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Captive interest in parametric solutions increasing – Descartes

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Interest from captives in parametric solutions is increasing, particularly in the property market where insureds are looking at managing rising insurance costs.

Captive Intelligence published a long read in September examining the potential for more captive involvement in parametric structures, and specialists Descartes believe the time is right for greater adoption.

“We’ve seen a growing interest from captives in parametric solutions,” Meryl Bermond, business development manager at Descartes Underwriting, told Captive Intelligence.

She said a key driver is parametric structures allowing captives to charge the “real price” of a risk for the period covered.

“We always price the risk itself, according to past events, not past losses,” Bermond explained. “That makes all the difference, because it allows the captive manager to understand the real price of the risk.”

Bermond said this is important when a captive is involved, because “at the end of the day, the captive pays the losses”.

Descartes is a carrier that primarily writes natural catastrophe related parametric policies in more than 60 countries around the world.

The company underwrites and innovates against natural catastrophes across a number trade sectors to provide insurance for events such as floods, earthquakes, cyclones, hurricanes, hail and wildfires.

“In terms of natural catastrophes, captives are usually very interested in covering the perils that are difficult to model, such as flood and hail, because they are very complex,” Bermond said.

“Some traditional insurers struggle to price them, and some of the models are not up to date for these risks.”

Bermond highlighted that hail risk in France is currently heavily under-priced by the traditional market.

“We are waiting for the next round of losses, when we expect the market price will realign and exceed the real price of the risk, then begin to decline again,” she said.

“Parametric prices, in contrast, are much more stable.”

Bermond said when underwriting for a captive, the first job is to price the pure peril risk.

“That could be, for example, that the level of water in the Seine River in Paris exceeds six metres,” she said.

“To do this, we model maybe 150 years of historical data to recreate thousands of possible years of loss experiences.

“Then, with all those potential scenarios, we set the price to insure Seine River flooding above six metres.”

She explained that for the second step, they utilise the captive’s own data on its past losses, and back-test the solution based on actual experience.

Bermond told Captive Intelligence that the services Descartes can offer captives are quite “diverse” and includes options such as fronting and captive protection.

“With insurance captives, the captive writes the policy and then we reinsure the captive,” she added.

“We also have cases with reinsurance captives, where we front the parametric policy, keep part of the risk, and reinsure the rest into the captive.”

Jan Bachmann to join SRS Altitude as CUO

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Strategic Risk Solutions has appointed Jan Bachmann as chief underwriting officer of SRS Altitude effective 1 April.

The company announced the launch of managing general underwriter Altitude in November, to be led by former Swiss Re executive Loredana Mazzoleni Neglén.

Bachmann will oversee Altitude’s underwriting portfolio and will be responsible for structural solution design.



“Joining this innovative company marks a thrilling chapter in my professional journey,” said Bachmann.

“I’m also excited to be part of Strategic Risk Solutions which I have known for many years for its forward-thinking approach.

“Together, we’ll navigate new horizons, foster creativity, collaboration, and a shared commitment to excellence in alternative risk transfer solutions.”

Bachmann brings more than 20 years of experience to his new role and most recently worked at Swiss Re.

He has held various technical and leadership positions across underwriting, natural catastrophe modelling and alternative risk transfer.

“With his extensive knowledge and expertise, I am confident that his addition to the team will greatly contribute to the success of the company,” said Ron Sulisz, president of SRS.

In January, Thomas Keist joined SRS Altitude as chief commercial officer, with the confirmation of Keist following the appointment of Paul Fitzgerald as chief operating officer.

Strategic Risk Solutions also acquired captive and insurance manager Robus from the Ardonagh Group in January, further strengthening its presence in Guernsey and adding Gibraltar to its list of domicile options.

PoloWorks, PwC UK joint venture to focus on captive solutions

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PoloWorks, which launched a new independent captive manager in Guernsey last month, has announced a joint venture with PwC UK – PoloPartners – with an initial focus on captive solutions.

