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Prysmian gets authorisation for Italy’s second captive

Richard Cutcher
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Prysmian gets authorisation for Italy’s second captive

Multinational cable specialists Prysmian Group SpA has received authorisation for Italy’s second captive reinsurance company, which it plans to merge with its existing Dublin captive.

Prysmian Riassicurazioni SpA has been authorised by the Italian insurance regulator, IVASS, and follows the licence granted to Enel Erre SpA, owned by energy multinational Enel SpA last month.

Captive Intelligence understands Prysmian Riassicurazioni will be self-managed with Alessandro De Felice, chief risk officer at the parent group, appointed CEO of the captive.

Similar to Enel’s re-domestication strategy, Prysmian’s plan is to merge its existing Dublin captive, Prysmian Reinsurance Company DAC, into the new entity which is expected to be completed by the end of February.

The captive’s board will have five directors, including an independent non-executive director, and four functions – risk, compliance, audit and actuarial – sourced from within the Prysmian Group.

Due to Prysmian’s captive being smaller than Enel’s, Captive Intelligence understands IVASS has agreed to a “lighter” regulatory approach, which could prove an important precedent for future re-domestications and new formations.

Prysmian has been advised by Professor Albina Candia, a lawyer and professor of insurance law in Milan, and Professor Marco Micocci of Mazars Italy as actuarial advisor.

Aon agrees deal to acquire NFP

Richard Cutcher
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Aon has agreed a $13.4bn deal to buy NFP, a privately-owned mid-market brokerage that also offers benefits consulting, wealth management and captive services.

Aon’s purchase will be financed by $7bn of cash and $6.4bn of Aon stock, acquiring the broker from Madison Dearborn Partners (MDP) and HPS Investment Partners.

NFP will operate as an “independent but connected platform”, going to market as “NFP, an Aon company”, with Doug Hammond, chairman and CEO of NFP, continuing to lead the platform.

“We have continually evolved our leading capabilities to better serve our clients’ growing needs amidst increasing volatility across the marketplace,” said Greg Case, CEO of Aon.

“The acquisition will advance our relevance to clients, create opportunities for our colleagues and further strengthen our shared cultural values.

“Doug and NFP have built an exceptional team, with a complementary one-firm mindset, and we expect to both learn from their entrepreneurial culture and share with them the depth and breadth of our capabilities to create more value for clients, colleagues and shareholders.”

NFP has been growing its captive consulting and management business since hiring industry experts Tracy Stopford and Kara Tencellent in October 2020 to co-lead its Risk & Insurance Strategy Collective (RISC) under NFP’s Captive and Alternative Risk practice.

In July 2022, NFP opened a captive management business in Alberta and in August 2023 hired Amanda Wescott as vice president, director of US captive management operations, for RISC.

US Congress members send letter to IRS backing micro captives

Luke Harrison
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US Congress members send letter to IRS backing micro captives

Members of the House Ways and Means Committee has sent a letter to the Internal Revenue Service (IRS) Commissioner Daniel Werfel expressing their support for small captives.

Captive Intelligence reported in April that the IRS had proposed new regulations for “micro captives”, those that make the 831(b) tax election, which have divided opinion across the captive landscape.

“The IRS may not eliminate laws that it finds inconvenient to administer or somehow troublesome, nor may it legislate via regulation,” the letter stated.

“Treasury and the IRS are harming the American economy by their misguided effort to eradicate small captive insurance.”

The letter was organised and signed by Rep. Van Duyne (R-TX 24th District), Rep. Mike Carey (R-OH 15th District), Rep. Ron Estes (R-KS 4th District), Rep. Randy Feenstra (R-IA 4th District), Rep. David Kustoff (R-TN 8th District), Rep. Carol Miller (R-WV 1st District), Rep. Greg Stuebe (R-FL 17th District), and Rep. Brad Wenstrup (R-OH 2nd District).

The 831(b) Institute praised the letter and said the lack of guidance provided by the IRS on 831(b) plans is unfair and targets small business owners that are acting in “good faith” on the laws Congress has passed.

The 831(b) Institute was launched in the US in June and has asked for clarity from the IRS around how it regulates micro captives, arguing that it “unfairly” scrutinises them.

“Many of the points raised by this group of legislators are critical to ensuring that this valuable tool is available to small businesses in the coming economically difficult years ahead,” the Institute said.

“The collaboration by both parties in Congress, small business owners, and the IRS will be necessary to build a meaningful micro captive insurance program that helps current and future generations and helps protect jobs.”

Peter Dawson, advisor to the 831(b) Institute, said the letter correctly points out the duty the IRS has in implementing the will of Congress and acknowledging the “flaws” in their current approach to regulating microcaptives.

“Legislative action and advocacy to the federal government is essential to protect the future of 831(b) plans and small business owners in America as desired by Congress.”

In June, Oklahoma’s Insurance Commissioner Glen Mulready called on the IRS to withdraw its Notice of Proposed Rulemaking (NPR) concerning micro captives and form a joint task force consisting of the IRS, regulators and representatives of the captive insurance industry.

