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Pool Re members back new reinsurance arrangement

Luke Harrison
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Members of Pool Re, Great Britain’s terrorism reinsurance pool, have backed formal proposals from the Pool Re Board to change the current Pool Re scheme.

Pool Re’s reinsurance covers property damage arising from nuclear, biological, chemical, and radiological attacks (CBRN), as well as property damage arising from cyber-triggered terrorist losses and conventional terrorist acts, and non-damage business interruption.

Any type of insurer, including captives, that cover terrorism risk in the UK can access the Pool Re reinsurance fund.

A significant number of captives, from domiciles including Gibraltar, Guernsey, Isle of Man, Bermuda, Ireland and Vermont, are members of Pool Re.

The proposals to convert its reinsurance arrangements from the current facultative obligatory treaty to an annual aggregate catastrophe excess of loss treaty will take effect in April 2025.

Pool Re said the changes will create the conditions to support members in driving greater take-up of terrorism cover, returning risk to the private market, and further distance the taxpayer from the financial consequences of acts of terrorism.

“Members and HM Treasury have given Pool Re a very clear and exciting mandate to continue Pool Re’s modernising journey,” said, Tom Clementi, Pool Re CEO.

“When Pool Re was founded some 30 years ago, it was never intended to be a permanent, static, and definitive solution.

“Our job was always to correct a market failure, and to provide opportunities for the industry to take more terrorism risk onto its own balance sheet and normalise the market.

“The change to an aggregate catastrophe excess of loss treaty is the best possible outcome for both members and the taxpayer.”

This modernisation is a element of the ‘Scope of Works’ programme agreed by members and HM Treasury following the last review of Pool Re by the government which concluded in March 2022.

The updated scheme will provide members with reinsurance cover that is priced in a more sophisticated and risk-reflective way, while members’ reporting obligations will simplify, with members only required to provide an annual exposure return.

Domicile Wars: Mauritius positioning itself as reinsurance hub as captives rise

Luke Harrison
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Domicile Wars: Mauritius positioning itself as reinsurance hub as captives rise
  • Most Mauritius captive owners have links to Africa
  • New legislation permits pure captives to write third party risk
  • Big focus on anti-money-laundering efforts

Despite being one of the biggest insurance centres in Africa, Mauritius is keen to enhance its reputation as a global financial hub and continue captive expansion in the domicile and recently allowed pure captives to write third party risk.

In order to do this, the jurisdiction is in discussions with the World Bank on a new reinsurance framework that Mauritius hopes will further develop its place on the international stage.

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Everen CEO Bertil Olsson to retire March 2025

Luke Harrison
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Bertil Olsson, the CEO of Bermuda-domiciled energy mutual Everen, is set to retire from his position in March 2025, as the board has declared a dividend of $350m.

The dividend was declared at the company’s board meeting on 19 March, which was followed by its annual general meeting on 21 March, where Olsson broke the news regarding his retirement.

“Whilst my retirement is still a year away, I would like to express what an honour and privilege it has been to lead this amazing organisation over the past 8 and a half years,” Olsson said.

“I am looking forward to the continued work over the coming year with our very talented team and Board of Directors and to transition the business to the next leader upon completion of the succession recruitment process.”

Directors Gwenola Jan, Michele Waters, and Robert Wondolleck are also set to retire.

At the AGM, shareholders voted to approve amendments to Everen’s by-laws and shareholders’ agreement, aimed at enhancing governance and operational flexibility.

Shareholders also elected a new Board of Directors who will serve until the March 2025 AGM. 

The newly elected Board appointed John Weisner as chair of the board and Brian Mullen as deputy chair for 2024.

For the fiscal year 2023, Everen reported a net income of $679.5m, driven by a rebound in the investment portfolio, positive underwriting income and cost management.

“In 2023, Everen performed very well and remained dedicated to advancing Strategic Plan initiatives including our marketing and communication activities and facilitating the use of our coverages through the approval of the use of incorporated cell captives,” said Robert Foskey, senior vice president and COO at Everen.

“The addition of three new members underscores our continued growth, geographic and insured portfolio diversification, and the strong interest from global energy companies to be a part of our world-class energy insurance mutual.”

In March last year, Olsson told Captive Intelligence that Everen is facilitating the global transition to a greener economy by providing an insurance solution to all types of energy companies for both old and new projects.

US commercial brokers keen on captive education, no longer “pushing back”

Luke Harrison
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US commercial brokers keen on captive education, no longer “pushing back”

American commercial brokers are increasingly looking for captive education to avoid losing clients as more businesses demand information and advice on captive utilisation.

