In a speech in 1962, President John F. Kennedy observed that the Chinese character for crisis was the combination of the brush stroke for “danger” with the brush stroke for “opportunity.” While this could describe the financial world in general right now, it is a good summation of the current captive insurance environment.

Investment income is down significantly, removing one big incentive for risk managers to form new captives. And as long as the soft market continues, prices for coverage from traditional insurers may be so attractive that the decision to form a captive becomes more difficult to rationalize.

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