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GCP Short: What would make a successful UK captive domicile?

Richard Cutcher
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GCP Short: What would make a successful UK captive domicile?
Chris Lay, Marsh McLennan UK
William Thomas-Ferrand, Marsh Captive Solutions
Matthew Latham, Marsh UK

In this GCP Short, produced in partnership with ⁠Marsh Captive Solutions⁠, Richard is joined by Chris Lay, CEO of Marsh McLennan UK, William-Thomas Ferrand, International Captive Practice Leader at Marsh, and Matthew Latham, Alternative Risk Transfer Leader at Marsh UK.

Chris, Will and Matt discuss the UK government’s interest in establishing a captive regime, what it would mean for captive prospects and clients and what its unique selling proposition can be.

Read the latest news on the UK’s captive prospects on Captive Intelligence ⁠here⁠.

Chris, Will and Matt published a Thought Leadership on this topic ⁠here⁠.

For more information on Marsh Captive Solutions, visit its Friend of the Podcast page ⁠here⁠.

MAXIS promotes Brown, Howley to regional BD director roles

Luke Harrison
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MAXIS promotes Brown, Howley to regional BD director roles

MAXIS Global Benefits Network has appointed Aaron Brown and Larry Howley to the new positions of regional directors in the company’s business development team.

They both join Juliet Kwek, regional director, APAC, to complete the MAXIS GBN business development leadership team.

MAXIS is the international employee benefits joint venture between MetLife and AXA, providing fronting and programme management services for EB programmes around the world.

Brown has been appointed regional director for EMEA and is responsible for all outbound business development across the region.

He has more than 12 years of experience working in the global employee benefits industry, joining MAXIS GBN in 2012 from MetLife Europe.

“I’m delighted to be taking on this role and leading the business development teams across EMEA,” Brown said.

“I’m looking forward to collaborating with our talented teams, trusted partners, and contributing to the continued success and growth of MAXIS GBN in the EMEA region.”

Howley has been appointed regional director for the Americas where he will be responsible for leading the outbound Americas business development team.

He has held various positions at MAXIS GBN, most recently as regional manager for the US Northeast leading a team of account managers

“There’re lots of exciting challenges and opportunities within the Americas region, with some of the largest multinationals looking to innovate in the employee benefits space,” Howley said.

“I’m excited to be taking on this new role and leading our incredibly strong Americas team to deliver the best service for our clients and key partners in the region.”

Howley also spent five years as an underwriting manager for MAXIS GBN’s Americas region.

“Aaron has been instrumental in supporting some of our most strategic customers since he joined MAXIS, and he and his team have produced exceptional results year after year,” said Paul Lewis, chief business development officer, MAXIS GBN.

“I have no doubt that he will continue to excel in this new role.

“Larry has also been incredibly successful during his time at MAXIS, managing relationships with some of our largest clients and key partners. “

“I’m confident that Larry, and his team, will continue to deliver a great service as he takes on this new challenge.”

Geraghty, Gale promoted as Lorraine Stack moves into risk management role

Luke Harrison
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Geraghty, Gale promoted as Lorraine Stack moves into risk management role

Marsh has appointed Lorraine Stack as risk management leader, Europe, effective immediately, after a 28-year association with the broker’s captive management business.

Stack will retain her position as chair of Marsh Captive Solutions’ Dublin captive management office.

Rob Geraghty succeeds Stack as international consulting and sales leader, while Nick Gale has been promoted to Dublin and Isle of Man captives operations leader, both effectively immediately.

Stack is based in Dublin and will report to Christos Adamantiadis, CEO, and Carolina Klint, chief commercial officer of Marsh McLennan Europe.

“Lorraine is widely recognised and respected among her peers as one of the industry’s foremost thinkers on risk and resilience, and how insurance can be used to create a competitive advantage,” Adamantiadis said.

“She is a wonderful addition to the European leadership team and will play a key role in delivering the best of Marsh to our clients across Marsh McLennan.”

