From: Captive International

The velocity of new captive formations is continuing to increase – but an additional driver of this momentum is captive owners realising the lucrative investment returns now possible.

That is the view of Anjanette Fowler, managing director and senior vice president, Insurance & Specialised Industries Group at PNC Institutional Asset Management, speaking to Captive International ahead of the annual CICA conference taking place March 5-7 in California.

She said the velocity of new captive formations is greater than she has ever seen. She believes this is partly driven by a persistent hard insurance market, which is filtering down to drive captive formations – and the way capital is deployed in captives.

Fowler said that there have been some dramatic changes in the timing and deployment of both capital and premiums, certainly as it relates to the work PNC Institutional Asset Management does investing those assets or funds.

“The biggest change that we’ve noted is that given the dramatic shift in Fed policy, we’ve seen yields go up dramatically, which has completely changed the investment landscape for captive owners,” she said.

According to Fowler, it used to take new captive owners quite a long time before they felt it was worth the time and effort to invest their capital, whether it was fixed income, equity, or both.