Europe’s 2023 captive highlights: More domiciles, PCCs, risk portfolios broadening

Luke Harrison
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Europe’s 2023 captive highlights: More domiciles, PCCs, risk portfolios broadening
  • Germany, Spain, UK to follow in French and Italian footsteps?
  • Solvency II reforms, hoped to help proportionally, expected in January
  • Cell popularity has soared, more domiciles considering PCC legislation
  • Less traditional risks such as cyber more commonly being written in captives

The growing captive trend seen across Europe could create a further “echo” across the continent, with more countries in the region looking to introduce their own captive legislation in the coming years.

The 2023 narrative has been dominated by France, confirming its long-awaited reinsurance captive legislation at the turn of the year, with Italy grabbing the headlines in the last month with its first captive licence.

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Jerry Messick to step down as Elevate CEO, Ryan Ralston to take the reins

Luke Harrison
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Jerry Messick to step down as Elevate CEO, Ryan Ralston to take the reins

Elevate Risk Solutions CEO Jerry Messick is stepping down from his role effective 1 January 2024, but will continue to work at the captive manager as a consultant.

Elevate provides turnkey captive insurance solutions for a variety of businesses to reduce their risk exposures.

Elevate’s managing director, Ryan Ralston, will be appointed president, and Serena Lintker will be promoted from director of finance to chief operating officer effective the same date.

“I am honoured to have served as CEO of Elevate for more than 12 years,” Messick said.

“I’m confident that Ryan and Serena’s continued leadership and passion for serving our clients will transcend the incredible success that we have seen and drive even more value for our clients through our captive insurance solutions.”

Ralston has strong industry experience having previously worked at Whirlpool, Koch Industries, The Boeing Company, among other organisations.

“Our reputation has been built on our ability to consistently deliver client solutions with skill, integrity and transparency, which are unsurpassed in the captive industry, and I’m excited to lead our outstanding team and continue the legacy that Jerry began,” Ralston said.

HDI adding workers comp, commercial auto, exploring MSL for US fronting

Luke Harrison
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HDI adding workers comp, commercial auto, exploring MSL for US fronting

While traditional property and casualty products are still the focus for HDI Global, the carrier is now looking to add additional lines of business to its fronting capabilities in the United States.

HDI appointed Jason Tyng in January 2023 as it entered the US captive fronting market and in May told Captive Intelligence it was targeting $100m in gross written premium within five to six years.

“We now also offer cyber, directors and officers, and construction products,” said Marco Hensel, senior vice president and underwriting lead at HDI Global, speaking on the Global Captive Podcast at the European Captive Forum in November.

“And within the next few weeks, also workers’ compensation, which is a great step to expand our offerings.”

Hensel said commercial auto is in the works too, which will hopefully be launched in 2024.

“We are also looking at medical stop loss, which we are currently reviewing and hopefully to get something off the ground within the next year.”

Jason Tyng, vice president and captive lead at HDI Global, said one of the major things HDI Global has seen recently is captives in the US being formed to initially cover their property risk as a result of commercial market conditions.

Captive Intelligence published a long read in July highlighting that the current environment for property risk has created the “perfect storm” for writing the line through captives.

“Where we may have started to see the traditional workers’ compensation, general liability and auto coverages, there’s now a movement towards starting with a property coverage instead,” he said.

“Because of the way the market is changing, we have seen some smaller risks because larger mid-market sized companies that maybe would not have [traditionally] been a candidate for a captive, are all of a sudden interested in forming a captive and taking more control.”

Nate Reznicek, president & principal consultant at Captives.Insure, said that when it comes to fronting, insurance is a “very large ship to steer” and sometimes a lot of capacity providers will never “veer off course” regardless of what the market says, until they are forced.

“We also see a need for the understanding that the insured or the captive is going to be in a position to take a very large, if not all of the risk back from the transaction,” he added.

Reznicek said that in this instance there needs to be some “common sense underwriting” from the carrier side, which does not necessarily always correlate in a very crowded US market.

“The most successful fronting providers have blended those things together where they have again taken a common sense approach to underwriting as well as flexibility and innovation in what is being offered.”

AM Best affirms ratings of Phillips 66 captives

Luke Harrison
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AM Best has affirmed the financial strength rating of A (excellent) and the long-term issuer credit ratings of “a” (excellent) of Vermont-domiciled Spirit Insurance Company and Cayman-based Radius Insurance Company.

Spirit and Radius are both pure captives owned by Texas-headquartered energy company, Phillips 66.

The captives’ underwriting risks largely consist of onshore and limited offshore property and liability business.

Spirit provides property damage, business interruption, construction all risks, excess liability and employee medical reimbursement insurance for Phillips 66, its affiliates and subsidiaries’ domestic US operations only, though generally does not provide coverage for Texas-based risks.

