Sunday, April 21, 2024

Membership options

Marsh on track for another “record year” of new captive formations

Ellen Charnley, president of Marsh Captive Solutions, is expecting 2022 to have been another record year for new formations by the largest captive manager in the world once the final numbers are confirmed.

Marsh broke their own records in 2020 and 2021 when 200 new captives were formed during those two years and speaking on GCP #78, Charnley said appetite for new captives shows no sign of waning.

“We have not seen any signs of it cooling down yet,” she said.

“I ran the very draft numbers year to date so far, and we’re on track for another record year.

“I’m predicting another record year this year. I could be wrong of course, we could fall off the wagon for the next couple of months, but I doubt it.”

North America continues to drive much of the new captive growth, but Charnley emphasised emerging regions and all territories are experiencing a boom in activity.

“That’s been a real delight to see in the position I sit as a global leader,” she said.

“I see that not only in the client activity, but also in our employee headcount activity. We’ve added headcount and new employees across the globe, which has been a delight as well.”

It is also those domiciles that are willing and able to respond quickly to new applications and business plan changes that have benefitted most from the growth activity.

“I would say it’s really a speed to market that the clients have wanted to see,” Charnley added.

“We’ve seen real growth in those locations where domiciles can be nimble and that’s not just the regulator, I mean, but the actual infrastructure of the domicile itself.

“So where captives can be formed quickly and nimbly, those are the real winners for growth. That’s where we’re seeing high growth, not only in numbers of formations, but clients being able to add new lines of business and add new premiums to their captive.”

Charnley also expects to see the captive premium and assets under management (AuM) across their portfolio of more than 1,300 entities continue to increase, despite the commercial market showing signs of softening in most classes of insurance.

“That would be a logical assumption for sure,” she said. “Captives are formed regardless of necessarily what the commercial market is doing. In times when the commercial market is challenging, it tends to encourage more companies to form captives.

“Even when the commercial market starts to go into more of a softening phase, we’ll still see captives being formed for other reasons. As that graph [insurance rates] starts to drop off, it’s important to note that there’s still double digits of growth happening … and some of those lines in some parts of the world are still incredibly challenging for our clients.”