The emergence of new domiciles within the European Union should not impact discussions with fronting companies, according to HDI Global’s captive portfolio manager Jelto Borgmann, but he expects Luxembourg to remain Europe’s premier captive jurisdiction.
Captive Intelligence has reported extensively on developments in France as the domicile has approved six new formations in 2023, while Italy licensed its first captive in November.
Speaking on the Global Captive Podcast alongside HDI colleagues from Europe and the United States, Borgmann explained that he analysis the financial statements of a captive, no matter what country it is domiciled in.
“We’re always looking at the financial stability of the captive,” he said.
“With Luxembourg we have a well-established jurisdiction where you have the equalisation reserves, which is seen for us in the same way as capital.
“The same, of course, would apply to France because they also want to have something similar. However, the way to establish the equalisation reserves will be slightly different.
“For me, if the captive is located in Europe, it doesn’t make much of a difference. However, I always analyse the financial statements on an individual basis.
“When it comes to the landscape, I would say Luxembourg will stay top on the list, Ireland and Malta and France will attract specific clients who have specific needs.”
Paris-based Etienne de Varax, who has been head of HDI’s Centre of Excellence for Risk Finance Solutions since January 2023, said there has been a concerted effort within the multinational insurer to bring together and expand its captive services as more companies embrace alternative risk transfer.
“We have been working with captives for a long time in many markets, especially in Europe, but also more and more in the United States,” de Varax said.
“The goal was to take advantage of what we have done already and to expand more to have wider range of what we can offer to captives and to major clients interested in risk finance solutions.”
De Varax said the centre of excellence is focused on numerous areas with captives, including providing stop loss solutions, reinsurance protection through collaboration with HDI’s sister company Hannover Re, and on affinity programmes which the insurer sees as a good growth opportunity.
More broadly, the centre of excellence is working on parametric products, as well as virtual captives.