New regulatory regimes for captives in some European countries have already started to “change the landscape of European captive domiciles,” according to AM Best. France, which introduced rules to encourage captives to establish or redomicile in the country at the end of 2022, recorded the highest net captive growth in 2024, the rating agency says.
Publishing a market sector report, AM Best finds that Guernsey and Luxembourg jointly took first place, housing the largest number of captives in 2024 at 197 each. But Guernsey recorded a net decline of seven captives after 17 surrenders in the year, while Luxembourg saw net growth of just two after seven new formations and the loss of five.
The Isle of Man and Ireland retained their places as the third- and fourth-largest captive locations, at 94 and 61, respectively, but both recorded net declines in the growth of captives.
“Together, the top four domiciles, which are all mature captive domiciles, saw a net decline in captive numbers in 2024, while net increase have been seen among the smaller and newer domiciles,” AM Best says, also noting that the UK is preparing for a captive insurance regime ready for 2027.
France has “grown fast” as a captive domicile, AM Best says, now the eighth-largest captive domicile in Europe and housing a total of 20 captives in 2024 after adding five new captives in the year: AssuraPoste Re (Groupe La Poste), CDA Reinsurance (Chantiers de l’Atlantique), Orange Réassurance (Orange), Soreval France (Safran) and SRIGLB (Lucien Barriere).
Additional licences have since been granted to Groupe Bel for Bel Ré and Groupe Agrial’s Agrial Réassurance, and AM Best says it expects further approvals before the end of 2025 and also in 2026.
The analyst says captives have “proven to be a cost-effective risk management tool” for European organisations, particularly for large risks such as cyber, property and business interruption, and have expanded into new lines such as D&O, trade credit and political risk. In addition, captives are expected to benefit from more proportionate rules under Europe’s changes to Solvency II from 2027.
Kanika Thukral, associate director at AM Best, says captives are dependent on high levels of reinsurance but are well-positioned to benefit from softer reinsurance rates at renewal.
“Given their generally favourable claims history, AM Best expects captives to negotiate better terms and conditions for their reinsurance programme during the upcoming renewal season, which in past years has often been restrictive, with higher attachment points and incorporated exclusions, particularly for certain liability and natural catastrophe-exposed risks,” Ms. Thukral says.
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