Finish 2026 Strong: Three Captive Insurance Priorities for 2027

Key Takeaways

• Broaden your view of the captive by participating beyond your usual committee and considering a leadership role.
• Use peer benchmarking to put capital, losses, distributions, investments, and premium growth in context.
• Review investment diversification, liquidity, and capital needs before strong recent returns create complacency.

As we wrap up 2026, captive insurance companies continue to operate in an environment shaped by economic uncertainty, evolving risk exposures, and rising insurance costs across several lines. While many captive owners have benefited from both strong underwriting results and increased investment income over the past few years, the rest of 2026 presents opportunities which can help the captive well into 2027.

The strongest captives will be those that use the remainder of the year to understand fully how the captive is performing, benchmark against peers, and understand how investment portfolios are allocated.

The goal is not simply to close out 2026 with strong financial results. It’s to position the captive for sustainable long-term success.

Expand Your Captive Insurance Perspective

Many captive members attend the same committee at every meeting. While this may provide a deep understanding of one aspect of the captive, it doesn’t provide a broad perspective of all the captive performance drivers.

Widen your understanding by attending other committees.

The new round-robin format introduced this year offers captive members a glimpse into each committee and can help members begin to see the captive more wholistically. However, it’s no substitute for attending another committee and digging into a new aspect of the captive. Sitting in on another committee at your next meeting is a practical way to gain a fresh perspective and understand the captive more fully.

Consider taking a leadership role in your captive.

As they say, “In for a penny, in for a pound!” Each committee has a chair and vice chair, which rotate every few years. For some captives, there are also representatives which sit on an investment board for the captive. Taking on a leadership role is a great opportunity to truly understand “how the sausage is made” and ensure your questions and ideas are considered by the captive at large.

It’s not as heavy of a lift as many expect, but it can provide great value to the individual, their company, and the captive at large.

Use Captive Peer Analysis & Benchmarking to Improve Strategy

One of the benefits of joining a captive is networking and learning best practices from peers within your captive. Those conversations may cover:

• Safety practices
• Business advice
• Company structure
• Insurance strategies

One of the most underutilized tools in captive management is peer analysis. A thoughtful captive peer review, supported by captive group analysis, can show how a captive compares with similar organizations. Captive leaders often spend significant time evaluating internal performance but may spend less time considering relevant captive insurance benchmarks. Benchmarking provides valuable context for key aspects of the captive, including:

• Capital levels
• Loss performance
• Distribution strategies
• Investment allocations
• Premium growth

Peer comparisons are included in each board book and discussed in committee meetings. Peer groups are designed to consider the maturity of the captive, whether its members are in the same industry (homogeneous) or various industries (heterogeneous).

Take some extra time to review how your captive measures up to your peer group

What is your captive doing well and how do you ensure you keep a strength a strength? Where is the captive falling short and what are strategies to find a better path forward? Think about how these insights can inform strategic plans within your own businesses and the captive.

Optimizing Captive Insurance Investment Portfolios for Long-Term Growth and Stability

Over the past several years, investment returns have provided significant lift for captive profits. Captives who were previously challenged to earn meaningful investment returns have benefited from stronger equity markets and greater income generation. Younger captives with heavier allocations to fixed income and cash have benefited from reinvesting assets at higher interest rates, while more mature captives have benefited from the run-up in equity markets.

Longer-term returns for a captive’s investment portfolio are likely in the 4%-6% range, and over time, make up 25%-30% of a captive’s cumulative profit. However, over the last three years, many captives have experienced annual returns in the 8%-10% range and have contributed between 40%-50% of a captive’s annual profits.

While generating investment income is important, maintaining capital preservation and liquidity should remain primary objectives.

A diversified investment portfolio can help maintain the safety and liquidity a captive requires. Captive leaders should ensure portfolios are not overly concentrated in any single issuer, sector, or maturity range. A well-diversified portfolio can help reduce volatility while improving risk-adjusted returns.

Build a Stronger Financial Foundation for 2027

Captive insurance companies have consistently demonstrated their ability to navigate changing economic conditions, insurance market fluctuations, and evolving risk landscapes. As we near the end of the year and prepare for the next, the most successful captive leaders will be those who take a proactive approach to evaluating their captive’s financial performance, governance structure, and long-term strategic objectives rather than simply waiting for year-end results to guide decision-making.

This includes:

• Evaluating capital adequacy
• Benchmarking performance against peer captives
• Reviewing investment portfolio allocations

These activities can help uncover potential risks, highlight areas of competitive advantage, and ensure the captive remains aligned with the broader business objectives of its members.

By broadening leadership involvement, leveraging peer benchmarking insights, and maintaining a disciplined investment and capital management strategy, captive leaders can help position their organizations for greater financial stability, operational flexibility, and sustainable growth in 2027 and beyond. A forward-looking approach not only strengthens the captive itself, but also enhances its ability to deliver value, protection, and strategic benefits to member organizations for years to come.

Whether you’re an existing captive member evaluating your year-end strategy or an organization exploring captive insurance for the first time, Innovative Captive Strategies (ICS) is ready to help you own your outcomes. If you would like to learn more about captive insurance solutions, benchmark your captive’s performance, or discuss financial planning strategies, our team is ready to help. Reach out today to start the conversation and explore how a well-structured captive strategy can support your organization’s long-term risk management and financial goals.