International

Global captive survey

The growth in the number of new captive companies is markedly slowing down, according to the US based financial services research consultancy, Advisen Ltd. The number of captives in the world’s top 10 domiciles increased by less than 4% from 4,004 in 2004 to 4,157 in 2005. The two main, very closely related, reasons given are: an increase in reinsurance capacity and falling insurance premium rates. There are exceptions, however: the number of medical malpractice and healthcare risk retention vehicles, seen as largely unaffected by the property and casualty insurance market cycle, are on the increase. The report also suggests that the US has now surpassed Bermuda as the largest captive domicile in the world. The report cites more flexible legislation as the main reason why companies prefer to establish their captive insurance vehicles onshore, rather than in the more traditional offshore, location like Bermuda and the Cayman Islands. At the end of 2005, the most popular onshore captive locations in the US were: Vermont, Hawaii and South Carolina. To date, 19 US states have now introduced legislation to attract captive companies. The number of captives in other international domiciles such as Bermuda, Dublin, the Isle of Man and Luxembourg also fell in 2005. The Cayman Islands was the only major domicile to report a meaningful increase in its captive company population.