The Impact on the Company's Long Term Performance With the Establishment of Captive Insurance Company

This study examines whether the establishment of a pure single-parent captive insurance company can effectively better the parent company's long term performance. We employ data of U.S. exchange-listed firms that have pure single-parent captive insurance companies registered in Bermuda between 1960 and 2007. Using matched pairs of firms with and without captive insurance companies, our findings show that the long term performance of the parent firm is significantly improved due to the establishment of a pure single-parent captive insurance subsidiary, suggesting such actions provide additional benefits to parent companies.