From: Captive.com/IRMI
US captive insurance companies rated by A.M. Best experienced another year of significant growth in 2023, reporting a 53 percent increase in net income, according to a recent report. These captives not only saw surplus gains but also continued to outpace their counterparts in the commercial insurance market.
The A.M. Best report, titled “Growing Captive Insurance Market Highlights Risk Management Expertise,” reveals that the population of A.M. Best-rated US captives posted a collective net income of $1.4 billion, up from $923 million in the previous year. Despite some volatility leading to a 10.2 percentage point deterioration in their combined ratio to 91.1 in 2023, these captive insurers still maintained a 5-year average combined ratio of 86.5, outperforming the 97.5 average of their commercial casualty peers.
Between 2019 and 2023, US captives added $4.3 billion to their year-end surplus and returned $2 billion in dividends to stockholders and policyholders. This represents $6.3 billion in insurance cost savings, as these captive insurance companies retained funds that would otherwise have been spent on commercial coverage.