Captive Intelligence reported in February Mark Elliott would lead Polo Insurance Managers (PIM) in Guernsey, with the new firm keen to leverage its existing insurance services infrastructure in the London Market, Lloyd’s and its legacy business Marco Capital.



PoloPartners has been launched to provide a “bespoke, tech enabled, differentiated offering” for insurance clients, with the two firms stating captive solutions for corporate clients will be “an early focus”.

PoloPartners is particularly interested in captive developments at Lloyd’s of London, where it already owns a managing agency.

“PoloPartners epitomises our commitment to innovation and client-centric solutions, leveraging cutting-edge technology and industry expertise,” Richard Lawson, CEO of Polo Commercial Insurance Services (PCIS), said.

“The seamless combination of PoloWorks’ and Marco’s regulated platforms and service resources with PwC’s insurance practice which brings scale, market insight and a reputation for quality and technological innovation to the partnership, provides PoloPartners with an unparalleled customer proposition – adding value to the insurance market.”

The partnership will provide a “tech-enabled end to end insurance management service”, including services such as  actuarial, claims management, risk and compliance and finance.

Alex Bertolotti, head of insurance at PwC UK, said: “This partnership is an exciting opportunity for us to create value for our clients in a new way and is fully aligned with our strategy to work with insurance businesses to help solve challenges, build trust, unlock value and transform.

“We are particularly excited to be working with PoloWorks on this journey, who are a respected and growing player with a strong track record.”

Dubai registers one new captive in 2023, AuM almost doubles

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Dubai licensed one new captive in 2023, taking the total number of captives domiciled in the jurisdiction to five, compared to four in 2022.

There were zero dissolutions in 2023, compared to one dissolution the year previous.

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

Annual premium increased to $71m in 2023, up from $70m in 2022.

The one new captive licensed this year was a single parent captive, with all five captives domiciled in Dubai registered as single parent captives.

1.6% of MAXIS GBN claims for mental health – report

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MAXIS Global Benefits Network (MAXIS GBN) has released a report analysing factors impacting employee health, revealing only 1.6% of all paid claims in MAXIS GBN’s data are for mental health conditions despite 22.9% of claims in the retail industry alone being for mental health.

MAXIS is the international employee benefits joint venture between MetLife and AXA, providing captive fronting, pooling and management services for employee benefits programmes across the globe.



The report examined how industry, culture and gender impact a variety of different health claims, with mental health being a key area of focus, with all these factors having the potential to impact such claims.

There was a 70% increase in mental health claims from 2020-2022 compared to 2017-2019, while 16% of insurers globally reported in 2023 that they do not provide plans that cover mental health services.

The report also explores how multinationals can ensure their employee benefits programmes are as beneficial as possible for their employees.

“Increasingly, I’m tasked with guiding multinationals who want to know how to persuade their board of directors on both the merits of wellness and sustaining their investment in it,” said Dr Leena Johns, chief health & wellness officer at MAXIS GBN.

“And I completely understand this predicament. HR executives championing wellness initiatives find themselves navigating a complex landscape, where every expenditure is put under the microscope, against the backdrop of escalating healthcare costs and broader economic inflation.

“Multinationals are right to want to see a return on their investment in wellness programmes.”

The report also found that in 12 of the 13 industries covered by MAXIS GBN’s data, musculoskeletal (MSK) claims were the top cost driver, with spending on MSK care nearly tripling from $26m to $95m between 2018 and 2022.

Arizona licensed 17 new captives in 2023

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The Arizona Department of Insurance and Financial Institutions licensed 17 new captives in 2023, compared to 14 in 2022, taking its year-end total to 176.

Of the 17 new captives licensed in Arizona in 2023, 15 are single parent captives, one is a Risk Retention Group (RRGs), and one is a group captive.



There were three captive dissolutions in 2023, compared to one dissolution in 2022.

The activity in Arizona translates to a net increase of 14 captives with the latest annual captive premium total now more than $10bn.

The State’s new captives were in a variety of industries, including health care, retail trade, energy, utilities, real estate and transportation.

