Best’s Market Segment Report: Rated Captives Continue to Demonstrate Financial Stability in Evolving Risk Landscape

OLDWICK, N.J.--(BUSINESS WIRE)--AM Best-rated U.S. captive insurance companies not only continued to outperform their counterparts in the commercial market but also provided a less costly route that generated an estimated $8.2 billion in savings for their organizations over the past five years, according to a new Best’s Market Segment Report.

Even as more-affordable capacity materializes in the traditional commercial segment, the captive market continues to exhibit sustained growth, exemplified by new formations and the expansion of coverage into new lines. “This trend reinforces AM Best’s view that captives are increasingly regarded as long-term strategic risk-financing mechanisms,” said Sharon Marks, director, AM Best.

For decades, captives have proven to be an effective alternative to financing risk and have proven over time to be an effective enterprise risk management (ERM) strategy for organizations that understand their own unique risks. In periods of market hardening, captive vehicles can offer an efficient option to support a parent’s or member’s coverage requirements.

Single-parent captives emanate from the parent’s corporate ERM strategy to provide coverages that work closely with loss control and offer products that are customized to fit the needs of the company. “Given this customization, price is not the only factor in today’s market, but a well-designed captive is also about finding long-term solutions that meet the organization’s particular needs,” Marks said.

AM Best rates over 220 captive companies globally. Approximately 70% of these captives are domiciled in the United States, with about 17% in the Caribbean and the remaining 13% in various other domiciles globally. These are comprised of single-parent captives, group captives, risk retention groups and cell companies.

Among the report’s other findings:

• AM Best-rated captives have experienced pressure on their operating performance in the past two years when examining the combined ratio metrics, but when compared with industry benchmarks, their performance continues to exceed that of the industry;
• Premium levels among rated captives have continued to increase in each of the past five years. At year-end 2025, net premium written increased 7% for AM Best-rated captives. The five-year change is 65.5%, with premiums increasing substantially in 2022 to 23%.

To access the full copy of this market segment report, titled, “Rated Captives Continue to Demonstrate Financial Stability in an Evolving Risk Landscape,” please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=367014.

AM Best will host a market briefing on the state of the captive insurance industry on Tuesday, Aug. 4, 2026, at 10:00 a.m. EDT. Please visit the briefing page to register for the event.

AM Best remains the leading rating agency of alternative risk transfer entities, with more than 200 such vehicles rated in the United States and throughout the world. For current Best’s Credit Ratings and independent data on the captive and alternative risk transfer insurance market, please visit www.ambest.com/captive.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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