The Bermuda captive market was profitable in 2017, according to the BMA’s captive report 2018.
The report highlighted results from statutory financial returns submitted through the BMA’s electronic statutory financial return system as of 31 October 2018. The new system officially launched in April 2016 for financial year-end returns for 31 December 2016 onwards.
The report’s statistics on profitability ratios in the domicile showed that the captive market was profitable in 2017, with the median loss ratio and combined ratio for general business captives at 54 percent (an increase from 49 percent in 2016) and 77 percent (an increase from 75 percent in 2016).
The BMA noted that the loss ratio increased reflected insurers paying claims “primarily related to natural catastrophes in 2017”.
According to the report, the combined ratio is relatively unchanged as insurers restructured in a bid to increase operational efficiency.
In 2017, 53 percent of all business written by Bermuda captives was property coverage, down from 55 percent the year before.
The primary property lines were property and casualty catastrophe (43 percent, up from 38 percent in 2016), warranty and residual value (21 percent, no change), and property damage and business interruption (15 percent, up from 12 percent).
Casualty lines made up about 47 percent of all business written, in comparison to 45 percent in 2016.
The main casualty lines written in 2017 were general liability (26 percent, up from 21 percent in 2016), workers’ compensation and employers liability (24 percent, down from 29 percent), and motor (20 percent, down from 24 percent).
In terms Bermuda captives assets’, the BMA noted that they’re primarily “held in investments and intercompany investment advances, however, the combined percentage of the two has decreased from the prior year, as insurers reallocated their asset mix”.
Additionally, the report revealed that the majority of Bermuda captives’ investments are in investment-grade securities, with 73 percent in bonds (down from 81 percent in 2016) and 17 percent in equities (up from 12 percent in 2016).
Matching the figures from 2016, 17 percent of limited purpose insurers reported having segregated accounts in 2017.
More than half of business written in these cells related to workers’ compensation, motor, and general liability.
The BMA commented that the market is “adequately positioned to pay claims from reserves and capital and surplus when due”.