Heather McClure, a former captive owner, joined new captive manager and consultant Helio Risk as general counsel and chief risk officer in April 2023.

Speaking on episode 100 of the Global Captive Podcast, she said a lot of the focus has been on building relationships and providing education to brokers who have not previously worked with captives.

“We’ve been doing a lot of education with commercial brokerages and really educating them about captives because their concern is losing their commissions,” McClure said.

McClure said the time has come when commercial brokers “can no longer push back”.

“Years ago, they were only familiar with the commercial market solutions and captives were competitors to them,” she said.

“We’re not beating down their doors,” McClure stressed. “They are coming to us, saying, ‘okay, give us a captive 101, empower us with information and data to present before our clients so that it becomes our idea’.”

She said that if brokers are not able or willing to answer a client’s captive questions, then clients will find their way to Helio or to another captive expert.

“We’ve seen that happen quite a bit, where a client will come to us directly and say, ‘I have been asking my trusted broker that I’ve had for 15 years about captives for the last two years.’”

She said if prospective captive owners do not get the information or answers on captives, they can become irritated and look for alternative broking and captive partners.

“We try to reach out, if we can repair that relationship, fine, but if not, there are many brokers that are willing to shepherd their clients through the captive process.”

McClure said the last few months have been some of the most intense in terms of clients coming to Helio for advice.

“Sometimes directly or sometimes through referrals, when they are having difficulty with the property markets, and we are partnering with brokerages in a way that I could not have really foreseen.”

Artex launches new group captive for US transportation industry

Luke Harrison
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Artex Risk Solutions has launched a new group captive to address risks associated with transportation, trucking for hire, convenience store operators and petroleum marketers in the United States. 

The group captive is a homogenous insurance company that will provide coverage for workers’ compensation, auto liability and auto physical damage.

Artex are the captive consultant and manager for the captive, while claims administration and loss control will be handled by Gallagher Bassett and Carolina Casualty.

“The U.S. transportation industry has experienced pockets of reduced insurance and risk management options in recent years due to labour shortages, supply chain challenges and a distressed insurance market,” said Martin Hughes, executive vice president, specialty risk transfer for Artex in North America.

“The new group captive addresses a need for alternative risk solutions in the space.”

Artex sad the objectives of the captive are to provide participants with the ability to take control of their insurance program through quality claims and loss control services, retain underwriting profits and investment income, and reduce the cost of insurance.

Tennessee licences 25 new captives and 66 cells in 2023

Luke Harrison
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The Tennessee Department of Commerce & Insurance (TDCI) licensed 25 new captives and 66 cells in 2023, taking the total number of risk bearing entities, including cells, in the domicile to 719.

Tennessee currently has 164 active captives and 555 active cells. 

The active captives in the jurisdiction include 97 pure captives and 57 protected cell companies (PCCs), in addition to several risk retention groups (RRGs) and association captives.

Total Gross Written Premium (GWP) increased in 2023 to $2.41bn, up from $2.12bn in 2022.

“In Tennessee, our focus on responsible regulation, our modern captive insurance statute, and our roster of seasoned professionals continues to create a difference for captive domicile managers who might not find that combination when looking elsewhere,” said TDCI Commissioner Carter Lawrence.

“Taken together with our central location and our network of first-in-class service providers, Tennessee continues to prove to the world why we are a first choice when establishing a captive insurance domicile.”

At the end of 2022, Tennessee had 100 pure captives, 411 individual cells and 42 PPCs.

AM Best affirms rating of Ecopetrol captive

Luke Harrison
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AM Best has affirmed the financial strength rating of B++ (Good) and the long-term issuer credit rating of “bbb+” (Good) of Bermuda-domiciled Black Gold Re Limited (BGRe). The outlook for the ratings is stable.

BGRe is a captive reinsurer owned by Ecopetrol S.A., a Colombia-based integrated energy company that is 88% owned by the Colombian government.

The captive has access to a wide scope of insured risks given the relevance of Ecopetrol to the oil and gas industry in the Americas, but the company’s underwriting risks are concentrated in Colombia.

BGRe’s enterprise risk management is well-integrated within Ecopetrol and is important to the group as a risk management tool.

The company has low net underwriting leverage, creating dependence on reinsurance, but these associated risks are mitigated partly by a diversified mix of well-rated reinsurers.

The ratings of BGRe reflects its balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).

The ratings also recognise the importance of the company within Ecopetrol’s strategy.