Radius provides similar coverage for non-US risks in which Phillips 66 has ownership interests.

Spirit also provides terrorism coverage supported by reinsurance protection provided by the Terrorism Risk Insurance Program Reauthorization Act (TRIPRA).

Both captives have exposure to low frequency, high severity loss claims due to the sizable limits on their respective policies, introducing potential significant dependence on reinsurance protection.

The ratings reflect Spirit and Radius’ balance sheet strength, which AM Best assesses as very strong, as well as each company’s “adequate” operating performance, neutral business profile and “appropriate” enterprise risk management.

Phillips 66 also owns SCH Insurance Company, a Texas-domiciled captive established in 2014, which is not rated.

The captives’ loss experience has remained favourable due to the parent’s strong loss control program and small number of material catastrophe losses.

Phillips 66 conducts periodic reviews of Spirit and Radius’ potential loss exposures through an industrial risks specialist.

Premium and exposures for Radius fell in 2022 after removing UK property exposures from the captive.

Ian Podmore joins Hylant as director of captive consulting

Richard Cutcher
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0
Ian Podmore joins Hylant as director of captive consulting

Hylant has appointed experienced industry practitioner Ian Podmore as director of captive consulting for its global captive solutions team.

Podmore has more than 25 years of experience in captive consulting, underwriting and compliance and has previously worked for Atlas Insurance Management and WTW. He joins from AF Group where he was director of captive operations.

“Ian is another great addition to our team. His expertise will complement the continued expansion and growth of our consultants,” said Anne Marie Towle, CEO of Global Risk and Captive Solutions.

“We are always looking for the best talent in the industry and finding new ways to grow and innovate.”

In his new role, Podmore will work with clients to develop strategic solutions to a wide range of complex exposures through accessing captive and alternative structures.

EU domicile choices should not have material impact on fronting requirements

Richard Cutcher
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0
EU domicile choices should not have material impact on fronting requirements

The emergence of new domiciles within the European Union should not impact discussions with fronting companies, according to HDI Global’s captive portfolio manager Jelto Borgmann, but he expects Luxembourg to remain Europe’s premier captive jurisdiction.

Captive Intelligence has reported extensively on developments in France as the domicile has approved six new formations in 2023, while Italy licensed its first captive in November.

Speaking on the Global Captive Podcast alongside HDI colleagues from Europe and the United States, Borgmann explained that he analysis the financial statements of a captive, no matter what country it is domiciled in.

“We’re always looking at the financial stability of the captive,” he said.

“With Luxembourg we have a well-established jurisdiction where you have the equalisation reserves, which is seen for us in the same way as capital.

“The same, of course, would apply to France because they also want to have something similar. However, the way to establish the equalisation reserves will be slightly different.

“For me, if the captive is located in Europe, it doesn’t make much of a difference. However, I always analyse the financial statements on an individual basis.

“When it comes to the landscape, I would say Luxembourg will stay top on the list, Ireland and Malta and France will attract specific clients who have specific needs.”

Paris-based Etienne de Varax, who has been head of HDI’s Centre of Excellence for Risk Finance Solutions since January 2023, said there has been a concerted effort within the multinational insurer to bring together and expand its captive services as more companies embrace alternative risk transfer.

“We have been working with captives for a long time in many markets, especially in Europe, but also more and more in the United States,” de Varax said.

“The goal was to take advantage of what we have done already and to expand more to have wider range of what we can offer to captives and to major clients interested in risk finance solutions.”

De Varax said the centre of excellence is focused on numerous areas with captives, including providing stop loss solutions, reinsurance protection through collaboration with HDI’s sister company Hannover Re, and on affinity programmes which the insurer sees as a good growth opportunity.

More broadly, the centre of excellence is working on parametric products, as well as virtual captives.

GCP Short: HDI’s next steps in captive fronting, ART

Richard Cutcher
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GCP Short: HDI’s next steps in captive fronting, ART
Etienne de Varax, HDI Global
Jelto Borgmann, HDI Global
Jason Tyng, HDI Global
Marco Hensel, HDI Global

In this GCP Short, produced in partnership with ⁠HDI Global⁠, and recorded in November at the European Captive Forum.

As we have reported throughout 2023, HDI has been expanding its captive fronting and alternative risk offerings and in this episode, Richard is joined by four members of the team from across Europe and the United States, as well as Nate Reznicek, President & Principal Consultant of Captives.Insure in the US.

From HDI, we hear from Etienne de Varax, Head of HDI’s Centre of Excellence for Risk Finance Solutions, and Captive Portfolio Manager Jelto Borgmann, based in France and Germany respectively, and US-based duo Marco Hensel, Senior Vice President and Underwriting Lead, and Jason Tyng, Vice President and Captive Lead.

For more information on HDI Global and its captive services, visit its ⁠Friend of the Podcast page⁠.

For the latest news, analysis and thought leadership from the global captive market, sign up for the ⁠Captive Intelligence twice-weekly newsletter⁠.

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