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Adriana Scherzinger to be Zurich’s global captive leader

Richard Cutcher
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Adriana Scherzinger to be Zurich’s global captive leader

Adriana Scherzinger will succeed Emma Sansom and take on the group head of captives position at Zurich Insurance, effective from 1 September.

Sansom was appointed to the position in January 2023, but departed last month.

Scherzinger, who is currently head of alternative risk solutions at Zurich North America, has a long history with captives at Zurich, including as head of captive services in Latin America and as a captive fronting manager in Europe.

Speaking to Captive Intelligence today at the RISKWORLD conference in San Diego, Scherzinger said: “I am very excited to go back to Switzerland and take on this group role for captives.

“Five years ago, it was natural for me to go back to Latin America and work there, before moving to Chicago in 2022 to learn about the captive market and work with our clients in the United States.

“It was important for me to come to America and learn about the market because of the growth and innovation we have here. There is healthy competition between domiciles in the United States, which I think is really beneficial, and there is the group captive aspect, which is different to Europe and the rest of the world.

“I am excited by the recent domicile growth in Europe and would like to explore if there are some of these US aspects, such as group captive and broader cell utilisation, that we can support and facilitate in other markets.

“Zurich has been in captives for 35 years. In terms of captive fronting and reinsurance, we are a big player globally.”

Scherzinger will relocate to Switzerland towards the end of the year and report to Vinicio Cellerini, global head of customer & distribution management for Commercial Insurance at Zurich.

Joshua Nyaberi, who has taken on the global captive role on an interim basis since Sansom’s departure, will continue until Scherzinger starts in the position on 1 September.

Zurich North America will be hosting its Captive Dialogue Day in Chicago on 25 June.

Property the fastest growing captive line for Marsh

Richard Cutcher
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Property the fastest growing captive line for Marsh

Property is now the fastest growing line of insurance written by captives managed by Marsh, with 29% more captives under management insuring the volatile line compared to last year.

Speaking at the Marsh Captive Solutions Luncheon at RISKWORLD in San Deigo on 7 May, Americas captive consulting leader Michael Serricchio said clients are responding to the troubled commercial market.

“Property is the number one fastest growing coverage in our captives,” Serricchio said.

“Clients that are writing property are writing limits much higher than they were before, using quota shares and increasing retentions.”

While cyber, D&O and employee benefits all continue to feature prominently in the growth areas for captives, it was property that took the headlines in 2023 and it continues to be an area captives are stepping into.

Pat Donnelly, president of Marsh Specialty & Global Placement, opened the presentation by saying “fatigue” and “frustration” with the commercial market had led to the increased utilisation and innovation within captives.

Donnelly added that the captive manager’s portfolio now writes $73bn in aggregated premium and “frankly, I think we’re just getting started”.

The Marsh Captive Solutions team, led by its president Ellen Charnley, also discussed domicile trends, reinsurance placements, ReadyCell and the launch of Edgware Re, its new Bermuda group captive for cyber.

The poster child for domicile growth in 2023 was Canada with 78% premium growth in Marsh managed captives year-on-year, predominantly led by the emergence of Alberta as an new domicile.

Charnley said it was an “exciting time for Canadian captives, for sure”.

“We are doing a lot of work in Canada bringing captives there,” Serricchio added.

“Canada as a whole, including parent companies based there, are embracing the captive concept. They are tired of the commercial market and taking control of their programmes.  They are doing it in a smart and sensible way.”

Marsh has now formed more than 500 captives over the past four years, with 125 new captives formed in 2023. Including cells, it has 1,900 entities under management.

AstraZeneca captive introduces business resilience policy

Luke Harrison
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AstraZeneca captive introduces business resilience policy

AstraZeneca has implemented a five year business resilience insurance policy that will help protect against supply chain disruption, reputational damage and product withdrawal.

The policy was designed and structured by AstraZeneca in partnership with Strategic Risk Solutions and is backed by three of the world’s largest reinsurers.

AstraZeneca is also part of the Russell Working Group, which has been developing ‘connected risk’ outcome-based solutions. Steed presented the final business resilience policy to the group.

The Russell Working Group was originally formed in 2018 to focus on ‘connected risk’ and to explore how data and analytics could help corporate risk managers and (re)insurers design risk solutions more suited to today’s environment.

