AM Best rated captives generated an estimated $8.2 billion in savings for their parent organizations over the past five years, the rating agency said in a market segment report that puts a hard number on a case insurers usually argue only in qualitative terms. The figure lands just as global commercial insurance pricing has softened for eight consecutive quarters, testing whether the arbitrage behind captive formation survives a retreating market.
Eight quarters of softening, and the captive case still holds
Global commercial insurance rates fell by an average of 6% in the second quarter of 2026, according to Marsh’s quarterly Global Insurance Market Index — the eighth consecutive quarter of rate decreases. InsuraBeat covered the same inflection point when the index first showed IMEA leading the regional declines, and the softening has only extended since. For captive owners, that duration matters more than any single quarter’s headline number: eight quarters is long enough to erase much of the pricing gap that made a captive worth the compliance overhead in the first place — in theory.
Yet AM Best’s July report describes the opposite happening among the captives it rates. Net premium written by that population rose 7% at year-end 2025, extending a 65.5% increase over five years that included a sharp 23% jump in 2022. A book of business does not keep expanding at that pace purely on hard-market momentum once the market in question has spent two years softening.
Where the $8.2 billion in savings actually comes from
AM Best said in its July market segment report that it now rates more than 220 captive insurance companies globally, with roughly 70% domiciled in the United States, 17% in the Caribbean and the remaining 13% spread across other jurisdictions. Against that base, the agency estimated the rated population had generated an estimated $8.2 billion in savings for their organizations over the past five years by routing risk through a captive instead of buying it on the retail market.
Price is not the only factor in today’s market, but a well-designed captive is also about finding long-term solutions that meet the organization’s particular needs.
Sharon Marks, director, AM Best
Marks framed the growth as a durability story rather than a pricing one: the trend, she said, reinforces AM Best’s view that captives are increasingly regarded as long-term strategic risk-financing mechanisms rather than tools that get mothballed once retail rates ease. That framing matters for the report’s timing. The broader market backs the trajectory — the FCA’s draft captive framework cites global captive premiums of $69 billion in 2021, projected to reach $161 billion by 2030, a figure the regulator uses to justify the UK’s own push into the segment, previewed when the PRA set out plans to reverse the offshore drift of UK-parented captives and detailed further in the consultation promising four-to-six week authorisations by mid-2027.
Casualty is the outlier keeping the retention math alive
The captive case does not benefit uniformly from the current market — it concentrates precisely where retail pricing stays punitive. Global property rates fell 12% in the second quarter, following declines of 9% in the first quarter and 9% in the fourth quarter of 2025, per Marsh. US casualty moved the opposite way, rising 7% in the second quarter after a 9% increase in the first quarter. Aon’s own first-quarter market overview reached a similar conclusion, noting that some clients with large US exposures are exploring adjustments to retentions and limits, as well as fronting and captive solutions, to achieve pricing and program stabilization.
That divergence explains why captive growth has not stalled even as the broader market corrects. A property owner facing double-digit rate relief has little reason to retain risk it can now transfer more cheaply. A casualty buyer facing another year of increases has every reason to keep pushing risk into a vehicle it controls. Sustained captive growth, in other words, reads less like a hard-market artifact than like structural retained-premium leakage from the lines where the traditional market has not yet corrected.
The combined ratio caveat AM Best won’t quantify
AM Best’s report is not an unqualified endorsement. The agency said its rated captives have experienced pressure on operating performance over the past two years when examining combined ratio metrics, though their performance continues to exceed industry benchmarks. Notably, AM Best did not publish the underlying ratio figures behind that statement, and specific combined-ratio numbers circulating in secondary summaries of the report could not be verified against the source and are not repeated here. The caveat matters: operating discipline, not just a favorable rate gap, is what separates a captive built as permanent infrastructure from one that was a hard-market improvisation waiting to be unwound.
Brokers and regulators are reading the same signal
Captives are one strand in a broader shift toward retained and alternative risk financing. The insurance-linked securities market hit a record high this year as Swiss Re formalized a standalone alternative capital unit, and in Europe, Allianz’s captive-fronting arm relocated from Liechtenstein to Switzerland to sit inside a stricter supervisory perimeter. Each move points the same direction: large buyers and the carriers serving them are building permanent infrastructure for retaining risk, not opportunistic hedges against a hard market that will eventually pass. AM Best’s $8.2 billion figure gives that shift, for the first time, a dollar sign attached to a captive segment specifically.
