Article ID: 8d54de157027a712f2de538d4451ce0fe53994bdcad3c31fd4521a7b1e889c38
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URL: https://www.businessinsurance.com/captive-owners-use-hybrid-structures-to-add-stability/
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Captive owners use hybrid structures to add stability - Business Insurance Skip to content Register for free Search Search Log In Risk Management Cyber Risks Pricing Trends Mergers & Acquisitions Technology Sponsored Content WSIA RISKWORLD Workers Comp & Safety Workers Comp Cost Control Pain Management Workplace Safety International EMEA Asia-Pacific Latin America People Events BI Intelligence Top 100 Agents & Brokers Best Places to Work 2025 Lists Directories Insurance Pricing BI Stock Index Magazine Current Issue Past Issues Subscribe Women to Watch ALL INsurance Resources Risk Perspectives Sponsored Content Webinars White Papers Risk Management Cyber Risks Pricing Trends Mergers & Acquisitions Technology Sponsored Content WSIA RISKWORLD Workers Comp & Safety Workers Comp Cost Control Pain Management Workplace Safety International EMEA Asia-Pacific Latin America People Events BI Intelligence Top 100 Agents & Brokers Best Places to Work 2025 Lists Directories Insurance Pricing BI Stock Index Magazine Current Issue Past Issues Subscribe Women to Watch ALL INsurance Resources Risk Perspectives Sponsored Content Webinars White Papers Risk Management Cyber Risks Pricing Trends Mergers & Acquisitions Technology Sponsored Content WSIA RISKWORLD Workers Comp & Safety Workers Comp Cost Control Pain Management Workplace Safety International EMEA Asia-Pacific Latin America People Events BI Intelligence Top 100 Agents & Brokers Best Places to Work 2025 Lists Directories Insurance Pricing BI Stock Index Magazine Current Issue Past Issues Subscribe Women to Watch ALL INsurance Resources Risk Perspectives Sponsored Content Webinars White Papers Risk Management Cyber Risks Pricing Trends Mergers & Acquisitions Technology Sponsored Content WSIA RISKWORLD Workers Comp & Safety Workers Comp Cost Control Pain Management Workplace Safety International EMEA Asia-Pacific Latin America People Events BI Intelligence Top 100 Agents & Brokers Best Places to Work 2025 Lists Directories Insurance Pricing BI Stock Index Magazine Current Issue Past Issues Subscribe Women to Watch ALL INsurance Resources Risk Perspectives Sponsored Content Webinars White Papers Captive owners use hybrid structures to add stability by Claire Wilkinson Alternative Risk Transfer/Captives , Reinsurance Mar 10, 2026 PALM DESERT, California – Hybrid insurance and reinsurance structures that blend traditional coverage with alternative risk transfer are gaining traction among captive owners seeking greater flexibility and protection from volatile pricing, experts say. Hybrid structures allow companies to optimize captive programs, said Graham McCarthy, a Dublin-based partner at McGill and Partners, during a panel session at the Captive Insurance Companies Association 2026 International Conference. Captive owners can “leverage markets, create arbitrage for themselves and ultimately keep control of their captive program,” he said. Hybrid structures may include facultative reinsurance for specific risks, multi-line treaty reinsurance or multi-year aggregate protections. These approaches can help organizations stabilize costs and manage volatility in their captives, panelists said. RWE AG consolidated several separately placed property programs into a single global property program supported by its captive insurer, said Udo Kappes, head of insurance at the Essen, Germany-based energy company. The process began with an actuarial analysis of claims data to determine expected loss levels, he said. “Once you have the data sorted and on the table then you can really start playing with these figures. It gives you the opportunity to define your own risk appetite,” Mr. Kappes said. From there, the company decided on a retention level that would allow the captive to assume more risk while maintaining protection against large losses. “My preference is always to look at the amount of claims I can expect in the coming years and to find a level of retention that gives the opportunity to keep benefits and profits in your own captive rather than pay it to the insurance market over the long term,” Mr. Kappes said. Commercial market pricing can create pressure to justify captives internally, panelists said. While property insurance rates have softened recently, captives can help companies smooth insurance costs across market cycles, they said. “For CFOs it’s a good argument to say that in the future you don’t have to be concerned about hard market phases,” Mr. Kappes said. Many structured programs established during the hard market continue to renew because they provide predictability, said Katherine Malley, New York-based head of alternative risk solutions, Americas at Swiss Re Corporate Solutions. Programs launched in 2021 and 2022 are “sticking around” because they demonstrate the long-term benefit of stabilizing pricing, she said. Programs are often designed around expected loss curves across several lines of business and typically span three to five years to help ensure stability. “Ultimately, the goal is to have something in place that will work for the time horizon we’re planning for and beyond,” Ms. Malley said. 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