The group has more than 30 members, including 20 of the FTSE100, representing companies of various sizes across industry and encompassing both insurance and risk professionals.

“It was a real privilege to witness history in the making of a new era for insurance with this tangible connected risk solution,” said Suki Basi, managing director of Russell.

“The insurance market has been perceived as being resistant to change but here is an example of the market leaders displaying true innovation.”

Initially, the “connected risk” concept offers risk financing against a range of major events, with minimal exclusions, but Russell said that as exposures become better understood and with improvements in data and analytics, there will be a major industry shift to risk transfer structures of this type.

“I was delighted to advise on the progress and success of the AstraZeneca Group Insurance team in implementing our exciting new business resilience insurance policy within the AstraZeneca captive and reinsurance framework,” said Kevin Steed, head of group insurance at AstraZeneca.

“The level of dialogue between the various risk managers on the Russell Working Group call was phenomenal, clearly outlining the common interest that insurance products need to be relevant, not just now, but also for the future.”

Steed was a guest on the Global Captive Podcast in 2021 when he discussed the growth and evolution of AstraZeneca’s Cayman-domiciled captive and how it utilises structured reinsurance programmes.

Cells still not wholly embraced by Europe, US domiciles increasingly attractive – Jelto Borgmann

Luke Harrison
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Cells still not wholly embraced by Europe, US domiciles increasingly attractive – Jelto Borgmann

Companies in certain European countries are less likely to utilise cells than others, according to Jelto Borgmann, captive portfolio manager at HDI Global.

The use of cells in Europe has become more popular, but there is a lack of choice when it comes to domiciles within the European Union, as Malta is the only EU captive domicile that has PCC legislation in place.

More broadly in Europe, Guernsey, Gibraltar and the Isle of Man all facilitate cell business, with Guernsey a particularly popular option.

“I have a feeling that some countries are more reluctant to go in the cell direction than others,” Borgmann told Captive Intelligence.

“With UK companies, they are very open to cells, but a lot of German companies still have the issue.

“There are some that went in this direction, but it is still something that is not so familiar to everybody and needs a little bit of explanation.”

Borgmann said that from his perspective there is some legal uncertainty when it comes to cells writing direct insurance within the EU.

“In Malta they can directly write business in Europe, so they could also issue policies for compulsory insurance,” he said.

“My question would be if there would be a case, for example, when the captive defaults and there is not enough money in the cell and core to pay a claim for compulsory coverage it issued, I’m still not 100% sure that the ring fencing would be accepted by the German legal system, which is not familiar with any kind of ring fencing from my knowledge.”

Borgmann said he is seeing an increasing number of companies exploring the option of domiciling their captive in the United States.

“More and more European companies are looking into US domiciled captives, and that is something we have already seen,” he said.

Several States within the US have active cell legislation as they continue to rise in popularity.

Borgmann noted that EU companies are attracted to by the enhanced processes and accessibility of the regulators in the US compared to certain European jurisdictions.

“To take one example, four or five years ago, we had a German client who had questions regarding Vermont, and they messaged the regulator on LinkedIn and a day later they had a response, and that is something you don’t get in Germany.”

Flagstone International enters captive market

Richard Cutcher
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Flagstone International has partnered with Strategic Risk Solutions to allow its European clients access to the cash deposit aggregator’s platform.

Flagstone’s platform allows trusts, funds, companies, and high net worth individuals to manage their cash deposits across multiple banks and jurisdictions using a single account.

The firm already makes its platform available through trust companies, private banks, wealth managers and family offices, but is now targeting captive insurance.

“Having made great strides within the trust space, we recognised similar issues were arising for managers of captive insurance structures – both standalone and cell structures – which made this a logical next step for Flagstone International,” said Damian Cocking, head of sales at Flagstone International.

“We are very excited to be launching into the captive space and we look forward to rolling out our platform to other leading firms in this area of the market in the not-too-distant future.”

Peter Child, CEO at SRS Europe, said:“SRS provides our clients with the most innovative options when it comes to using their captive to better their business.

“When Flagstone International first came to me with this idea I thought it was an interesting option to ensure our clients can continue to manage cash deposits with ease.”

