The ideal clients for SRS Altitude will primarily be in the large corporate space, where clients tend to have sophisticated risk management and risk financing needs.
Strategic Risk Solutions announced the launch of SRS Altitude in November, with the managing general underwriter (MGU) focusing on alternative risk transfer solutions, led by Loredana Mazzoleni Neglén as Global CEO.
Speaking exclusively on the Global Captive Podcast, Neglén and chief commercial officer Thomas Keist explained the genesis of SRS Altitude, its objectives and why an MGU focused on sophisticated clients can be of benefit for captive owners.
“Those clients will have well-established captives or will be in the process of establishing those captives and want to leverage them in their risk management strategy, and management of their overall cost of capital,” said Neglén, speaking on GCP #103.
“We also believe that those clients and captives think long term.”
Keist said the MGU will provide alternative risk transfer solutions for both clients with and without a captive.
“However, we expect the majority of transactions in the first phase of our business operations will involve a captive,” he said.
“Because of the trend of higher retentions, and how they are managed, this also lends itself to us offering products that emulate the financial mechanics of a captive without the actual legal entity being involved.”
Like managing general agents (MGAs), MGUs do not have their own capacity, and instead use the paper and capacity of a legally unrelated risk carrier.
MGUs also tend to focus on a specific markets or products, whereas a commercial insurer typically covers a broader range of risks.
Keist said the main difference between an MGA and a MGU is that MGUs do not handle the premium invoicing or claims.
“It leaves these two very important functionalities to the commercial insurer or reinsurer who is behind the MGU,” he said.
“This is a very positive aspect for clients as it allows for a direct relationship between itself and the commercial insurer on very critical parts of the transaction.”
Neglén said an increase in premium rates and shrinking capacity in the commercial market has accelerated the need for captives to retain more risk.
“This has prompted the need for the captives to enter into structured reinsurance solutions that are multi-year and multi-line, in order to maintain strong solvency ratios,” she said. “I believe this change is structural and for the long-term in our industry, and we see SRS Altitude as an agile vehicle that will be an important play into to this market.”