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McGriff acquires Alternative Risk Resources, strengthens captive presence
US retail broker McGriff has completed the acquisition of Alternative Risk Resources (ARR), the Wisconsin-based captive consultants focused on group captive programmes.
McGriff already has an alternative risk transfer and captive solution division and the purchase of ARR is expected to complement those offerings.
“We have long admired and respected the ARR insurance team and its decades of experience in providing alternative risk solutions to their clients,” said Read Davis, CEO of McGriff’s Specialty and Middle Market business.
“This acquisition complements McGriff’s existing capabilities in the captive insurance arena as we expand our geography in the Midwest region.”
ARR will be transitioned into the McGriff brand over the next six months, with ARR partners Sean Doyle and Mike Wosick saying they are excited to further grow their portfolio alongside the McGriff captive solutions team.
“For the past 25 years, ARR has empowered businesses to control their insurance costs and develop organizational cultures that exemplify the industry-best in safety and loss prevention practices,” said Doyle.
“We now look forward to growing our business while further enhancing services to our clients as we work alongside McGriff’s dedicated captive insurance team.”
Shipyard, football league form latest French captives
France’s captive regime has taken its total to 14 captives, including four new entities this year after reinsurance captives were formed for Chantiers de l’Atlantique and France’s Professional Football League.
Captive Intelligence has reported extensively on French captive activity over the past 10 months as new enabling legislation was passed, including the introduction of an equalisation provision, and new captives for the Naval Group and Limagrain.
The latest reinsurance captive formation appears to be CDA Reinsurance, owned by Chantiers de l’Atlantique, one of the largest shipyards in the world based in Saint-Nazaire.
Captive Intelligence understands CDA Reinsurance was established on 30 August, but is now waiting an insurance licence from the ACPR, the French regulator.
LFP Ré, a reinsurance captive owned by the French Professional Football League, received approval from the ACPR in July to begin writing insurance and has been established with support from Marsh France.
There is expected to be several more captives formed this year in France. Captive Intelligence understands Aon will soon complete its first captive formation in the country.
Oliver Wild, president of the French risk management association Amrae, told the Global Captive Podcast in July that the country has the opportunity to build a whole captive ecosystem now its new regulatory regime is in place.
“The major achievement is through this change we have been able to allow organisations, companies to take their own destiny in their own hands effectively, and take more control of how they manage risk and how they anticipate and prepare for negative events,” Wild said.
“The outcome is in line with what you can find elsewhere, so it means that France is now a competitive domicile compared to other countries. We have a true opportunity in that market. I expect that whole ecosystem to develop strongly in France.”
Topco expecting further expansion of new Vermont cell captive
Topco Associates LLC, America’s largest retail food group purchasing organisation (GPO), is planning further cell set-ups having formed a sponsored captive in November last year.
As a GPO, Topco operates as member-owned co-operative of 45 grocery chains, aggregating purchases and knowledge management across the company to drive savings and innovation.
It formed a sponsored captive, Member Owned Topco Insurance Solutions (MOTIS), in Vermont last year, and speaking on the Global Captive Podcast Adam Binder, category director for the group’s indirect spend program, explained the rationale and motivation behind the captive formation.
“One of our big objectives is to help our members save money, to stay competitive and compete with the big box retailers as margins are very thin in grocery retail,” he said.
“When we started looking into insurance and HR benefits and having conversations with the executives, it was pretty clear that they were struggling buying insurance. There was capacity issues, so they didn’t have access to certain lines of insurance.
“These guys are selling fuel, tobacco, CBD so there were challenges in terms of getting the right coverage and it was also a very hard market.”
These conversations took place in 2020 and 2021 when some of the group’s companies were experiencing 20% to 30% premium increases in property and cyber and they were asking Topco if they could help address this.
After attending a virtual VCIA conference during the pandemic and conducting a request for proposal (RFP), Topco engaged Hylant and Milliman to kick off the captive project and engage members to see who would be interested in participating in a captive project.
“Anytime you explore a captive opportunity, and particularly when you have a group scenario in this particular instance, or a co-op or an industry association, it’s going to take time and education,” said Anne Marie Towle, CEO of Hylant’s Global Risk Captive Solutions.
“People need to be conscious of building in that time element because a lot of times people will approach us and say, ‘we need a captive and we need it very quickly’. And being thoughtful in that process, having the member buy-in, thoroughly educating them is ultimately important in order to grow successfully.”
When Topco surveyed its members, 19 of the 45 said they would like to engage in a feasibility study, starting with workers’ compensation, general liability and auto. Combined, the premium spend across those lines added up to $170m.
Binder said with that feedback and data, it provided the urgency to get the sponsored captive established.
Associated Food Stores, based in Salt Lake City, Utah, is the first cell to be established within MOTIS, writing workers’ comp, general liability and auto, while Topco as a corporation is the second cell.
Topco will be utilising its cell to write general liability, cyber liability and medical stop loss.
“We have conversations lined up with other members to get started,” Binder added.
Adam Miholic, senior consultant at Hylant Global Captive Solutions, worked closely with Topco on the project, and continues to support the addition of new cells.
He explained on the podcast why a sponsored captive, rather than a single parent, was the right structure for the strategy.
“Everything that we talked about with the executive leadership team from Topco in those early stages was ‘this really is for the benefit of the members’,” Miholic said.
“Topco, as the association, was really the sponsor of this entire process, and they funded the feasibility study for the members. They brought the idea out to the members as part of a benefit of being a co-op owner, member of Topco.
