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New Cayman regulation will require “beefing up” of captive investment documentation

Luke Harrison
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New regulation from the Cayman Islands Monetary Authority (CIMA) will likely result in most captives having to substantiate documentation around their investment portfolio strategies (IPS) from February, according to Darren Treasure executive director, Caribbean at London & Capital.

“Most will probably have some slight beefing up to do in terms of including some additional documentation around their IPS to satisfy the regulator,” Treasure said in a recent GCP Short episode.

“I would imagine the insurance manager along with the asset manager and the client will review their investment policy statement to see where the gaps lie.”

CIMA issued the new rules for investment activities of insurers in February 2022, which allows for a one-year grace period, and will therefore be in effect from February this year.

The regulator is looking to impose the new rules on investment activities in order to set clearer guidelines on regulatory investment requirements, so that solvency, liquidity, and all other relevant risks are considered when investing.

“It’s making sure that the board has oversight over the investment policy statement and the investment portfolio,” said Rob Leadbetter, SVP at USA Risk.

“The regulation also makes sure that the board is looking at their investment portfolio with a risk management mindset, and making sure that they’re in the right asset mix, the right duration, and the type of investments they’re making makes sense for the business that they’re in.”

Darren Treasure said that he suspects some of the smaller captives might find the new regulation more onerous.

“Just because of resources and the time it might take to just put all the documentation in place, if that’s kind of the level that CIMA is looking for,” he added.

MGU Xchange Benefits launches Tennessee PCC

Luke Harrison
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Xchange Benefits, a managing general underwriter (MGU) owned by Ambac Financial Group, has established a protected cell company named Distribution Re.

The PCC, which is domiciled in Tennessee, will insure accident and health risks mainly in the form of high deductible medical stop loss plans.

Distribution Re will be run by New Jersey-based captive manager, Captive Planning Associates.

“Being able to make captive cells available to our employer stop loss clients is an important addition to our capabilities at Xchange Benefits,” said Peter McGuire, CEO of Xchange Benefits.

“The use of captives in the employer stop loss industry is an exciting area of growth. We look forward to talking with all our incredible clients about their potential captive needs.”

Xchange Benefits is headquartered in Armonk, New York and was founded in 2010. It has a diverse group of business units focused on the global insurance and reinsurance industry.

Everen COO to retire

Richard Cutcher
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Everen has announced that its chief operating officer, George Hutchings, will retire at the end of 2023, and will be replaced by chief actuary, Robert Foskey, effective 1 April 2023.

Hutchings will remain at Everen for the remainder of 2023 as special advisor.

Everen Limited is a mutual insurer, domiciled in Bermuda, which was rebranded from OIL in June 2022.

It provides capacity to some of the largest energy companies in the world, with members including TOTAL Energies, Phillips 66, Chevron and Valero.

In 2022 it had 64 members and insures more than $3 trillion worth of assets worldwide.

“It has been an honor to serve as COO of Everen during this period of transformation and growth, and I want to offer my sincere thanks to our employees whose hard work and dedication have allowed us to achieve so much,” Hutchings said

“I also want to thank our shareholders, my colleagues in our leadership team and the Board of Directors for their ongoing support.”

John Weisner, chairman of Everen, said: “On behalf of the board of directors, the management team, and all of Everen’s employees, I want to thank George for the tremendous impact he has had on the organization over the past 18 years.”

GCP Short: Captive landscape in Cayman, and investment guidelines changes

Richard Cutcher
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Darren Treasure, London & Capital
Rob Leadbetter, USA Risk

In this GCP Short, produced in partnership with London & Capital, Senior Reporter Luke Harrison is joined by Darren Treasure, Executive Director & Head of Caribbean Office at London & Capital, and Rob Leadbetter, Senior Vice President at USA Risk, for a conversation recorded at the Cayman Captive Forum in December.

Darren and Rob discuss the profile of the Cayman Islands as a captive domicile, recent trends and what imminent new investment guidelines mean for captives in the jurisdiction.

For more information on London & Capital and their captive services, visit their Friend of the Podcast page here.

Marsh McLennan acquires HMS Insurance Associates, group captive capabilities 

Luke Harrison
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Marsh McLennan Agency (MMA), a subsidiary of Marsh, has acquired Maryland-based HMS Insurance Associates, one of the US’s largest independent agencies.

