Intercompany loans and other intercompany investments are currently the single largest investment allocation for corporate captive insurance companies, according to an annual survey of captives conducted by insurance brokerage Marsh. Other trends occurring in the captive industry include a surge in small captives and growing interest in using captives for employee benefits in the wake of healthcare reform.

The survey shows that the 1,148 captives Marsh has under management hold an aggregate 34 percent of their investment portfolios in intercompany loans or other intercompany investments. The next largest allocation is to fixed-income securities, which make up 32 percent of the investments in captives' portfolios.

Marsh says the financial crisis, which lowered the return on fixed-income investments and put a premium on funding, encouraged captives' use of intercompany loans.