The operating results of captive insurance companies in Bermuda, the Cayman Islands and Barbados that are rated by A.M. Best continue to outperform the segment’s counterparts in the commercial casualty sector, according to a new Best’s Market Segment Report.
The report, Rated Bermuda, Cayman Islands, and Barbados Captives Steadily Navigate Market Cycles, found that in 2018, a new milestone was reached as net premiums earned surpassed $3.5 billion for the first time.
Rated captive composite reported pretax income of approximately $1 billion, an 8.3 percent increase over the previous year, the report found.
The combined ratio for Bermuda, Cayman Islands and Barbados captive composite declined slightly in 2018 by a percentage point to 85.2; however, the five-year average—from 2014 to 2018—combined ratio of 80.8 was nearly 20 points better than the 100.4 combined ratio posted by the Bermuda, Cayman Islands and Barbados captives’ peers in the commercial casualty segment.
Between 2014 and 2018, Bermuda, Cayman Islands and Barbados captives added $2.7 billion to their year-end capital and surplus and paid $1.4 billion in dividends.
The report suggested that the figures translate into nearly $4.2 billion during this period either remaining with these captives or paid back to policyholders and stockholders instead of going to the commercial market.
Although the purpose of captives is to optimise risk financing, and not to generate a profit, in most years, the report found that in most years, the Bermuda, Cayman Islands and Barbados captive composite has returned positive results.