Terms of the acquisition were not disclosed.

John Stanchina, CEO of MMA’s Mid-Atlantic region, said: “The MMA goal has always been to partner with the best firms and together build a unique experience for colleagues and clients.

“With exceptional leadership, client satisfaction, long-term client retention, and decades of profitable growth, we are delighted to bring the HMS team on board.”

Founded in 1943, HMS provides businesses and individuals in the mid-Atlantic with P&C insurance, surety, group captive, and employee benefits.

All of the companies more than 120 employees will join MMA and continue to work out of the Maryland office.

Gary Berger, president and CEO of HMS Insurance Associates, said: “We are excited to join the MMA family given the alignment we share in our approach to customer service, employee engagement, and carrier partnership.

“This is an opportunity to continue to enhance our capabilities and deepen our industry relationships, as well as augment the training and career development resources available to colleagues, in turn equipping them to best meet client needs.”

Bill Fitzpatrick joins Granite as SVP, business development

Luke Harrison
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Bill Fitzpatrick joins Granite as SVP, business development

Bill Fitzpatrick, best known in the captive market for leading Deutsche Post DHL’s corporate employee benefits programme, has joined Granite Management Limited as senior vice president, business development, based in the United Kingdom.

He will be responsible for expanding Granite’s business relationships and enhancing Granite’s value proposition in Europe.

Granite is a Bermuda-based independent captive manager, which is led by Brian Quinn and specialises in international employee benefits consulting and management.

Bill was guest on GCP #8 in June, 2019 where he detailed the huge employee benefits programme financed by the DHL captive.

“We at Granite pride ourselves on being the ground breakers and global thought leaders in the underwriting of EB into captives, having been the first company to offer such services at our foundation over a decade ago,” the company said.

“We are constantly looking forward to enhancing our expertise and client management capabilities for the benefit of our current and future clients.”

Fitzpatrick brings with him more than 40 years of employee benefits experience, his most recent role overseeing the Deutsche Post DHL (DPDHL) employee benefit captive program, from 2006 to 2021, that currently reinsures risk from over 110 countries, covering in excess of 250,000 employees.

Before his role at Deutsche Post, he oversaw the European global employee benefits team for AIG.

Jennifer Santiago appointed RIMS president for 2023 term

Luke Harrison
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<strong>Jennifer Santiago appointed RIMS president for 2023 term</strong>

Wakefern Food’s Jennifer Santiago has been assigned the role of RIMS president for the 2023 term.

Santiago is currently the director of risk management & safety at Wakefern Food, the largest retailer-owned cooperative in the United States.

At Wakefern she is responsible for the strategic direction for corporate and member risk management, insurance risk financing, captive management and safety management programmes across the enterprise.

Previously, she was the assistant vice president & chief risk officer (CRO) at The Pennsylvania State University.

“The road to organisational resilience starts with leadership of the risk management professional,” Santiago said.

“Around the world, risk professionals have taken the initiative, stepping up to lead strategies that empower smart decision-making and innovation.”

Santiago has been a RIMS member for over 15 years, serving on the society’s board of directors since 2014.

“However, current risks show no sign of stabilising, and this highly uncertain environment will require risk leaders to lean on each other, to share experiences and embrace diverse thoughts and perspectives to successfully address them,” she added.

“RIMS is an invaluable platform for risk management collaboration, and I am honoured to help ensure that it continues to deliver opportunities that unite, inspire and build a safer, more resilient world.”

Paul Eaton appointed Artex International CEO

Luke Harrison
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<strong>Paul Eaton appointed Artex International CEO</strong>

Artex International has appointed Paul Eaton as its CEO, with Nick Heys transitioning to the role of chairman of the company.

As the new Artex International CEO, Eaton will serve on the Artex executive leadership team, driving the company’s strategy around talent, organic growth, M&A, and operational efficiency for Artex’s international operations, including Guernsey, Gibraltar, Malta, London and Singapore.

Based in Guernsey, Eaton joined Artex in 2004 after more than 13 years as an underwriter in the insurance market with RSA.

