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Howden enters “highly fragmented” Japanese captive market with Foresight acquisition

Richard Cutcher
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Howden enters “highly fragmented” Japanese captive market with Foresight acquisition

Howden has expanded its captive footprint with the acquisition of Foresight Holdings Co. Ltd in Japan, bringing with it captive consulting and management experience in Micronesia to the fast-growing group.

Howden’s first dip into the captive market came in February when it bought independent Guernsey captive manager Alternative Risk Management.

The broker has also appointed Takuya Aibe as CEO of Howden Japan’s retail business. Aibe has previously worked for Marsh Japan and was most recently CEO of Gallagher Japan.

As well as offering retail brokerage services, Foresight provides captive consulting in Japan and a captive management operation in Micronesia, which is one of the preferred captive domiciles of Japanese corporates.

Howden said Foresight manages 13 captives for Japanese corporates.

Kentaro Tada, CEO of Howden Japan, said:“Partnering with Foresight represents a big leap forward in the development of a broader offering for our Japanese clients, and means Howden Japan can now offer retail broking and captive management services alongside its reinsurance and ILS capabilities.”

Kenichiro Hamada, CEO at Foresight said: “After almost twenty years of developing our business, joining with Howden is the next significant step in our growth journey.

“It means that together, we can leverage the full force of our expertise and Howden’s global capabilities, enabling us to better serve clients and develop a leading market position in a highly fragmented captive market.”

Foresight is headquartered in Tokyo with 17 staff across six offices.

High-risk natural catastrophe areas pushing property into captives

Luke Harrison
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Captives are increasingly being utilised by companies that are experiencing increasing property rates, often because of a substantial loss, or if a company has operations in a high-risk natural catastrophe zone, according to Gary Osborne, vice president of Risk Partners.

Osborne was speaking to Captive Intelligence at the Vermont Captive Insurance Association (VCIA) conference in August, where property was a main area of focus across all areas of the captive industry.

“The property market is stabilising but there is still a lot of subjectivity, depending on if we get through the hurricane season or where someone is located,” Osborne told Captive Intelligence.

“We can still see big increases just because of valuations or if a client has had fires or hailstorm damage then the market’s still not making enough profit.”

Osborne said the general liability market is also starting to “tighten up” slightly on the property side.

“We have seen a lot of people opting for smaller general liability buy-downs, but we’re not really seeing them having to take on much higher retention,” he said.

“Property still accounts for about a third of what we’re focusing on.”

He said that commercial auto is also an area where rates are not improving, and challenges are continuing.

“Covid-19 gave us a bit of a break, but now that traffic is back to pre-pandemic levels, we are facing the same challenges,” he added.

Osborne said the commercial auto market is still experiencing a lot of claims, and with inflation, repair costs have also increased significantly.

“This is also partly affecting electric vehicles,” he said. “While they do not have more claims overall, when they do, the claims tend to be large.” “In some cases, the vehicle is written off entirely because replacing the battery is so expensive.”

Dublin captive plays important role in Volkswagen risk financing strategy

Richard Cutcher
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Dublin captive plays important role in Volkswagen risk financing strategy

Volkswagen’s 23-year-old Dublin captive continues to play an important role in the group’s risk financing strategy, according to Tibor Boettcher, executive director and CEO of Volkswagen Insurance Company DAC (VICO).

Boettcher was speaking on episode 111 of the Global Captive Podcast as he discussed the history of VICO and the German auto giant’s approach to captive insurance, and the role of the in house broker.

VICO was established in 1991 at a time when Volkswagen had recently made several high-profile acquisitions, such as Škoda in the Czech Republic and SEAT in Spain, as well as ramping up its joint ventures in China.

“Today I can say the captive is pretty large,” said Boettcher, who took on the captive role in January 2023.

“We currently underwrite seven lines of business. We take care of the major lines of business for the Volkswagen group, especially the marine cargo business and the property business.

“We have a team of nine people here in Dublin and we have four colleagues working out of Germany for the captive.”

Volkswagen largely self-manages VICO, but also utilises external service providers in Dublin.

The multinational operates an in-house broker, which takes care of insurance purchasing for the group worldwide.

“They decide in the end which insurance cover and which insurance company is going to participate in the various lines of business and in the various layers of the insurance protection,” Boettcher explained.

“We, as Volkswagen Insurance Company, are one of the insurance companies on the panel. In general, we, we take care of around 60% of the overall Volkswagen insurance cover and the remaining roughly 40%, is placed with other insurance companies.”

When it comes to claims, the in-house broker remains the contact for the local subsidiaries and various Volkswagen brands and business.  The captive, put simply, is just the capacity provider.

“We deal with claims together with the broker,” Boettcher added. “In the end, the brands get an insurance product which is tailored to their needs, and which is then a combination of Volkswagen Insurance Company, so a captive product, with additional coverage or additional capacity from external insurance providers.”

