Hard market conditions is one of the main drivers behind the decision by Ascot US to launch a captives unit, Mark Totolos, senior vice president for captive solutions at Ascot US, told Captive Intelligence.
Ascot Group is an insurance and reinsurance company, with Ascot US appointing Totolos to the newly created role last month. He joined from Skyward Specialty Insurance where he was head of captives and programmes.
“The main reason we are starting up Captive Solutions is that the hard market environment continues to push insureds into the alternative market as more realise that risk management can have a positive financial impact to their business,” he said.
Totolos said the industry has been trending in the direction of greater captive utilisation for the last three years as a result of the hard market.
“It’s a great time to lean in because rates don’t seem like they’re going to start coming down anytime soon and captives can solve some of that instability,” he said.
Totolos said that clients are increasingly learning there is a financial impact by taking on risk retention, whether that be on the tax or premium side.
“You’re not relying on an insurance company to take underwriting profit, now you’re sharing the underwriting profit based on your own results,” he added.
Totolos indicated that the market is seeing an increasing number of consultants looking at building property captives for their clients.
“They’re a bit more difficult because of the vertical capacity, but those insureds are finding out that if they take more risks, they can reduce their overall premium while receiving potential underwriting and investment income,” he said.
Although being US focused, Totolos said Ascot will also be open to working with captives in domiciles outside of the US.
Totolos also noted that Ascot has its own captive domiciled in Tennessee, which is currently being used by the company’s workers compensation unit.
He said in the future, Ascot’s Tennessee-domiciled captive could potentially be used as a rent-a-cell unit for the company’s clients.
“Having the ability to utilise our Tennessee domiciled captive to rent a cell is a big plus for our partners that may not have access to captive options,” he said.
Totolos told Captive Intelligence that Ascot is looking to have a full launch of its Captives Solutions unit in Q1 2024.
“We are currently getting all the filings that we need completed and building the infrastructure in the background,” he said.
“I want to make sure we have the capabilities before we start bringing in additional staff.”