In her new role, Stack has overall responsibility for Marsh’s portfolio of some of its largest European clients and supporting them in managing their insurance programmes.

She brings over 30 years’ experience in broking and underwriting to the role and succeeds Klint, who was appointed as chief commercial officer, Marsh McLennan Europe, in 2023.

Geraghty is based in London and Gale is based in the Isle of Man, with both reporting to William Thomas-Ferrand, international captive practice leader.

Geraghty leads a team of sales and consulting professionals responsible for new business initiatives and captive consulting across the United Kingdom, Ireland, Europe, Middle East, Africa, and Asia Pacific.

 “The growing popularity of captive insurance solutions globally is continuing apace amid challenging insurance market conditions, which is contributing to innovation in captive structures, servicing, regulation, and greater adoption in numerous countries,” said Thomas-Ferrand.

“Rob and Nick’s rich knowledge of the international captive insurance sector will be invaluable as Marsh Captive Solutions continues to develop new solutions that support our clients in managing their rapidly evolving risks.”

Utah licences 38 captives in 2023

Luke Harrison
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Utah added 38 new captives to its ranks in 2023, taking the total number of captives in the domicile to 376, compared to 365 at the end of 2022.

There were 27 captives that surrendered their licences in 2023.

All 38 of the new captives licensed in Utah in 2023 were single parent captives.

The State also licensed 12 new individual cells in 2023, taking the total number of cells domiciled in Utah to 57.

Of the 376 year-end total, 361 are single parent captives, eleven are cell companies, two are agency captives and two are group or association captives.

Utah’s total gross written premium for 2022 was $2.2bn and its assets under management (AuM) is $8.3bn. The 2023 figures will be available later this year.

In December, Mike Kreidler, Insurance Commissioner for Washington State, fined Utah-domiciled, Geoduck Insurance Group, Inc $10,000 for transacting insurance business in the State without being registered with the Office of the Insurance Commissioner (OIC).

Captive Intelligence reported in July that Kreidler had fined Utah captive Drico Insurance Company $1,000 for transacting insurance while unauthorised.

AM Best affirms rating of Sony captive

Luke Harrison
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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 Bermuda-domiciled PMG Assurance. The outlook for the ratings is stable.

PMG is owned by Sony and writes commercial property, marine, directors and officers, cyber risk and employee benefits insurance for Sony and its affiliates.

The ratings reflect PMG’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management (ERM).

As an integral component of Sony’s ERM, PMG’s role is to meet the global insurance requirements of the parent while also providing risk management services to Sony group members.

PMG exhibits strengths that are derived from its underwriting expertise and emphasis on risk management controls, which are well-integrated with those of its parent.

Although the captive is susceptible to volatility in earnings due to the low frequency and high severity losses for the risks it insures, PMG has a comprehensive reinsurance programme in place.

Strong operating performance reflects PMG’s consistent results in its combined and operating ratios that continue to outperform industry averages.

The rating also reflects PMG’s risk-adjusted capitalisation at the strongest level, as measured by Best’s capital adequacy ratio (BCAR).

DARAG acquires Hawaii captive

Luke Harrison
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Legacy specialists DARAG have acquired a new Hawaii-domiciled captive carrying a portfolio of workers’ compensation business.

The book was put into run-off in 2023 and will be transferred to one of DARAG’s existing US domiciled entities, providing full legal finality.

Tom Booth, CEO of DARAG, said there is a continued interest in the North American captive market for bespoke legacy solutions that enables companies or groups of companies to achieve finality for self-insured liabilities.

“DARAG’s onshore infrastructure enabled us to complete this acquisition effectively and we are pleased to be able to consolidate further our leading position within the US self-insured market,” Both added.

In October, DARAG concluded a novation agreement between an undisclosed Benelux based captive, the captive’s policyholder and DARAG’s German insurance carrier DARAG Deutschland AG.

