Captive Market Size Today
There are now over 100 domiciles that license and regulate captives today all around the world (approximately 30 US states now have captive statutes).
As of 2009 there were an estimated 5,000 or more captives globally, with nearly 50% of the US S&P 500 companies having captives. By the end of 2011, an estimated 80%+ of the S&P companies will be participating in a captive program.
Future growth will be driven by mid-market and smaller companies as the cost of participating in captive programs continue to decline. New 831(b) captives should continue being popular.
Some insurance industry sources state that 50% of property and casualty insurance written in the US today has captive insurance companies involved. Captives are clearly a major part of the insurance market today.
Health insurance related captives are anticipated to a robust growth sector for captives due to expected increases in health care costs and related insurance, particularly in the US where health care costs continue exploding with an aging population and expensive high-tech medicine now available to the public.
Domicile’s with related healthcare captive expertise, like the Cayman Islands according to Les Boughner, will be at the forefront of this important area although we at Captive Experts hope to see some leadership from one or more US captive domiciles.
The tables below reflect the size, as of December 2010, of only the top domiciles by annual premium, total assets managed, and number of active captives. 1
PREMIUMS (in millions $USD):
$73,800 – Vermont
$19,642 – Bermuda
$11,510 – Luxembourg
$8,664 – Cayman Islands
$5,477 – Guernsey
$3,751 – South Carolina
$2,560 – Isle of Man
$2,200 – Ireland
$1,201 – Hawaii
$602 – Singapore
ASSETS UNDER MANAGEMENT (in millions $USD):
$134,400 – Vermont
$118,000 – Bermuda
$67,891 – Luxembourg
$57,983 – Cayman Islands
$37,271 – Guernsey
$9,000 – Isle of Man
$7,500 – Ireland
$7,273 – Hawaii
$1,679 – BVI
$1,325 – Singapore
NUMBER OF CAPTIVE COMPANIES:
845 – Bermuda
738 – Cayman Islands
576 – Vermont
333 – Guernsey
252 – Anguilla
249 – Luxembourg
242 – Barbados
219 – BVI
188 – Utah
168 – Hawaii
FAST GROWING DOMICILES (based on new captives in 2010):
48 – Delaware
46 – Nevis
40 – Utah
25 – Kentucky
Captive Market Current Financial Condition
The level of captive owners’ equity increased the past several years despite lower investment returns, an indication that owners did not deplete capital during the economic downturn of 2007 through 2011. The study released confirming this involved more than 750 captive insurance company clients of Marsh—primarily single-parent captives—based on figures as of December 2010.
“In a period when the reinsurance and insurance markets continued to soften, and when many organizations struggled to just keep float, captive insurance companies performed exceedingly well,” said Michael Cormier, Global Captive Solutions Practice Leader. “Moreover, the financial stability and claims paying ability of captives generally improved during the four-year period.
“This indicates that rather than using captives as a money-saving vehicle when traditional insurance costs rise, owners are viewing their captives as efficient and effective long-term risk management and risk financing solutions.”
The report also shows that while overall new captive formations are down in most domiciles, the 10 largest U.S. onshore captive domiciles, with the exception of Arizona and Nevada, experienced growth in 2010.
“The growth of U.S. state domiciles highlights the trend of migration from offshore jurisdictions such as the British Virgin Islands, which saw the largest reduction in the number of captives—66—in 2010, to onshore locations,” added Mr Cormier.
Note and Main Reference Sources:
1/ The above numbers do not indicate which domicile is best by any means. The age of the domicile accommodating captive business has a significant impact. Which domicile is best for you is a complex analysis. You may find consultants are experts in only a handful of domiciles. And the domicile comparison tables in use today only scratch the surface of the issues you need to consider.
/Matthew Broomfield, Captive Review, March 2011
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