Captive owners still gain financial advantages from using the alternative risk vehicles to directly access the reinsurance market, but the benefits have diminished.

With a soft market for most lines of coverage, policyholders can obtain attractive rates directly from commercial insurers and don't need to route the risks through a captive to obtain the cheaper rates that historically have been available from reinsurance companies.

And for the few coverage lines where rates are hardening, such as some energy risks, reinsurance costs have risen and capacity has contracted, experts say.

Companies previously obtained significant savings by using captives to tap reinsurance capacity. Reinsurers traditionally provide significant amounts of capacity to insurers so, by accessing that capacity directly, captive owners were able to create efficiencies.

But that benefit is less pronounced, as primary insurers are offering such cheap rates for most forms of property/casualty insurance that accessing reinsurance directly offers little in the way of savings.

“You used to save a lot of money accessing reinsurance (with a captive), but you have such a soft market now that sometimes it's not cheaper,” said Gary Osborne, president of the captive manager USA Risk Group Inc. in Montpelier, Vt.

In the end, what a captive will get in tapping the reinsurance market depends on the specific circumstances. “None of our clients are the same,” said James Murray, a director of captive and insurance management at Aon Global Risk Consulting in Burlington, Vt., a unit of Chicago-based Aon Corp. “We don't have a cookie-cutter approach.”

The benefits of using reinsurance range from a captive's loss experience to the appetite of reinsurers for taking on a risk, he said.

Not all reinsurers are interested in captive business.

“The reinsurance market for captives is smaller than the ones for insurers,” said Michael O'Malley, managing director of consulting in Concord, Mass., at the captive management firm Strategic Risk Solutions Inc.

Though, according to Mr. Osborne, “Almost every reinsurer will entertain a captive proposal that's large enough. Few will say point blank that they won't deal with a captive.”

In some cases, captive owners continue to find better prices from reinsurers. For example, Mr. Osborne said he put together a captive for a shopping mall operator within the past six months. The company was located in an area that had experienced hurricanes previously, so coverage was not easy for it to find. But the shopping mall operator obtained roughly $150 million of coverage on its windstorm risks from reinsurers for the same price it would have gotten around $100 million from insurers, Mr. Osborne said.

“It's not that it's not worth it to get it; it's just that the insurance market is relatively soft at the moment, so it's relatively easy in most of the general lines (of business) for our clients to find the insurance they need,” said Jill Husbands, head of office and managing director at Marsh IAS Management Services (Bermuda) Ltd. in Hamilton, which is a unit of the New York-based Marsh Inc.

She said in specialty lines of insurance where the market has hardened a little, some clients need to find capacity from reinsurers. For example, her team has seen “a number of instances” of captives in the energy sector wanting to access the reinsurance market themselves out of the need for additional capacity, she said.

But accessing reinsurance is not always straightforward.

Andrew Baillie, property risk manager for AES Corp. in Arlington, Va., is finding that options are limited for the power company, which faces risks that range from tropical storm damage to gas explosions at its plants.

The company established AES Global Insurance Co. in Burlington, Vt., to insure its assets on a consolidated basis. The captive now carries the first $30 million of AES' risk. To cover its risks beyond that amount, the captive also buys up to $1 billion dollars of additional coverage.

But prices for some energy exposures have increased significantly as a result of losses related to damage to the Fukushima nuclear plant in Japan in March and the BP P.L.C. oil spill in 2010.

“We're finding that there's a limited supply of the coverage we need because we're in a fairly difficult market,” Mr. Baillie said. He said the captive provides a wider choice of underwriters from which AES can buy coverage. “Sometimes the opportunities are cheaper, and sometimes they're not, but if you need (coverage) then you're the victim of whatever the pricing will be,” he added.

Mr. Baillie said AES is exploring other options for its April renewal.

“The most sophisticated risk management buyers will be continually looking at the market to see what the correct solution is for them,” Mr. Baillie said. In some cases, the solution might be to carry more risk in the captive; and in others, the answer might be to move the risk into other places or to use new structures.

“You have to continually look at how (the market) is evolving,” Mr. Baillie said.