Captive market tops 2,000 active cells
Bermuda’s segregated account companies continued their rapid expansion in 2023, with more than 2,000 active cells across the captive market — an 8.6 per cent increase — as firms turned to protected cell structures to manage complex global risks.
Meanwhile, updated guidance for segregated account companies is expected shortly, after consulting with the industry.
According to the Bermuda Monetary Authority’s 2023 Captive Insight Report, SACs and independent SACs now represent about 15 per cent of all captive registrations and account for roughly 40 per cent of captive premiums written. Property catastrophe coverage dominated activity inside the structures, which wrote 89 per cent of their business as reinsurance.
Across the wider market, Bermuda captives wrote $31 billion in gross premiums in 2023, with 71 per cent of risk originating in North America and Bermuda.
Sixteen new captives were formed during the year, led by construction, financial services and technology and telecoms firms. Fourteen were pure captives, consistent with the overall market profile.
According to the report, Bermuda’s captive regime remains a “mature market that has weathered industry cycles, geopolitical shifts and strategic pivots”, supported by strong capital positions and conservative investment portfolios.
Short-tail property business continued to dominate captive activity, led by property and casualty catastrophe cover at 45 per cent of premiums. Cyber business grew by 22 per cent year-on-year, although it remains a small portion of total volume. Long-tail business made up 35 per cent of premiums, led by general liability and workers’ compensation.
The report showed another profitable year for the sector. Captives recorded an average combined ratio of 79 per cent and had strong balance sheets, with quoted investments, intercompany advances and cash representing 71 per cent of total assets. About 85 per cent of bond holdings were rated “A” or higher.
The BMA also pointed to emerging trends, including a new supervisory policy allowing captives to incorporate stablecoins on a case-by-case basis.
The BMA said the market is “increasingly leveraging artificial intelligence to enhance operational efficiency, risk management and strategic decision-making”, while cautioning that the technology introduces new oversight challenges.
• For the complete report, see Related Media
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