In July, it was announced that DARAG had concluded two transactions with undisclosed North American captive insurance companies.

“Our strong historical track record and relationships meant that we could complete the acquisition, including regulatory and fronting carrier approvals, in a highly efficient timeframe,” said Joel Neal, executive vice president, M&A, at DARAG North America.

“We also thank the Lockton alternative risk practice for its role as the seller’s intermediary, contributing to the successful conclusion of this transaction.”

European consultation launched on corporate sustainability reporting

Luke Harrison
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The European Financial Reporting Advisory Group (EFRAG) has been instructed to develop a suitability reporting standard for SMEs that are public-interest entities, including captive insurance companies.

A similar exposure draft (ED) is also being carried out for non-listed SMEs. The EFRAG is carrying out the work as part of its mandate to provide technical advice to the European Commission on European Sustainability Reporting Standards (ESRS).

The consultation period will run until 21 May 2024, and EFRAG is inviting all stakeholders to provide comments through the online consultation questionnaires.

Interested parties are also invited to participate in the field test that will be run in parallel to the public consultation.

The purpose of the ESRS is to set reporting requirements that are proportionate and relevant to the scale and complexity of the activities and to the capacities and characteristics of captives.

The aim is to support captives in getting better access to finance and avoid discrimination against them on the part of financial market participants, as it will enable availability of standardised sustainability information.

The ESRS will be issued as a delegated act and will be effective from n 1 January 2026 with an additional two-year opt out.

“SMEs are a crucial part of the European economy,” said EFRAG SRB chair, Patrick de Cambourg.

“After the completion of the ESRS for large undertakings, EFRAG releases today these two proposed standards to support SMEs in being part of the transition to a more sustainable economy, getting appropriate access to finance and reducing the burden of dealing with uncoordinated data-requests while preparing decisions-useful information for all.”

HDI sees fruits of captive investment in Europe – Nuno Antunes

Luke Harrison
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HDI sees fruits of captive investment in Europe – Nuno Antunes

HDI Global sees captives as a “significant and expanding” opportunity for the carrier, both in the Iberian market and across Europe, according to Nuno Antunes, managing director at HDI Global Portugal.

HDI opened an operation in Lisbon in October, which the company said would complement its existing customer and broker platform in Iberia.

“We have made substantial investments to enhance our capabilities in the captive sector, and we are now witnessing the fruitful results of our dedication and hard work,” he told Captive Intelligence.

Antunes said that companies and risk managers may currently feel that the traditional insurance market is falling short when it comes to their risk financing needs.

“The truth is that alternative risk transfer (ART) and captives always allow for more tailor-made solutions and work outside of the classical insurance world,” he added.

HDI Global has been operating in the Portuguese market for more than two decades under a Freedom of Services (FoS) licence, but until now the Portuguese business has been handled by the Madrid office.

“As the business grew, we have seen an ever-increasing demand for our products and service, so the new branch in Lisbon, is a natural evolution of the existing portfolio, and will complement the existing customers and broker platform in Iberia, allowing HDI Global to be much closer to its Portuguese customers and partners,” Antunes told Captive Intelligence.

Antunes said HDI strongly believes in the importance of having a local presence.

“However, our decision to open an operation in Lisbon was primarily driven by the need to be in close proximity to the risk managers, rather than specifically being influenced by discussions surrounding Spanish captive legislation,” he said.

Similar to other countries around Europe, there has been growing discussions around the possibility of Spain introducing its own captive legislation.

“Speaking in a broader sense, we view the increased focus on captives by regulators and the growing public discussions as positive developments,” Antunes said.

Antunes said the introduction of Spanish captive legislation could particularly benefit those who are currently hesitant to utilise certain domiciles.

“By providing an additional option, it would enhance the flexibility and attractiveness of the captive insurance industry,” he said.

“For HDI, captive business is a strategic priority and therefore we are keeping a very close eye on all legislative developments on this matter.”

