
commercial casualty composite for comparative purposes throughout the
To access a copy of this special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=227616.
This report originally appeared in Bestís Journal, Aug. 4, 2014
edition. Bestís Journal is a biweekly publication that presents
A.M. Bestís original research, analysis and commentary on the global
insurance industry and is available exclusively as part of a
subscription to the Bestís Insurance News & Analysis service.
More information about the Bestís Insurance News & Analysis
subscription service is available at www.ambest.com/sales/bina/default.asp.
OnAug. 12-14, at the Vermont Captive Insurance Associationís
29th Annual Conference in Burlington, VT, A.M. Best will join panelists,
exhibitors, captive owners and other insurance professionals. A.M.BestTV
will be providing wrap-up programs and interviews through a
complimentary video news service available at www.ambest.tv.
A.M. Best Company is the world's oldest and most authoritative
insurance rating and information source. For more information, visit www.ambest.com.
Copyright © 2014 by A.M. Best Company, Inc.ALL RIGHTS
Fred Eslami, 908-439-2200, ext. 5406
Chirico, CPA, 908-439-2200, ext. 5087
Sharkey, 908-439-2200, ext. 5159
Manager, Public Relations
Peavy, 908-439-2200, ext. 5644
Assistant Vice President,
Source: A.M. Best Company, Inc.