“So when we thought about how do we translate that into the insurance world and a captive structure, the cell captive made just unbelievably good sense because you have Topco sponsoring it now as the core and they are renting out cells to their members for any type of risk that you could think of as exhibited in their industry.
“Really making it flexible and nimble, but always under the premise of it’s to the benefit of the members so a single parent captive really was not too big of an option after we had some initial conversations about what’s the long-term goals and objectives of this.”
Listen to the full interview with Topco’s Adam Binder, joined by Hylant’s Anne Marie Towle and Adami Miholic, on the Global Captive Podcast here, or on any podcast app. Just search for ‘Global Captive Podcast’ on any podcast choice.
Feetham proposes Gibraltar government captive, updated legislation
Experienced insurance lawyer Nigel Feetham will assess the feasibility of forming a Gibraltar government-owned captive insurance company, should he be appointed Minister of Financial Services.
It was announced last month that Feetham, a respected Gibraltar lawyer with a long background in captives and cell companies, would be appointed the country’s next Minister of Financial Services by Chief Minister Fabian Picardo should his political party, the GSLP, win re-election.
Feetham highlighted the success of Gibraltar International Bank (GIB), established in 2016 when Barclays left the island, as a good example of economic intervention that gave the country and residents more control of its affairs.
“If my party is re-elected into Government and I am appointed Minister for Financial Services by Fabian, I will undertake a review of the feasibility for setting up a Government-owned captive insurance company (Gibraltar Insurance Company: ‘GIC’) regulated by the Gibraltar FSC,” he said.
“The dual objective would be to obtain the most competitively priced insurance for the Government and addressing any public interest insurance needs linked to the Government not available locally, such as travel insurance for our elderly citizens.”
Prior to Brexit, Gibraltar had a unique captive and insurance offering, being able to passport across Europe and into the United Kingdom.
Its captive sector had suffered since, however, and Feetham has recently proposed new legislation that would update Gibraltar’s regime and make it more attractive.
He said the Gibraltar Insurance Company would be an ideal “showcase” for the post Brexit captive legislation.
GCP Short: Topco’s cell company formation in Vermont
In this GCP Short, produced in partnership with Hylant Global Captive Solutions, we bring you another new captive owner story.
Richard is joined by Hylant’s Anne Marie Towle and Adam Miholic, who discuss with Adam Binder, Category Director for the Indirect Spend Program at Topco Associates, LLC, how and why the company formed a sponsored captive in Vermont in November 2022.
For more information on Hylant’s captive services, visit their Friend of the Podcast page here.
For the latest breaking news, analysis and thought leadership from the global captive market, visit Captive Intelligence and sign up to our twice weekly newsletter here.
Lufthansa considering Delvag sale
German flag carrier Deutsche Lufthansa AG is considering a sale of its group insurer, Delvag Versicherungs-AG, and in-house broker Albatros, according to reports from Bloomberg.
Delvag, domiciled in Germany, dates back to 1924, and while it provides insurance in the commercial market, it also operates as a captive reinsurer for the airline, for group risks including international employee benefits.
It is not clear what a sale of Delvag would mean for its captive business, but the scale of first party risk insured by Delvag could necessitate another captive formation.
The near 100-year history and evolution of Delvag was explained in GCP #58 in 2021.
Delvag is self-managed with around 140 employees in 2021, while Albatros had around 300 employees.
Lufthansa has sold off two non-core businesses already in 2023 as it looks to “streamline operations” according to Bloomberg.
In May the airline announced it was selling the LSG Group to AURELIUS Group, while payment specialist AirPlus is set to be acquired by SEB Kort.
Captive Alternatives request for “claw back” in IRS case rejected by Florida Judge
Captive Alternatives LLC (Captive) has had its request to include a “claw back” option for materials it has been asked to provide to the Internal Revenue Service (IRS) as part of an investigation over a potential tax shelter denied by a Florida district court.
“In the end, the decision of whether to enter a Rule 502(d) order is left to a court’s sound discretion,” the Florida Judge said. “Against this backdrop, Captive’s motion fails.”
A “claw back” arrangement, like the one sought by Respondent Captive Alternatives “allow[s] the return of documents that a party belatedly determines are protected by the attorney- client privilege or [the] work product” doctrine.
Such arrangements are governed by Rule 502, which authorises a court to enter an order directing that attorney client or work product protections are not waived “by disclosure connected with the [pending] litigation.”
In October 2021, the IRS originally served Captive Alternatives with an administrative summons (Summons) seeking the disclosure of twenty-nine categories of records, plus subparts, for the period beginning January 1, 2011.
When Captive Alternatives failed to respond, the IRS filed a petition in February 2022 to enforce the Summons.
The presiding District Judge directed that Respondent disclose the requested items and a privilege log by 1 October 2023.
Captive Alternatives then asked the Court to enter an order providing for the non-waiver and “claw back” of any privileged materials that it turns over to the IRS.
Captive Alternatives said in its defence that the items it must deliver to the IRS “total over 1.1 million” and that the protections it seeks are necessary given the “costs associated with reviewing and producing such a significant volume of documents and the near inevitability of making mistakes in doing so”.
Vesttoo, White Rock fallout could influence future cell regulation, legislation
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Captive Intelligence provides high-value information, industry analysis, exclusive interviews and business intelligence tools to professionals in the captive insurance market.