From 2017 until 2023, the group owned a second captive in Ireland – Volkswagen Reinsurance Company – which was utilised to support a tailored health insurance coverage of expatriate workers.

The decision, however, was taken to close that vehicle down and make use of the commercial market for that particular coverage.

“We figured out as a group that external specialised health insurance companies might be the better option to take care of the expatriate health cover, instead of an in-house captive,” Boettcher said.

“There is one large health insurance company, who has an international footprint and which is in quality perspective, service perspective, and in the end as well from pricing perspective, the better choice for the group instead of having a second captive here in Dublin.”

Listen to the full interview with Tibor Boettcher on Volkswagen’s captive strategy on the Global Captive Podcast here, or on any podcast platform. Just search for ‘Global Captive Podcast’.

HDI planning more targeted approach to UK & Ireland captive market

Richard Cutcher
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HDI planning more targeted approach to UK & Ireland captive market

HDI Global will be stepping up its presence in the United Kingdom and Ireland captive market in the coming months with a more targeted approach on new programmes.

Speaking on the latest episode of the Global Captive Podcast Oliver Davies, chief distribution officer for the industrial insurer in the UK and Ireland, said while they have been servicing captive fronting programmes in the region for the past decade, they are now planning a more targeted approach.

“We’ve been making a huge amount of investment into captives over the last 12 to 18 months here in the UK and Ireland and there’s further news to come on that,” he said.

“I would say that our focus has really been around existing clients, particularly in the large corporate sector, where we’ve been working with them on the sort of standard placement to their programmes, mainly around property and casualty.

“They’ve had a requirement to bring those into a captive environment over the last decade and we’ve serviced them extremely well.

“What we’re doing going forward is being far more targeted and making people far more aware around our proposition as a fronting insurer with a great international network that we do have here at HDI.”

Davies is currently recruiting for a Captive Services Team Leader and other captive roles.

He said HDI had also invested in a new operating model for its captive business and added more specialist understanding.

HDI already has a large presence in the continental European fronting market, while it has been growing its proposition in the United States over the past two years.

Davies said because HDI’s core target market is large corporates he is working closely with colleagues in Paris at the insurer’s Captive Centre of Excellence and at Hannover Re on alternative reinsurance solutions.

 “We’ve worked very closely with our colleagues in the Paris office under the headline of HDI Enables and so they are providing, in conjunction with ourselves, a number of different options in relation to alternative risk transfer,” he added.

“If we need additional capacity, or we need additional insights for something a little bit quirky, then we can pull in the Hannover Re teams to support us on that.

“It’s really important for us to utilise the wider Talanx group, being the fifth biggest insurer in Europe; to be able to get in some of the expertise from various parts of the organisation makes a huge difference.”

Listen to the full podcast discussion with Oliver Davies and US colleague Jason Tyng here, or on any podcast platform. Just search for ‘Global Captive Podcast’.

GCP #111: Tibor Boettcher on Volkswagen captive

Richard Cutcher
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GCP #111: Tibor Boettcher on Volkswagen captive
Richard Cutcher, Captive Intelligence
Tibor Boettcher, Volkswagen Insurance Company DAC

In GCP #111, supported by the ⁠EY Global Captive Network⁠, Richard is joined by Tibor Boettcher, Executive Director and Chief Executive Officer (CEO) of Volkswagen Insurance Company DAC, domiciled in Dublin, Ireland.

Tibor has a long history with the Volkswagen group, but has been in the captive role since January 2023.

Over the course of a 20 minute discussion, Tibor explains the role of the Volkswagen captive, its position in various risk financing progammes, why they recently moved from two to one captive and his experience of Ireland as a captive domicile.

For the latest news, analysis and thought leadership on the global captive insurance market, visit ⁠Captive Intelligence⁠ and sign up to our ⁠twice-weekly newsletter⁠.

Property business driving HDI’s captive growth in United States

Richard Cutcher
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Property business driving HDI’s captive growth in United States

HDI Global continues to experience significant growth in its captive fronting business in the United States, largely driven by property and new formations, according to Jason Tyng, vice president of the US captive solutions group at HDI.

Speaking on the latest episode of the Global Captive Podcast, Tyng said HDI’s US captive portfolio had grown 30-40% year-on-year with the majority of it being driven by property programmes and an increase in new formations partnering with the industrial insurer.

“The demand has been tremendous,” he said on the podcast.

HDI began offering fronting solutions for US workers’ compensation programmes in 2024 and Tyng said they are “95% of the way there” towards going live with auto.

“HDI is very methodical in our approach, so we have taken our time and assessed where we want to be a player at, in what particular segment,” he explained.

“Once everything is finally rolled out, which I expect will be January of 2025, we’re going to be in a great position to be successful and really start servicing our clients better.”

Within HDI’s growing book of business in the US, Tyng said around 70% is coming from new captive formations and, especially in the property space, HDI’s experience as an industrial insurer means it feels comfortable supporting certain programmes that may be less mainstream.

