Marsh Global Benchmarking Report 2008

Marsh’s Global Benchmarking Report 2008, ‘Next generation captives: optimizing opportunities’, released this month reports that indications are that captives could be more profitable for their owners.

Over 40% of the captives surveyed have a return on capital employed (ROCE) of greater than 10% but these returns have been affected by generally low investment returns of below 3% in about 40% of captives. By contrast a third of all captives have a ROCE of less than 5.00%.

Citing that most captives are conservatively managed and tend to invest in low risk instruments, the report found that 60.00% of the 900 captives surveyed do not buy reinsurance to reduce risk and free up capital, which could be used to improve returns.

The report suggests however that most captive business continues to be profitable but could give greater returns with better structural optimization.

According to the report more than a third of captives are currently achieving an ROCE of 5% or less; financial institutions account for 20% of all captives, healthcare companies 11% and manufacturers 10%; US companies own 57% of the world’s captives; and all of the Dow Jones 30 own captives.  

To get a copy of this report please go to http://marsh.co.uk/download.php?id=31