From a foundational self-insurance vehicle to a rated capital partner writing parametric coverage and global employee benefits, Vertex Pharmaceuticals’ Vermont-domiciled captive Torreyana is redefining what a biotech captive can achieve. Mark Dugdale reports
Vertex Pharmaceuticals, a US biotechnology company headquartered in Boston, Massachusetts, is undergoing strong and consistent growth, reporting total annual revenue of US$12 billion for the fiscal year ending 31 December 2025.
As impressive as these figures are, they do not tell the whole story. This life sciences company is on the cutting edge of innovation and creates transformative medicines for people with serious diseases, with a focus on specialty markets. Vertex now has seven approved medicines: five that treat cystic fibrosis (CF), one that treats severe sickle cell disease (SCD) and transfusion-dependent beta thalassemia (TDT), and one that treats moderate-to-severe acute pain. It is also developing treatments for kidney disease, diabetes, and various genetic conditions.
As Vertex has pushed the boundaries of biopharmaceutical science, its captive insurer, Torreyana Insurance Company, has moved beyond traditional risk financing. Established in the premier domicile of the US State of Vermont, Torreyana has evolved from a foundational self-insurance vehicle into a sophisticated value driver for the organisation.
Under the leadership of Brando Soto, senior director of insurance and risk management at Vertex, the captive is breaking new ground in risks and exposures addressed, relationships, and real-world impact.
After recently undergoing its annual AM Best ratings re-accreditation, Torreyana stands as an example for US biotech firms and how they can leverage captive insurance to secure both long-term stability in a volatile commercial market and build a long-term risk management tool that supports its parent into a bright and prosperous future.
Vertex’s decision to move into the standalone captive space was a calculated, long-term play rather than a reactive measure to market cycles. “Torreyana was formed back in 2018,” Soto explains. “The decision was driven by a desire to take a more strategic, long-term view of risk management at Vertex.
“As a pharmaceutical biotech company, we anticipated that traditional insurance capacity would become increasingly constrained. We wanted an alternative tool to mitigate risk financing issues as we grew, rather than relying solely on the commercial market.”
Choosing Vermont as a domicile was a natural fit for this strategy, as the state’s regulators possess an exceptional understanding of the industry. The location also aligns with several of Vertex’s peers.
Soto notes that the ‘gold standard’ reputation of Vermont was a primary driver: “Vermont’s regulatory framework is exceptionally well-understood, and the regulators there truly ‘know’ insurance. It was the obvious choice for our long-term strategy, which includes writing medical stop-loss and employee benefits.”
Securing internal buy-in for such a venture required a significant educational shift to ensure the captive was not viewed merely as a static tactical tool.
Soto says: “The biggest hurdle wasn’t deciding if the captive made sense, but ensuring stakeholders understood it was a long-term dynamic entity, not a one-time self-insurance tool. It requires resources and is expected to grow over the next 20 years.
“We overcame this through multiple educational sessions, bringing in subject matter experts in captive management, actuarial science, and other areas to explain how these
entities operate.”
These efforts, supported by proactive industry partners, helped align Vertex’s internal stakeholders with the captive’s 20-year growth trajectory.
A critical step on the captive’s journey was the pursuit of a rating. Torreyana’s commitment to an AM Best rating serves as a strategic differentiator and a testament to its operational maturity.
This process requires a high level of transparency and annual reviews of the captive’s balance sheet strength, operating performance, and enterprise risk management (ERM).
Torreyana received its first AM Best rating in February 2025. The agency assigned a financial strength rating of ‘A’ (Excellent) and a long-term issuer credit rating of ‘a’ (Excellent) to the captive, finding that it plays a ‘strategic and critical role’ in Vertex’s overall ERM and has a highly rated and diverse reinsurance panel that is well-equipped to protect its
balance sheet.
And on 12 March this year, AM Best affirmed both ratings, giving the captive a ‘stable’ outlook.
AM Best said in its press release that the affirmed ratings reflect Torreyana’s balance sheet strength, which the agency assesses as very strong, as well as its strong operating performance, neutral business profile, and appropriate ERM.
The rating agency added that the very strong balance sheet strength assessment of Torreyana is supported by the strongest level of risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR). The captive has a highly liquid investment portfolio that consists predominantly of cash and cash equivalents. In 2025, the company added a loan back to its parent, Vertex Pharmaceuticals Incorporated.
Commenting on the affirmed ratings, Soto says: “Maintaining the rating signals financial strength, discipline and governance to the entire market.
“It requires us to keep our house in order in a way that satisfies not just our internal auditors, but global benchmarks of insurance excellence. It has completely changed the dialogue; we are no longer viewed through a transactional lens, but as a capital partner.”
Torreyana’s ‘capital partner’ status is most evident in the captive’s complex reinsurance relationships. By holding a public rating, the captive can more effectively interface with Tier 1 global reinsurers.
This is particularly vital for the fronting arrangements and cross-border risks inherent in a global biotech firm.
The rating provides reinsurers with the necessary confidence in Torreyana’s capital adequacy and technical underwriting, facilitating broader coverage terms and more competitive pricing that would be unavailable to an unrated entity.
Under Soto’s management, Torreyana has further evolved into a highly sophisticated vehicle that, for example, utilises parametric insurance to navigate volatile market conditions.
By implementing these structures, specifically to address flood exposure, the captive has been able to outperform traditional offerings.
Soto says: “We’ve been writing parametric insurance for five years to support our property programme. It allows us to underwrite risk better because we understand the specific exposures of Vertex better than a traditional insurer.”
The captive’s portfolio has expanded significantly to include structured reinsurance; medical stop-loss; non-damage business interruption; and a major 2025 initiative to onboard global employee benefits.
Soto says the move into employee benefits is a key pillar of Vertex’s human capital strategy, allowing the company to gain more control over its spend while providing consistent coverage to its global workforce.
This complexity has yielded impressive financial results, including a combined ratio for fiscal year 2025 under 30 per cent and a year-on-year surplus growth of approximately 22 per cent.
Looking toward the future, Soto envisions the captive playing a role in Vertex’s market access strategy.
He says: “My vision is to continue to leverage our captive to support the ongoing growth of the company and creatively craft solutions that go far beyond traditional and insurable risks. We take an enterprise level approach to find new solutions to support our patients.”