He spent his first 14 years at Artex in a variety of positions, ranging from client management to leading business development, and then moving into the role of managing director of Artex’s insurance linked securities (ILS) operations.

Following the acquisition of Horseshoe, Eaton moved into the role of commercial director for Artex Capital Solutions. Most recently, he led Artex’s European operations as the regional managing director, helping to drive growth throughout its Malta, Gibraltar and London offices.

Heys joined Artex in 2014 with the acquisition of Heritage Insurance Management. Since then, he has supported Artex’s international market teams and clients.

With 40 years of insurance industry experience, Artex said Nick will continue to be a critical part of the company’s DNA.

“We look forward to Nick’s continued success in this new and exciting capacity,” Artex said.

Mixed appeal for captives in alternative funds space

Will Wainewright
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Mixed appeal for captives in alternative funds space
  • Hedge funds have dabbled in reinsurance with mixed success, and captives have been a tough sell
  • Rising insurance costs could put captives back on the agenda
  • Family offices and private equity seen as more suited to captive strategies, but priorities hard to align

The question of whether asset management represents unexplored territory for the captive industry, or a sector with few practical use cases, has come round again as market costs rise.

Opinion remains split but hope seems to be building as conversations develop in this huge and untapped market, and debate continues over best practice.

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Fewer but larger captives promise innovative future for Cayman

Luke Harrison
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Fewer but larger captives promise innovative future for Cayman

The consolidation of healthcare companies is the primary reason there has been a reduction in the number of captives operating in Cayman over recent years, according to those speaking to Captive Intelligence during this year’s Cayman Captive Forum.

Experts from Strategic Risk Solutions, Artex, Kensington Management Group and USA Risk were featured in a GCP #78 report from the Forum.

Colin Robinson, director at Strategic Risk Solutions, said: “Certainly, consolidation has been a key driver of the decline in numbers of captives that we’ve had in Cayman. Going back 10 years ago, we would have had numbers in the 700s.”

However, Robinson noted that this isn’t a dissimilar story from what is happening in other mature jurisdictions where older captives come to the end of a natural cycle or M&A activity at parent level prompt re-evaluation of strategy and consolidation where appropriate.

Adrian Lynch, executive vice president, North America, Bermuda & Cayman at Artex Risk Solutions, explained that the consolidation began with the introduction of ObamaCare and healthcare reforms in the United States.

“You had a number of smaller community hospitals that were really struggling for cashflow and really struggling for sustainability,” he said.

“Some of the larger systems might have 180 days cash on hand, and some of the smaller systems were living hand to mouth.

“What ended up happening was a lot of the larger systems picked up some of these smaller systems, and then ultimately if they had captives, they ended up consolidating the captives.”

Captive consolidation in Cayman is also not necessarily viewed as a negative development, due to the new underwriting opportunities that larger captives allow.

“We have seen a lot of consolidation on the captive side, which means potentially less captives,” said Robert Leadbetter, senior vice president at USA Risk.

“Some people were concerned about that, but from my perspective, what you end up having is rather than have two smaller captives, you have one bigger or stronger captive.

“You now have captives that are bigger, stronger, more complex, and I think that’s a good thing.”

Due to the larger size of the captives, many of them are now able to add more lines of coverage.

“So, one of the things that we’ve seen over the last couple of years is a growth in the lines of coverage,” Robinson said.

He highlighted that medical stop loss has been growing and a lot of his clients, if they haven’t already implemented it “are looking to implement it at some point”.

Erin Brosnihan, president at Kensington Management Group, believes there are opportunities for captives across many different lines of coverage including cyber and E&O.

“There are always opportunities for new lines of coverage to assist companies with their risk management profile,” she said.

Robinson noted that there is more sophistication when it comes to captive structures.

“We’re not just seeing the plain vanilla, single-parent captives, we’re also seeing a lot more sophistication, whether it’s through ownership or whether it’s lines of coverages,” he said. “And I don’t see that slowing down for Cayman as a jurisdiction at all.”

Lynch believes it is a very interesting time for Cayman as a domicile.

“We have jurisdictionally, a lot of very well capitalised captives that are sitting on a lot of surplus,” he said.

“They’re in good standing with the regulator and as an underwriter of choice, they have some options as to what they do. It’s a very interesting time for the future.”

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