Although reduced medical malpractice business led to a 15 percent drop in net premiums written by captive insurers between 2006 and 2007, overall their operations benefited from favorable underwriting trends, according to A.M. Best.

A.M. Best analysts told National Underwriter that risk managers have become much more sophisticated in their use of captives. They are holding onto their captives, even during a market when rates are down almost across the board.

In fact, captives are thriving despite the market, said A.M. Best analyst John Andre.

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