From: Risk & Insurance
Captives and alternative risk entities rated by AM Best outperform commercial market while formation pace moderates
AM Best-rated captive insurers preserved an estimated $6.6 billion for their owners between 2019 and 2024 — funds that would have otherwise flowed to the commercial insurance market — while continuing to outperform traditional insurers on key financial metrics, according to AM Best’s latest captive insurance review.
The number of U.S. domestic captives increased to 3,466 in 2024 from 3,365 the previous year, continuing a steady but slowing trend as the hard insurance market that began around 2018 gradually abates in certain coverage lines. Vermont leads all U.S. domiciles with 683 captives, followed by Utah with 462, North Carolina with 293, Delaware with 285 and Hawaii with 272.
The formation surge initially driven by rapidly rising commercial insurance costs has evolved into a more strategic approach, with captives becoming permanent enterprise risk management tools rather than temporary market reactions, AM Best said. Single-parent captives represented 30.4% of AM Best’s rated universe of 217 entities in 2024, followed by group captives at 24.4%, risk retention groups at 21.2% and other structures, including cell captives and reciprocals, at 24%.
