Word on the street is that private equity firms were diligently waiting for 2025 before diving into new investments. The current market volatility has many still in the waiting game, but cash not being used doesn’t add value. As a result, now may be a really good time for PE firms to consider investing in their own captive insurer that insures the various risks associated with not only their M&A transactions, but with the operational risks inherent in every business in which they do acquire. By paying premiums to their own captive insurer and managing their risks well, PE firms could benefit from investing surplus premium not needed to pay claims. In other words, PE firms could put those premiums to work.
Notwithstanding paying claims every year, insurance companies remain some of the most profitable companies in the world. Every business has risk. Captives makes sense because they enable organizations to profit from insuring their own risks – again, presuming those risks are managed well. To learn how a captive insurer can benefit private equity, contact one of the executives at AllianceCaptiveManagement to learn more.
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