He added that while the property market may have stabilised to some degree, rates have remained high and so captive layers are being adjusted rather than removed altogether.

“The folks that were thinking about putting property in captives are still thinking about putting property in captives, because they don’t want to be so much concerned about the changing rate environment all the time,” Tyng explained.

“Now the rate softening has given them a little bit of a pause, they’re not really out of the captive market, they’re just changing where their captive is going to participate.”

He said insureds may now “ease into” property instead of taking a large layer straight away in their captive and follow a five-year plan.

“I’m going to start small and maybe with a deductible buy down, instead of having to take an entire primary 10 million,” Tyng added in reference to the attitude he is seeing from some captive owners.

Ryan Alternative Risk appoints Michael Albian as president, group captives

Luke Harrison
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Ryan Speciality has hired Michael Albian who will join Ryan Alternative Risk (RAR) as president of group captives.

Ryan Alternative Risk utilises carrier relationships, reinsurance capabilities, alternative risk financing and expertise in client financial analysis to place and manage coverages for large and complex insureds.

At Ryan Alternative Risk, Albian will work on further developing a full-service consulting and captive management practice, be based in Chicago.

Albian has fifteen years of experience in the insurance industry and has spent the last eleven forming and managing group captive programmes.

“I am thrilled to welcome Mike to the Ryan Specialty family,” said Kieran Dempsey, Ryan Alternative Risk CEO.

“Adding Mike’s exceptional group captive experience to RAR, we can deepen our offerings and enhance the solutions provided by Ryan Alternative Risk.

“We look forward to working with Mike as we continue expanding our alternative risk expertise.”

Captives expanding data and technology utilisation to handle and reduce claims

Luke Harrison
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Captives expanding data and technology utilisation to handle and reduce claims
  • Data and technology being utilised in claim mitigation
  • TPA approach differs dependant on working directly with captives or a front
  • Cyber and D&O require specialist claims expertise

Captives are enhancing their use of claims technology, often provided by expert claims companies, as a means of reducing the number and cost of claims, as well as increasing the speed of handling.

The approach to claims management can vary between captives with some preferring to handle the majority of claims in-house.

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Captives being used to assume greater property risk retention – Adriana Scherzinger

Luke Harrison
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Captives being used to assume greater property risk retention – Adriana Scherzinger

There is a growing interest in property risk where captives are increasingly being utilised as vehicles to assume greater risk retention, according to Adriana Scherzinger, head of captives at Zurich.

Property has been one of the fastest growing lines of business written by captives in recent years, but they are increasingly taking larger property limits as a result of ballooning rates and lack of capacity in the commercial market.

Scherzinger was speaking to Captive Intelligence at the Vermont Captive Insurance Association (VCIA) conference in August, where property dominated discussions across all areas of the captive industry.

“From a carrier perspective, we’re seeing an increased use of captives as a vehicle to assume greater levels of property risk retention,” Scherzinger said.

“Weather events have become more capricious, and more locations are becoming exposed to frequent and costly natural catastrophes. The main challenge for writing property is that it is a largely volatile risk. It is usually a capital-intensive line of coverage to be included in a captive.”

She said there has been a lot of sophistication and creativity in the US when it comes to writing property through captives.

“Captives are often involved in the towers, primarily in the primary layer, and they’re also handling increased deductibles,” she said.

“But they’re also filling in gaps within the tower. It’s not that captives are always taking on all the property risk; they’re often working side by side with the commercial market.”

Scherzinger said Zurich has been observing a widening array of risks being considered in captives that goes beyond traditional insurance.

“This is where we’re seeing a significant shift in the market from alternative risk, as it was considered in the past, now into a mainstream solution,” she said.

She said she is expecting to see continued captive growth across the globe.

“In Europe, we’re seeing countries like France, Italy, and the United Kingdom actively discussing captives and their domiciles—they all want to be part of the game,” she said.

She said Pacific and Latin America are also preparing for growth.

“Here in the US, where the majority of all captives are domiciled, we are receiving many new fronting inquiries that I have not seen before,” Scherzinger added.

“The risk can be first-party or third-party, and customers are creative in how they want to use their captive programs.”

GCP Short: HDI’s UK and US developments

Richard Cutcher
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GCP Short: HDI’s UK and US developments
Oliver Davies, HDI Global
Jason Tyng, HDI Global

This GCP Short, produced in partnership with ⁠HDI Global⁠, checks in with the HDI Global team to find out how their expansion into the UK and US captive fronting markets is progressing.

Oliver Davies, recently promoted to chief distribution officer for the UK & Ireland, tells us about HDI’s captive growth plans on this side of the pond and what parts of the market they are targeting.

Jason Tyng, vice president of US captive solutions group at HDI, updates listeners about the latest growth and next steps for the industrial insurer in the United States.

For more information on HDI Global and its captive offering around the world, visit its ⁠Friend of the Podcast page⁠ on the ⁠Captive Intelligence website⁠.

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