Pfizer captive gets AM Best rating affirmed

Richard Cutcher
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AM Best has affirmed the financial strength rating of ‘A’ (Excellent) and the long-term issuer credit rating of ‘a+’ for Blue Whale Re Ltd, domiciled in Vermont. The outlook for the ratings is stable.

Blue Whale is owned by pharmaceutical giant Pfizer and insures the parent group’s global property exposures as well as cyber liability.

“Blue Whale provides coverages with ample limits with substantial retentions, augmenting significant reinsurance capacity supporting its obligations,” AM Best said in its rating statement.

“Nonetheless, the reinsurance program is appropriate and diverse, providing ample coverage for all its lines of business.”

The rating agency said it recognises the quality of the captive’s reinsurers and the “substantial financial resources and assistance” available from Pfizer.

“In recent years of hard market conditions, Blue Whale has opted to participate in small slices of its catastrophe tower as an economic efficiency for the Pfizer enterprise,” AM Best said.

“It also offers capacity for cyber liability coverage when required by hard market pricing.”

Cayman emerging as Bermuda alternative – Adrian Lynch

Luke Harrison
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Cayman emerging as Bermuda alternative – Adrian Lynch

The Cayman Islands is emerging as an alternative to Bermuda for reinsurers and captives, according to Adrian Lynch, CEO at Blue Ocean Reinsurance Group.

Bermuda had long been the largest captive domicile in the world but was recently overtaken by Vermont by number of captives, though it still remains the largest offshore jurisdiction.

“Cayman is emerging as an alternative to Bermuda, and a number of the conversations we’re having are with carriers who already have an operation in Bermuda who are looking to perhaps have some regulatory arbitrage or looking to mitigate some of their risks by having an office in both jurisdictions,” Lynch told Captive Intelligence.

Lynch said Cayman has a reputation jurisdictionally as being very “well served”.

“The insurance management space, the audit space, the legal space, the regulatory space, and all of those factors as a combination, make the jurisdiction quite attractive,” he said.

The number of pure captives domiciled in Cayman is reached 286 at the end of 2023, an increase of nine compared to 2022, while there was 127 group captives and 154 Segregated Portfolio Companies (SPCs).

Lynch said the growth of captives in Cayman shows that underwriting standards and cost of capital has become an important issue.

“Certain companies are looking internally in terms of how they allocate capital, and quite frankly, in terms of their own risk management and their own risk appetite,” he said.

“Alternative risk financing for an organisation internally has become something that they’ve become more skilled at and more comfortable with and, as a result, captives are seeing growth in terms of extra lines of business being added.”

It has been well documented that a number of US captive owners have looked to re-domesticate their captives onshore and there was a concern this will impact offshore domiciles.

Lynch said that most US domiciles have active captive legislation, and each will have a story to tell about a captive that has redomiciled from an offshore jurisdiction back onshore.

But he added that for every captive re-domesticating to the United States, there is likely to be some going in the other direction.

“Every state would have its own reasons and its own incentives to try and get companies back onshore, and that’s why a jurisdiction like Cayman needs to remain innovative, needs to be ahead of the curve, and needs to be pre-empting.”

Lynch told Captive Intelligence last week that there was a gap in the Cayman for Blue Ocean Re after he recently launched the company.

Dubai registered (re)insurers jumps 20%, including Guernsey captive re-domestication

Luke Harrison
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Dubai registered (re)insurers jumps 20%, including Guernsey captive re-domestication

The Dubai International Financial Centre (DIFC) has increased the registration of insurance and reinsurance firms by 20%, including the first re-domestication of a Guernsey-based captive.

The DIFC has increased his gross written premium (GWP) by 23% to $2.6bn, up from $2.1bn in 2022.

“DIFC is now home to more than 120 registered insurers, reinsurers, captives, MGAs, and insurance-related entities, reaffirming our position as a global hub for the industry,” said Arif Amiri, CEO at DIFC Authority.

“Our ongoing partnership with Global Reinsurance for the Dubai World Insurance Congress, reflects DIFC’s commitment to driving economic growth and the future of finance.”

The DIFC’s said the (re)insurance industry in Dubai has been bolstered through its cultural innovation, which includes the integration of new technologies such as AI and new distribution techniques.