Helio launched to fill regional gap for captive management

Luke Harrison
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Helio launched to fill regional gap for captive management

A key reason behind the launch of independent captive management firm Helio was the large market for captive business in the middle of the United States, where there is limited choice for captive owners in the region.

Captive Intelligence reported the launch of Helio in March 2023, when experienced captive operator Heather McClure was appointed general counsel and chief risk officer.

“What I saw was an underserved community here in Oklahoma specifically,” Blake Kerr,  Helio CEO, told Captive Intelligence.

The firm is managing captives in multiple domiciles and working with businesses across the country.

Kerr said captives based in the region were previously being served by offices on either coast, and as a result, Helio wanted to provide a more robust captive manager option.

Kerr said that since its launch, Helio has experienced a growing pipeline of new business, largely due to the hardening commercial market.

“I don’t really believe much in luck, but there could not be a better time to launch a captive management and risk consulting firm than now,” Kerr added. “The phone has been ringing non-stop.”

Jesse Olsen joined Helio as chief operating officer in December and said the types of captives he is seeing has become increasingly broad.

“We have irons in the fire right now on association captives, agency captives, and pure captives, for example,” he said.

Olsen revealed that Helio has established captives in multiple states over the past few months, including Oklahoma and Tennessee. 

“That said, we remain domicile agnostic, and we are going to go where the clients want to be and what makes the most sense for them. We objectively help them with that selection process.”

Olsen said there has been interest from faith based and non-profit organisations, as well as healthcare which has been aided by McClure’s extensive experience in that sector.

“With Heather having that healthcare background and the network that she does, there’s a lot of interest in domiciles that are far afield from where we are physically located,” he said.

Earlier this month, Captive Intelligence published a long-read highlighting that companies seeking property coverage will continue to be the driving force behind captive formations in the US in 2024.

 Olsen said property has always been one of the most popular coverage lines for captives.

“However, five years ago they were very targeted property placements, whereas now it is much broader.”

“Captive owners are looking at all other perils, wind and hail deductible buy downs, other natural catastrophe type coverages and participating on those risks in a way that we were not seeing captives do previously.”

AM Best affirms rating of Telefonica captive

Luke Harrison
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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 Luxembourg-domiciled Nova Casiopea Re S.A. (NCRe). The outlook for the ratings is stable.

NCRe is a single parent captive owned by multinational broadband and telecommunications provider, Telefónica, S.A.

The company is based in Spain with operations in Europe and across the Americas, with the captive benefitting from Telefonica’s geographic diversification.

The captive has a broad portfolio mix, but as a pure captive its business profile remains constrained to Telefonica’s operations and strategic decisions.

Recent changes to Telefónica’s business model have not materially impacted the captive’s operations, but AM Best noted that potential spin-offs of Telefónica’s major businesses in Latin America will likely impact the captive’s profile, reducing its natural catastrophe exposure, among other impacts.

In 2023, NCRe restructured its reinsurance programmes and further increased some of its net exposures in response to hardening reinsurance market conditions.

NCRe’s balance sheet strength assessment is underpinned by the strongest level of risk-adjusted capitalisation, on both a standard and catastrophe-stressed basis, as measured by AM Best’s capital adequacy ratio (BCAR).

This assessment is supported by NCRe’s “conservative and liquid” investment portfolio, as well as capital buffers in the form of equalisation reserves.

An offsetting factor is the company’s exposure to natural catastrophe risk, which has the potential to introduce volatility to capitalisation levels.

In 2022, NCRe generated a pre-tax profit of €5.9m compared with €12.4m in 2021, with the reduction being driven by a year-on-year increase in the loss ratio to 69.7% in 2022, from 38.6% in 2021.

Overall, in 2022, NCRe’s combined ratio stood at 89.4%, well above its five-year weighted average combined ratio of 70.4% (2018-2022).

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