Small companies flocking to set up captives

Once the domain of large companies, smaller organizations increasingly are joining the captive insurer movement, according to a new Marsh L.L.C. report.

Of the more than 1,100 captives managed by Marsh in 2014, 344, or about 31%, generated less than $1.2 million in premiums.

At 31%, small captives comprise the biggest percentage of captives managed by Marsh of any size category, including captives in the “extra-large” category — those whose premium volume exceed $20 million — which comprise 26% of captives managed by Marsh.

“The fact that small-sized captives are the largest group in the distribution effectively demonstrates our theory that captives are no longer exclusive to Fortune 500 companies,” according to the Marsh Captive Solutions Benchmarking Report, released Monday.

“Many more small and medium-size companies are becoming more aware of the opportunities that captives offer,” said Mike Serricchio, a senior vice president in Norwalk, Connecticut, with Marsh's Captive Solutions Group.

The report also found that while the number of domiciles, especially in the United States, has proliferated in recent years, three decades-old domiciles — Bermuda, Vermont and the Cayman Islands — have more captives, which do more business than any other domicile in which Marsh manages captives.

Marsh manages its greatest number of captives — 270 — in Bermuda, followed by Vermont with 192 and the Cayman Islands with 110.

By premium volume, Vermont leads the pack, with Marsh-managed captives generating $15.5 billion in premiums last year compared with $7.8 billion in Bermuda and $5.1 billion in the Cayman Islands.

Those domiciles have well-developed and sophisticated infrastructures that have enabled them to become key captive centers, said Chris Lay, president of Marsh Captive Solutions.