Captive Intelligence reported in March that Dubai had licensed one new captive in 2023, taking the total number of captives domiciled in the jurisdiction to five, compared to four in 2022.

Assets under management (AuM) in the jurisdiction almost doubled in 2023 to $550m, compared to $280m in 2022.

Gap in Cayman market for Blue Ocean Re – Adrian Lynch

Luke Harrison
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Gap in Cayman market for Blue Ocean Re – Adrian Lynch

There was a gap in the Cayman Islands insurance market for Blue Ocean Reinsurance Group, the company’s CEO, Adrian Lynch, has told Captive Intelligence.

Blue Ocean Re was formed earlier this year and provides reinsurers and larger complex captives in Cayman with tailored solutions, guidance, and strategies to help optimise their risk management.

Lynch said his thinking evolved over the past 12 to 18 months during conversations with Graham Mackay, a former CEO of a reinsurance company and a 40-year industry veteran, and Ruwan Jayasekera, former insurance regulator in the jurisdiction.

“The three of us came to the conclusion that there was a gap in the market in terms of what we were looking to do,” Lynch added.

Mackay is president and chief financial officer of Blue Ocean Re, while Jayasekera is chief operating officer.

Lynch said that having run start-up reinsurers previously, he knew it is a very different value proposition compared to running a captive.

“The error that the insurance managers are making is presuming upon the fact that they have the skill sets, technology, and the knowledge to run these reinsurers the same way that they’re trying to run what is essentially a commoditised product in captive management.”

Lynch said the company’s business plan is quite “comprehensive”.

“It revolves around obtaining an insurance management license, which enables us to manage various B3 reinsurers,” he explained.

“Even some Class D entities that have their own teams or are in the process of building them can also rely on us for specific aspects of their service needs.”

Lynch said the company is less focused on B1 captives, which are single parents.

“They are probably more suited to the larger insurance managers,” he said.

“That’s not really a market we’re targeting, it’s the third-party insurers, third-party reinsurers, the B3’s and the Class D’s, as well as the larger complex captives.”

He told Captive Intelligence that the company is in the process of acquiring a company management licence and a trust licence.

“Additionally, we’re obtaining a securities investment licence, as we find ourselves at the intersection of capital, insurance, and reinsurance, which has led us into capital raising opportunities,” he added.

“We’re securing all the necessary licences to support this expansion across our platform, and with these developments we anticipate being on a growth trajectory for the next few years.”

Lynch said he’s received “palpable validation” of the business model from the individuals and organisations he has engaged with.

“Additionally, there are asset managers looking to enter the reinsurance sector, but lacking expertise in insurance,” he said.

“We offer to manage all aspects of insurance for them, allowing them to focus on their core competency, asset management.”

Captives part of new Marsh Global Alternative Risk Solutions practice

Luke Harrison
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Captives part of new Marsh Global Alternative Risk Solutions practice

Marsh has launched Global Alternative Risk Solutions, a new practice which will encompass its expertise in parametric solutions, alternative risk transfer, captives and complex risk.

Global Alternative Risk Solutions will align existing capabilities from Marsh Specialty, Global Placement, Captive Solutions, and Advisory.

The new practice will be led by Christophe Letondot, a professional with 30 years of experience in financial services, including nearly a decade with Marsh working on alternative risk transfer, structured credit and parametric solutions.

“Leading Global Alternative Risk Solutions is an incredible opportunity to drive innovation and shape the future of risk management,” Letondot said.

“Together, we will embrace data-driven insights and cutting-edge technologies to unlock new opportunities and empower our clients to thrive in an increasingly complex risk landscape.”

The new practice will also work with Guy Carpenter to access capital pools, including insurance linked securities markets for corporate clients.

Letondot will report to Pat Donnelly, president of Marsh Specialty and Global Placement, and work closely with John Donnelly, global head of placement, as well as other Marsh leaders.

“Global Alternative Risk Solutions represents our commitment to being the risk advisor of the future and providing clients with easily accessible, cutting-edge risk management solutions,” Donnelly said.

“This practice will empower our clients to navigate the ever-changing risk landscape with confidence and resilience.”

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