Best’s Market Segment Report: Rated Bermuda, Cayman Islands and Barbados Captives Stay the Course

Business Wire

OLDWICK, N.J.--(BUSINESS WIRE)-- Persistently strong operating results among A.M. Best-rated captive insurers in Bermuda, the Cayman Islands and Barbados (referred to as BCIB) in 2017 continued to outperform the U.S. commercial market sector, according to a new special report from A.M. Best.

The Best’s Market Segment Report, titled, “Rated Bermuda, Cayman Islands and Barbados Captives Stay the Course,” states that in 2017, A.M. Best-rated captives in BCIB bolstered their operating performance with increased risk awareness, loss control, as well as the ability to integrate sound risk management practices.

These captives posted profitable financial results in 2017 that were in line with historical averages. Total assets increased by 7.7%, and policyholder surplus increased to almost $10.5 billion, up a healthy 11.4%. Additionally, this sector’s total return on revenue (ROR) for 2017 was 35.3%, up from 27.3% in 2016. Underwriting results declined, but were still well above the results posted by A.M. Best’s composite of U.S. commercial casualty insurers. The captives’ five-year (2013-2017) average combined ratio far exceeded that of their peers in the U.S. commercial casualty segment—by nearly 21 points.

Net premiums earned increased by 1.9% in 2017, and net income improved. Note that premium growth for captive insurers is usually a function of insured exposure growth or a captive’s desire to withdraw or write additional or new risks when the opportunities arise. Two particular areas of interest of late have been cyber liability and medical stop loss insurance. Although these are certainly growth opportunities, most of A.M. Best-rated captives write either limited or no coverage for these risks.

Overall, capital levels are healthy and more than supportive of the risks underwritten. During 2013-2017, these captives added more than $2.9 billion to their capital and surplus, after providing more than $1.0 billion in dividends, which translates into $3.9 billion in savings.

Captive insurers remain the beneficiaries of very productive business models and strong loss control and risk management practices, culminating in solid underwriting profits and strong growth in surplus.

A.M. Best believes that the captive segment, in general, will continue to outperform the U.S. commercial casualty composite by a healthy margin, by managing the risks it knows better than any commercial insurer and by retaining risks within its risk tolerances.

To access the full copy of this market segment report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=280061.

A.M. Best is a global rating agency and information provider with a unique focus on the insurance industry. Visit www.ambest.com for more information.