2005 premium growth for non-U.S. captives declines

An A.M. Best survey suggests growth in 2005 slowed down for rated, non-U.S. captives. The A.M. Best study looked at 30 captives — some U.S.-owned, others not — domiciled in various foreign territories, although the majority of the study’s members were domiciled in Bermuda and the Cayman Islands.All of the group’s members are described as single-parent and multi-member/owner captive entities formed to address the insurance needs of specific owners and groups. “This group of non-U.S. captives wrote US$2.3 billion in gross premiums in 2005 and US$1.9 billion in net premiums,” A.M. Best notes.Overall, the growth trend for the group was headed downwards. “While the softening insurance market for casualty business muted the growth of premiums in 2005, the dislocations on the property side caused by the unprecedented hurricane activity in 2004 and 2005 helped to limit this effect,” A.M. Best noted. Total assets represented by this population were US$13.5 billion; total surplus was US$5.8 billion. The captive with the most premiums written also held the largest share of total assets with US$5.3 billion. The largest captive in the study wrote more than US$1.1 billion of gross premiums, while the smallest wrote US$3 million.A.M. Best delivered a caveat to its observations: “Due to the mission of captives — primarily to serve the risk management needs of companies — and their establishment in domiciles with relatively modest capital requirements, the perceived and actual need for strong capitalization and operating performance is not as great as it is for insurers that sell insurance commercially. Therefore, caution must be exercised in making comparisons and drawing conclusions from these data.”