Best’s Journal: Rated U.S. Captives Continue Strong Outperformance Over Commercial Insurers

OLDWICK, N.J.--()--The universe of captives rated by A.M. Best continues to outperform the commercial sector in every key financial measure. In 2013, the U.S. captive composite posted a 12.4-point improvement in the loss and loss-adjustment expense ratio over the prior year, aided by a respite from major, outsize property losses, according to the centerpiece report in the latest edition of Best’s Journal, a biweekly publication that presents A.M. Best’s original research, analysis and commentary on the global insurance industry. The report, titled “Rated U.S. Captives Continue Strong Outperformance Over Commercial Insurers,” also notes that captives’ cousins in the alternative risk space, risk retention groups, also leveraged their focused approach to produce aggregate operating results that outperformed a peer group of commercial casualty writers.

Other highlights in this issue of Best’s Journal include as follows:

  • State Funds’ Net Premiums Increased for Third Consecutive Year in 2013: U.S. state workers’ compensation funds increased their premium volume for the third straight year in 2013 as pricing hardened, the economy improved and greater demand for residual market business appeared likely, according to a Best’s Special Report.
  • Dividends Affecting Capitalization Levels in Mexico’s Insurance Market: This Best’s Special Report explores how impending changes in regulatory solvency standards and capital adequacy are the core focus of Mexico’s insurance industry. The report also notes a negative trend in terms of capitalization for the industry over the past five years, driven primarily by an increasing volume of dividends paid to shareholders.
  • Federal Terrorism Backstop Bills Would Place Greater Onus on Insurers: This Best’s Briefing states that the two bills currently in Congress that seek to extend the federal terrorism insurance backstop will increase the insurance industry’s liability.
  • The Insurance Implications of Malaysia Airlines Flight MH-17: The large aviation losses in 2014 should cause rate increases; however, they will be constrained by the high level of capacity serving this market, according to a Best’s Briefing. For the aviation war risk market, losses this year will considerably outweigh premiums written, and so substantial rate increases are expected.
  • Recent noteworthy Best’s Credit Rating Actions, rating rationales and more.

Best’s Journal is available exclusively as part of a subscription to the Best’s Insurance News & Analysis service, and is delivered every two weeks as a bound, printed publication and in digital format via the Best’s Insurance News & Analysis website. Each issue is an installment in a cumulative business resource that provides insight from A.M. Best’s perspective as a credit rating agency, data provider and news publisher with a unique focus on the insurance industry.

To learn more about Best’s Journal, watch a brief video at www.ambest.com/sales/aboutbestsjournal.html. More information about the Best’s Insurance News & Analysis subscription service is available at www.ambest.com/sales/bina/default.asp. To order, contact Customer Service at (908) 439-2200, ext. 5742 or at (800) 424-2378 when calling from the U.S. and Canada.

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2014 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

Contacts

A.M. Best
Jim Peavy
Assistant Vice President, Public Relations
908-439-2200, ext. 5644
james.peavy@ambest.com

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Contacts

A.M. Best
Jim Peavy
Assistant Vice President, Public Relations
908-439-2200, ext. 5644
james.peavy@ambest.com