Securing capital is biggest worry for US captives

The biggest concern for captive owners in the US is getting their hands on capital, according to the results of the Captive Insurance Companies Association (CICA) 2010 survey.

Captives identified the biggest challenges as: Collateral concerns (27%), regulatory issues (16%), policyholder retention/growth (16%), with tax and fronting both at 7%. Other issues like reinsurance, service, corporate governance, Solvency II, and ease in closing a captive made up the rest.

A quarter (24%) of respondents reported that they considered the price of their reinsurance to be “expensive," 67% reported it as “reasonable," and 9% as “inexpensive."

A fifth (19%) of respondents reported that their reinsurance costs are the same as the prior year, with 43% of respondents reporting an increase and 38% of respondents reporting a decrease

A majority (53%) of respondents reported investment yields of 2%-3%, with another 13% reporting investment yields in the 4%-5% range. 22% of respondents reported yields of 0%-1%, but no one reported less than 0%

The vast majority of the survey respondents (73%) reported being domiciled in a US jurisdiction, with 27% domiciled off-shore.

The survey was drafted and approved by a CICA committee and was conducted by the independent consulting firm of Veris Consulting.