A.M. Best has released a Special Report on U.S. captives’ performance in 2012. The report found that institutions are moving toward a strategy of using captives to protect themselves against market volatility, rather than viewing captives as just a shorter-term solution to rate increases.
According to A.M. Best, "Over the longer term, the resulting five-year combined ratio for the captive composite of 92.3 still compares extremely favorably with the commercial casualty composite of 103.3. The captives’ operating ratio over the same five-year period is tighter, with the captives generating a five-year operating ratio of 76.0 versus 88.5 for the commercial casualty composite. It is well known that captives’ investment portfolios tend to be significantly more conservative; and therefore, less income generating, than typical investment portfolios for commercial casualty companies."
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