London & Capital to merge with Waverton

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London & Capital, the wealth management company with a strong footprint in captives, has announced an agreement to merge with Waverton Investment Management Group.

The combined entity will have more than £17bn in assets under management, with London & Capital’s majority shareholder Lovell Minnick Partners (LMP) having the majority shareholding in the combined business.



Waverton works closely with private clients, charities and institutional investors, but has not previously worked with insurers.

London & Capital is an investment manager that works with captives and insurers across Europe, the United States and offshore jurisdictions such as Guernsey, Bermuda, the Cayman Islands and Barbados.

Guy McGlashan, CEO of London & Capital, will be CEO of the combined business.

“We’re genuinely thrilled to announce our merger with Waverton,” McGlashan said.

“Our shared commitment to a client-focused approach aligns seamlessly, and we believe this combination will elevate our ability to effectively scale while delivering unparalleled client service, investment opportunities, and wealth solutions.

“Providing personalised service and retaining our entrepreneurial spirit has always been paramount, and the cultural fit with Waverton is perfect.”

LMP will provide “growth capital and strategic backing” for the business with a focus on enhanced client service, increased investment in technology, and continued product and geographic expansion.

Somers Ltd, the majority shareholder in Waverton since 2013, will continue as a significant shareholder in the combined business.

“We have a track record of successful partnerships with growing companies run by proven, dynamic management teams,” said Spencer Hoffman, partner at LMP.

“The combined experience and skillsets of these two businesses will provide an enhanced level of service for clients, creating a firm with scale and differentiation to be rivalled in the industry. “We look forward to supporting Guy and the talented management teams to expand service offerings, enhance technology capabilities, and shape a prosperous future for our clients, employees, and stakeholders.”

Answering the Saturday Morning Question

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Ryan Dod is founder and CEO of Intangic.

I recently had a conversation with a person who spent decades in the C-suite of some of the world’s largest organisations. He said to me, “the thing I used to fear most was the Saturday morning question.” “What do you mean?”, I said. “Well, often on Saturday mornings I would get a phone call from our CEO who often just read something in the press about a new emerging technology risk and he would ask me what we were doing about it.

My Saturday was over then and there. I spent the rest of the day on the phone with my team getting an answer.”

He then asked me, “what is the Saturday morning question for your customers?” I found this to be an apt way to define Intangic’s mission.

The questions we hear from risk managers at large companies with captives are: “Do we have enough of the right cover? Are the captive premiums too high? How can we consistently validate our risk posture? What are the best metrics to report to CEO and Board?”

For large organisations, managing cyber risk in captives continues to make sense after  years of ransomware increases, rising costs, reductions in cover and the market requiring more self-insurance.



How do we answer this questions?

Getting better answers starts with first asking different cyber risk questions and then ensuring you have the correct data to answer those questions.

For example, I was managing hedge funds prior to founding Intangic. While investments benefited from profitability of companies investing in digital transformation, I had an uneasy feeling that we – “the market” – didn’t understand the operational risks that came along with cloud migrations, outsourcing technology and digital supply chains.

As a result, I developed my own Saturday morning question for executive teams where we were shareholders: “With one phone call, I get a validated answer on your credit risk (the credit ratings agencies), your governance and financial risks (Wall St. analysts), so can you validate how you are managing your technology risks (i.e. your cyber)?”

Ten years ago, I couldn’t get a good answer to my question. With technology driving the value of most corporations, I was sure other risk stakeholders wanted similar answers.

As a result, I ended up seeking answers with alternative datasets that could give me solutions. That process led to what became the data-science foundation for creating Intangic.

Ultimately, that solution is what we provide to large companies: “How do we validate the performance of our cyber risk posture?” “How much should I spend to improve it? “What resources are needed?” etc. Our answers are especially relevant for captive programmes’ need for an independent lens.

What about captives?

Unfortunately, my unease about operational risks due to rapid digital transformation proved right with the rise of ransomware over the last five years. Risk managers’ motives for turning to a captive structure is a smart reaction to the insurance market’s response to ransomware.

