Captive Insurance Gathering

This week marks the Vermont Captive Insurance Association’s 24th Annual Conference where the economic downturn is likely to be the focus of discussions. Recent research from ratings agency A.M. Best noted that U.S. captive insurers’ net income declined by around 66 percent in 2008 for a composite of 186 captive companies. This reflects realized losses of $1.2 billion for the year, a large percentage of which resulted from one company’s investment losses. On the bright side, net underwriting income actually increased over the prior year – evidence of the captive industry’s typical underwriting discipline and its inclination not to rely on investment income, according to A.M. Best. Captive formations continue amid a softening commercial insurance market, but new captive domiciles are finding it challenging to establish a presence. A.M. Best reports that the outlook for the captive industry is stable as participants exercise their financial flexibility in a softening market. Check out I.I.I. information on captive and other risk financing options.

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