For those who work with Captive Insurance (single parent, group, cells, etc) what have you found to be an average rate of return on investments?
Clarification added 11 months ago:
1. Please identify where the captive you are representing in your answer is domiciled in the US or non-US (if non-US, what domicile).
Thanks,
Chris Kramer
Manager for the Captive Insurance & Risk Retention Network.
To Join this group, please follow this link: http://www.linkedin.com/e/gis/57367/761D343A40C0
Answers (1)
As investment consultants (we do not manage assets) who exclusively work with insurers, we would have to unfortunately say the answer is 'it depends' on several factors.
In the current environment, fixed income portfolios with heavy US Treasury exposure have done better than those focused more on yield oriented sectors (investment grade corporates, high grade MBS, etc). Thus, for some insurers, recent manager performance has been poor versus generic benchmarks (which are typically Treasury heavy). Add in the fact that a captive's portfolio is usually nowhere near as diverse as the benchmark indices, and you have the potential for credit events hurting captive portfolios more than those benchmarks.
For most equity portfolios, we still see very few managers who can consistently beat the generic indices, adjusted for fees and risk.
Please accept my apologies for being unable to quote a single 'average rate of return', but as you can tell, your question is multi-faceted.
(FYI, we work with captives in various domiciles, both US and Bermuda)