To quote one FTSE 100 risk manager: “We lost confidence in the value of the product the market was offering. We were being put in the wrong risk bucket by the market. Our best solution was running cyber through the captive.” I’d be looking in the same direction.

For risk managers looking for more control, the captive structure is well suited to generate value by achieving greater relevance of cover at a lower price. But again, how do you know—with predictive market data, not opinions—that you are getting the right value to price ratio?

We assess the risk for companies by looking on a continuous basis at real-time threat activity with unmatched scale and accuracy. No checklists or self-assessments of security controls. By looking across 10,000 networks every day over several years from an attacker’s (not defender’s) perspective, we’ve correctly predicted 82% of large publicly announced breaches over the past 5 years.

With this kind of predictive accuracy (i.e. frequency factor), we then help customers reprice the risk for the captive and save cost on the cover in the process. And with a risk as dynamic as cyber, this is not an annual process. The assessment of breach likelihood is updated monthly.

A vehicle for loss prevention

We can then help companies turn the captive into a ‘first line of defence’. With our early warning system for cyber, we give risk and security teams the ability to spot small problems before they become big ones.

With the cost savings generated, risk and information security teams can use things like risk bursaries as a vehicle for smartly investing in risk prevention efforts if and when the risk posture justifies it. Because we don’t just want to answer the Saturday morning question, we also want to help the CISO from ever having to answer the ‘3am phone call’.

More to come at the Airmic Captives Forum 

I’m looking forward to speaking with many captive owners and managers at the upcoming Airmic Captives Forum on 6 March at Lloyd’s. I’ll be talking more about the opportunities AI-powered data science can unlock and why well-managed security controls are important, but unfortunately no longer sufficient to lower the risk of a big breach.

Kentucky captive premium jumps as numbers remain flat

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The number of captives domiciled in Kentucky in 2023 has remained the same as 2022, with 32 captives domiciled in the State.

Despite captive numbers staying stable, premium increased from $78m in 2022 to $129m in 2023.

Assets under management (AuM) increased slightly year-on-year from $77m to $77.3m.

Captive Intelligence understands the jump in premium is the result of some captives curtailing the amount of risk they were writing during the Covid pandemic, with premium now returning to previous levels.

There were zero captive dissolutions in 2023, compared to two dissolutions in 2022.

Of the 32 captives licenced in Kentucky, 23 are single parent captives, three are Risk Retention Groups (RRGs), and six are group or association captives.

AM Best affirms Petronas captive rating

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AM Best has affirmed the financial strength rating of ‘A’ (excellent) and the long-term issuer credit rating of ‘a’ (excellent) of Malaysia-domiciled Energas Insurance. The outlook for the ratings is negative.

Energas is a single parent captive owned by the national oil and gas company of Malaysia, Petroliam Nasional Berhad (Petronas).

The captive’s underwriting portfolio shows concentration by line of business and geography, with a significant focus on upstream and downstream energy risks located in Malaysia.

AM Best views Energas’ operating performance as strong, supported by its five-year average combined ratio of 68.4% (2018-2022).

The company’s net underwriting margins have benefitted from favourable reinsurance commission income and low management expenses relative to net earned premium.

Higher than expected frequency of large losses, accompanied by recent increases in its stop loss reinsurance programme’s aggregate retention level has led to increased volatility in its underwriting performance in recent years. 

The AM Best ratings reflect Energas’ balance sheet strength, which are assessed as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.

Energas’ balance sheet strength assessment is underpinned by its risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), which is expected to remain at the strongest level over the medium term.

Capital requirements arising from underwriting risks are viewed to be low given the company’s low net underwriting leverage, though the accumulation of high severity losses from multiple policies may lead to moderate balance sheet volatility.

An offsetting balance sheet strength factor is the company’s reliance on reinsurance to manage its exposure to accumulation and large single risks, but credit risk is partially mitigated using a good credit quality reinsurance panel.