If you’re here, it’s likely for one of two reasons: You’re looking to form a single-parent or group captive but aren’t sure which fronting carrier you should go with, or you’re joining a group captive and checking to see if they have a reliable and stable fronting carrier.
Selecting a fronting carrier or learning about them can be daunting. It’s more than making sure you can tick off boxes of what you’re looking for. These carriers are essential for reinsurance, financial strength, having licensing in all 50 states, and ensuring they can keep everything stable for your captive insurer.
ReNu Insurance Group has worked in the captive market for years, helping over 130 businesses become captive owners. We understand how they’re vital for captives and know the key criteria to know who’s the best.
After reading this article, you will understand our criteria for the best fronting carriers and who we ranked as the best. That way, you can determine which fronting carrier will best fit the needs of your captive insurer or see if the group captive you want to join has a reliable fronting carrier.
The criteria ReNu Insurance Group will look at:
- AM Best rating
- Financial strength
- Licensed to write in all 50 states
- Years of experience fronting captives
- Services
Our opinion of the best fronting carriers is in alphabetical order:
- American International Group (AIG)
- Arch Insurance
- Great American Insurance Group
- Old Republic Insurance Group
- Zurich North America
Be sure to watch this video on fronting carriers and why they are important for captive insurers.
Understanding our criteria for the best fronting carriers
A.M. Best Rating
What exactly is an A.M. Best rating? This rating is provided by A.M. Best, which evaluates an insurance company's financial strength, operating performance, and business profile.
An A.M. Best rating answers two questions: “Are they reliable? Will they fulfill their obligations?”
Financial strength
Can your fronting carrier fulfill its obligations to pay claims? If so, how deep are their pockets? All of the fronting carriers also have retail distribution of other insurance products. How well are they doing, and can they support our captive? Because the fronting carrier has credit risk, meaning they are on the hook to pay claims if the captive doesn’t have the money, it's important to understand the financial strength of the carrier. Remember, this is a two-way street. The fronting carrier also wants to ensure you will fulfill your obligation as a captive member, which is where the member collateral comes in.
This guide provided by A.M. Best below shows the categories these insurance companies would fall under in Roman Numerals, indicating their capital and surplus. The higher the Roman Numeral, the higher the capital and surplus.
Licensed to write in all 50 states
Utilizing the licensing of a fronting carrier allows the captive insurer to avoid licensing in each state where a business is written.
Let’s say a South Carolina roofing company wants to join a group captive. Because the carrier is licensed in all states, the captive doesn’t have to go through the mundane and redundant filing process to be licensed in South Carolina.
Years of experience fronting captives
This category is a little broader. You want reassurance the carrier has the knowledge to front a captive. Generally speaking, structures in captives are different compared to traditional insurers. With years of experience, it gives you an indication of how the fronting carrier adapts to the structures of multiple captives.
Services
You need to know what coverage these fronting carriers provide, the lines of businesses they support, and what types of captives they focus on. For example, if you’re creating a single-parent captive only for a potential fronting carrier to work with group captives, their services won’t be in your best interest.
Top five best fronting carriers for captive insurance
American International Group (AIG)
AM Best rating: A+ (Superior)
Financial strength: XV (Greater than or Equal to USD 2.00 Billion)
Licensed to write in all 50 states: Yes. They also provide coverage for over 200 countries and jurisdictions.
Years of experience fronting captives: Over 50 years.
Services:
- Coverage and credit solutions for rent-a-captives, captive ownership, and building captives.
- Supports individual or multiple lines of business.
- Access to reinsurance markets.
- Develops fronting programs to manage channeling risks with American International Groups Underwriting, Credit, Legal, Claims, and Actuarial teams.
Bonus information: AIG has a deep understanding of captives. They understand that captives can be a more cost-effective alternative to the commercial market.
For an overview of their exact services, look at AIG’s captive management services page. Also, read their captive solutions for a rundown on their fronting carrier services.
Arch Insurance
AM Best rating: A+ (Superior)
Financial strength: XV (Greater than or Equal to USD 2.00 Billion)
Licensed to write in all 50 states: Yes, including the District of Columbia, Puerto Rico, Guam, and the U.S. Virgin Islands.
Years of experience fronting captives: At least 30 years
Services:
- Dedicated underwriting, operations, finance, and claims team.
- Primary focus on homogeneous and heterogeneous group captives.
- Help groups or individuals take a portion of their primary liability risks through a Captive or Rent-a-Captive.
Check out Arch Insurance’s Alternate Markets page to get a better view of what they provide regarding captives.
Great American Insurance Group
AM Best rating: A+ (Superior)
Financial strength: XV (Greater than or Equal to USD 2.00 Billion)
Licensed to write in all 50 states: Yes.
Years of experience fronting captives: Over 50 years
Services:
- Coverage for rent-a-captives, captive ownership, and building captives.
- Heterogeneous or Homogeneous group captive insurance.
- Supports Worker’s Compensation, General Liability, and Auto group captive insurance in all 50 states.
- Bundled or unbundled (third-party administrators) claims and loss prevention (LP) services.
Take a look at Great American’s Alternative Markets page to see if their services are right for your needs.
Old Republic Insurance Group
AM Best rating: A+ (Superior)
Financial strength: XV (Greater than or Equal to USD 2.00 Billion)
Licensed to write in all 50 states: Yes. They also have coverage in three U.S. territories and in all 10 Canadian provinces.
Years of experience fronting captives: 70+ years
Services:
- Excess risk transfer to single parent, affinity, and group captives.
- Casualty fronting and risk transfer for General Liability, Auto Liability, workers’ comp, and physical damage policies.
- Provides policies for single-parent and group captives.
- Expertise in heterogeneous and homogeneous group captives and affinity captives.
Bonus information: They have also received captive international awards for the year 2023.
Read Old Republic’s captive reinsurance page to see if their products and services fit your needs.
Zurich American Insurance Company
AM Best rating: A+ (Superior)
Financial strength: XV (Greater than or Equal to USD 2.00 Billion)
Licensed to write in all 50 states: Yes, as well as the District of Columbia and several US territories.
Years of experience fronting captives: Over 30 years of global experience.
Services:
- Coverage for single-parent and group captives.
- Collateral options.
- Manages multiple group captive programs with over 3,200 member companies.
To understand captives and what Zurich North America offers, check out their captive insurance page to learn about the services offered.
Make sure your business is an ideal fit for captives
Knowing which fronting carrier is best for your needs isn’t easy, especially when there are so many companies to choose from. Narrowing it down can be overwhelming, especially when you want to make the best choice and make sure everything goes well with your insurance
Learning about the best fronting carriers can only benefit you, especially as you either create a captive insurer or decide to join one. If there’s anything that you need reassurance on, it’s knowing whether or not your business is the best fit for a captive insurer.
Click the Take Your Assessment button below to better understand how your business would perform when going with captives. After answering 10 simple questions, you can see how much you can save on insurance premiums when switching to captive insurance.
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