Wednesday, July 24, 2024

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10% of EU captives account for half the total premium – SCOR

A study by SCOR of European Union-domiciled captives has found that around 10% of captives account for half the total premium, while a quarter write only one line of business.

The European Captives report has been researched using the latest data from Solvency and Financial Condition Reports (SFCRs) filed by 189 EU-domiciled captives.

The results highlighted a rise in the number of captives in Europe over the past two years, mostly driven by increasing premiums, higher retentions, and capacity constraints, particularly for emerging risks.

Eighty per cent of the captives in the report are domiciled in Luxembourg or Ireland.

These countries account for 67% of reported gross written premium and 69% of reported assets.

Other captives considered in the study are domiciled in Denmark, Germany, Gibraltar, Malta, the Netherlands, Norway and Sweden.

Around 10% of the captives account for half the total premium in the sample, and for the median captive, premium has grown by 7.1% since last year.

“A growing number of corporate groups in Europe believe that captives have a key role to play in their risk management strategies,” the report said.

“As a result, we have seen a rise in the number of captives in Europe over the past two years, which is mostly driven by increasing (re)insurance premiums, higher retentions, and the capacity constraints on the market for emerging risk as cyber.”

The headquarters of the captive owners were mostly based in western European countries, primarily France, Germany and Belgium.

All of the US-based groups in the sample domiciled their captives in Ireland.

Gross annual property and casualty premiums written by captives in the sample amount was €5.7bn, largely driven by a few major players.

Property was the most common line written, with 76% of the captives writing some form of property risk, amounting to an average of 46% of the premium.

Liability business is the second most frequent line, written by 67% of the captives, amounting to 16% of the premium on average.

A quarter of the European captives (23%) in the SCOR sample write only one line of business.

A third (34%) of the captives in the sample write direct business, while more than half (59%) of the captives were utilised for reinsurance.

Technical provisions (gross of reinsurance and net of recoveries) amounts to €8.2bn, which is €43m on average per captive.

“While we believe our selected sample is large enough to be representative of the European captive landscape, it is by no means exhaustive,” the report noted.