Best’s Market Segment Report: European Captives 2019 – Building Block Rating Considerations

Business Wire

AMSTERDAM--(BUSINESS WIRE)-- AM Best’s European captive ratings have been stable through the past year, with all of the ratings affirmed and their stable outlooks maintained. Typically, they fulfil the majority of their parent organisation’s insurance needs, with relatively little primary cover placed outside the captives. At the same time, the question of how captives could benefit from innovation is increasingly an agenda point at board level.

A new Best’s Market Segment Report, “European Captives 2019 – Building Block Rating Considerations”, discusses the key rating considerations as they apply to the European captives rated by AM Best, providing details of the captives’ balance sheet strength, operating performance, business profile and enterprise risk management, and any rating lift or drag from the wider group. Balance sheet strength is viewed as the foundation for financial security, and its evaluation is critical in determining an insurer’s ability to meet its current and ongoing obligations. All of the European captives currently rated by AM Best have balance sheet strength assessments of very strong, which is typically underpinned by the strongest level of risk-adjusted capitalisation. In addition, most of the rated European captives benefit from strong operating performance.

Mathilde Jakobsen, director, and one of the report’s authors, said: “The robust underwriting performance of single-parent captives is underpinned by their extensive and detailed knowledge of the portfolios they cover, which supports adequate pricing. Therefore, if achieving an underwriting profit fits with their strategic aims, the captives typically achieve the metrics required for a strong operating performance assessment.”

The report also notes that the majority of captives do not currently see innovation as a major growth driver but that most now consider how innovation could be used to achieve efficiencies in their daily operations, create new revenue streams or more generally enhance the use and value of the captive to their parent organisation.

Konstantin Langowski, financial analyst, added: “AM Best believes that innovation is a dynamic and ongoing long-term process that can take many forms and is not limited to a specific type of innovation or technological development. Captives are in a unique position to benefit from the close relationship and integration with their parent organisations, as they have access to potentially very detailed and unrivalled data sources, which could be used for big data analytics or to foster agile new coverage development.”

To access a complimentary copy of this market segment report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=292000.

AM Best remains the leading rating agency of alternative risk transfer entities, with more than 200 such vehicles rated throughout the world. For current Best’s Credit Ratings and independent data on the captive and alternative risk transfer insurance market, please visit www.ambest.com/captive.

AM Best is a global credit rating agency, news publisher and data provider specialising in the insurance industry. The company does business in more than 100 countries. Headquartered in Oldwick, NJ, AM Best has offices in cities around the world, including London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.