More French companies are becoming less reluctant to take the “next step” toward captive utilisation following the introduction of the country’s new captive legislation, according to David Vigier, director of captives services and claims strategy at HDI Global.
After numerous delays, the French legislator introduced its new regulatory system in 2023 designed for reinsurance captives and inspired by the regulatory framework in Luxembourg.
In June, the French government confirmed the details of its equalisation reserve, publishing a decree stating the provision can reach 90% of the technical result within 10 times the minimum capital requirement (MCR).
“There are a lot of captive creation studies ongoing in France and we expect captives to expand to some corporations that were previously reluctant, for many reasons, to take that next step,” Vigier said.
“In the past few years French companies did not want to have a captive in Luxembourg, Ireland or some other places. It was perceived to be complex and there might be some reputational risks linked to it.”
He highlighted that corporations across Europe that previously did not own captives are now looking at captive utilisation, particularly for risks such as property and liability.
“These are the classes of risks traditionally written by captives when it comes to working layers and attritional risks,” Vigier said.
For those companies that already have captives, he is witnessing a diversification of portfolios.
“This shows the necessity that corporations have to make up for the commercial market’s lack of appetite for certain classes of business,” he said.
“I have got a crazy example of one captive writing 16 different classes of risks.”
He said companies wanted to diversify their portfolios as it helps provide balance and stability within the captive.
Although there is a growing number of domiciles in Europe, Vigier said competition will not be an issue, with each jurisdiction creating a nuanced captive environment that will attract companies with different priorities.
“In Ireland, it’s mostly about corporate tax, which is low compared to other places,” he said.
“Luxembourg and France, to a certain degree, are more about building insured risks related provisions over time, with a limited tax impact, so they are very different.”
With the current captive activity, Vigier said there is an appetite at HDI to “be in the game”.
“We’ve got very strong qualities when it comes to underwriting and to claims,” he said.
“We are very focused on industry all-risks, and we’re focused on major accounts, but with a growing appetite for middle market accounts.”