Group captive experts Captive Resources added more than $500m in new premium to its portfolio in 2022, with some members now contributing up to $35m in annual premium.
There are nearly 6,000 members of the various group captives CRI consults on today, and Nick Hentges, CEO of CRI, spoke exclusively to Captive Intelligence in a wide ranging interview for GCP #79.
Hentges discussed CRI’s performance in 2022, its ambitions for further expansion into medical stop loss and why he believes group captives more than hold their own as an alternative to single parent captives in some instances.
The largest group captive the firm consults on is Affinity Insurance Ltd, first established in 1995, which has around 470 members and $407m in annual premium.
“It is really the size of some fairly sizable insurance companies,” Hentges said.
The CEO is passionate about the rationale of continuing to grow existing group captives and the advantages that scale can bring.
“In a big programme, a sizable programme, you really do have leverage in the marketplace, and that gives the members of that captive control to get consistency and predictability in what their insurance programme is going to be as they move forward,” he explained.
“It does give buying power. We negotiate from a position of strength rather than hoping that our partners are going to do well by us.”
When programmes surpass more than 200 members, CRI discusses with the captive’s board of directors what the appetite is and whether a second vehicle should be established, utilising the same broker network, to continue the growth.
CRI often refers to the strategy as a “parent-child relationship”, although there is no formal relationship between the two programmes – the established “parent” has no ownership or control over the new “child”.
“What we’ll do with the parent is raise the minimum premium, so we’re going after larger accounts now,” Hentges said.
“They may tighten the type of account that they’re looking for in that parent programme, and then we will open up the second programme.”
He highlighted how this strategy had worked successfully with Presidio Insurance, Ltd, a heterogeneous group captive, which had reached 200 members.
Fortis Insurance (Cayman), Ltd, the so-called ‘child’ of Presidio, was formed in 2016 and has since grown to 190 members itself. Presidio is now at 385 members, so it too, has continued to grow while incorporating the slightly different strategy.
“We are now starting to talk about the grandchild of Presidio, the child of Fortis, so we have a way of controlling the growth in those programmes,” Hentges added.
MSL and larger accounts
Captive Intelligence has previously reported that Captive Resources has been targeting the medical stop loss market over the past decade as businesses struggle to handle the growing cost of health insurance premiums, with self-insurance structures proving an effective strategy. In more recent years, that focus has intensified.
In November 2022 Joseph Parrilli, senior vice president at CRI, told the Global Captive Podcast that there are now more than 200 members of the medical stop loss captives the firm consults on.
“We think medical stop loss is going to be a huge area of growth,” Hentges added.
“We went from having three employees to, I think, we’re 30 or 35 employees now on the medical stop loss side. We’re going to be big in that space.”
The group captive strategy is also becoming increasingly appealing for larger companies, with Olympus Insurance Ltd. being established for members paying more than $5m in premium.
The largest individual member in the group captives that CRI supports is $35m in annual premium.