A.M. Best Briefing: Japanese Captive Industry Poised to Accelerate Growth
By a
The Best's Briefing, titled, "Growing Role of Japanese Captives," states that the low utilization in
The domicile is a key factor for captives' expansion.
The investment portfolios of the captives are yield-challenged just like those of the commercial market carriers. Liquidity is paramount for captives to support prompt claims payment given their role of fronting the parent risks with a number of (re)insurers. Consequently, investment portfolios consisting mainly of highly-liquid assets, such as cash or short-term deposits and investment income, have a limited contribution to overall returns amid the low-rate environment. On the other hand, a few of the rated captives have managed their capital efficiently in search of yields by offering a loan-back program to the parent through the group's liquidity management program.
Rated Japanese captives currently face an increasing challenge due to the weakening credit profiles of the parent companies. Although parent profile is not a sole factor in assessing the creditworthiness of the captive, this factor is increasingly putting downward pressure on the ratings of captives given their main purpose of managing the risks of captive owners. Another challenge for the Japanese captives has been the inclusion of new lines of business associated with the parent's business expansion. For further captive usage to occur,
To access a copy of this briefing, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=255377.
Keywords for this news article include:
Our reports deliver fact-based news of research and discoveries from around the world. Copyright 2016, NewsRx LLC
What does Trump’s vow to kill Obamacare mean for open enrollment?
Advisor News
Annuity News
Health/Employee Benefits News
Life Insurance News