BGRe’s very strong level of balance sheet strength reflects its capital management strategy and ability to build up capital.

AM Best expects BGRe to maintain a capital buffer as it continues to adjust its risk appetite to the reinsurance needs of its parent company, and overall reinsurance market conditions.

AM Best said BGRe’s operating performance is characterised by profitable technical results backed by well-established underwriting principles and considerable revenue from ceding commissions.

Over the past few years, the company has complemented its net profit with investment results, but dependence on this revenue is low.

AM Best expects the company to continue backing its results with its technical performance.

The stable outlook reflect AM Best’s expectation that BGRe will continue to adjust its risk appetite and tolerance levels that support its parent company’s needs in terms of volume of capital and underwriting capabilities.

“Positive rating actions could result if there is a sustained favourable trend in operating performance as the company’s strategy continues to adapt to the reinsurance market,” AM Best said.

“Negative rating actions could occur if business flow is limited by any change in its holding company or if the financial situation of the parent company is compromised by any socio-political or economic event.”

Marsh launches Edgware Re, cyber group captive in Bermuda

Luke Harrison
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Marsh launches Edgware Re, cyber group captive in Bermuda

Marsh has launched a Bermuda-domiciled cyber group captive for companies seeking more control of their cyber insurance programmes.

Edgware Re is a cyber-only group captive, licensed as a Class 3 insurer in Bermuda, that will only transact business with its participating members.

Participating members can purchase up to $10m in insurance or reinsurance from Edgware Re based on their needs, and limits are expected to grow as participation increases.

“As the scale, frequency, and economic impact of cyber events continue to grow, organisations must regularly reconsider and optimise their cyber risk strategies,” said Tom Reagan, global cyber practice leader at Marsh Specialty. 

“Edgware Re is a great example of Marsh working with its clients to use their own capacity to create a sustainable insurance program that better meets their needs in today’s market.”

The captive will use Marsh’s cyber policy forms, pool participants’ cyber risks and premiums, absorb their losses, and foster the exchange of cybersecurity best practices.

Participating members will be eligible for dividends in the event of requisite profitability. 

Marsh will provide captive management, incident response, vendor engagement and claims advocacy support to Edgware Re.

“The captive insurance market is a proven risk financing alternative for organizations that want to take greater control of their risk and gain increased financial flexibility and protection,” said Ellen Charnley, president of Marsh Captive Solutions.

“Edgware Re offers its participants the potential for more stable pricing and control, access to shared best practices, and potential profit sharing.”

In January, Marsh Captive Solutions launched ReadyCell to enable organisations to form their own insurance company within its Mangrove Protected Cell Facility in Washington DC.

In September, Captive Intelligence published an article highlighting that captives writing cyber coverage in their programmes is “emerging as a trend”.

Premium skyrockets in Alberta as province licences 15 new captives

Luke Harrison
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Premium skyrockets in Alberta as province licences 15 new captives

The Alberta Department of Insurance licensed 15 new captives in 2023, with captive premium rising to C$54m (US$40m), compared to C$2.1m (US$1.6m) in 2022.

Alberta’s year-end total was 16, compared to one at the end of 2022, with the Energy Province introducing its captive legislation in July of that year.

Of the 15 new captives licensed in Alberta in 2023, 13 are single parent captives, one is a group or association captive, and one is an industrial insured.

Of the 16 year-end total, 14 are single parent captives, one is a group or association captive, and one is an industrial insured.

Alberta’s total gross written premium for its captives for 2023 was C$54m (US$40m), compared to C$2.1m (US$1.6m) in 2022.

Captive intelligence published an article in December highlighting that a large number of prospective captive owners are expected to pick the domicile over the more traditional offshore domiciles, which have historically been popular with Canadian businesses.

In episode 97 of the Global Captive Podcast, Rick Da Costa, partner and national leader for corporate and regulatory insurance & reinsurance at Borden Ladner Gervais LLP, discussed Alberta’s appeal as a new captive domicile for Canadian businesses.

GCP #100: Sandy Bigglestone, Heather McClure and Dan Towle

Richard Cutcher
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GCP #100: Sandy Bigglestone, Heather McClure and Dan Towle
Sandy Bigglestone, State of Vermont
Heather McClure, Helio Risk
Dan Towle, CICA

In episode 100 of the Global Captive Podcast, supported by the ⁠EY Global Captive Network⁠, Richard brings the first instalment of interviews recorded at the CICA International Conference that took place in Scottsdale, Arizona from March 10-12.

02.16 – 17.12: Sandy Bigglestone, Vermont’s deputy commissioner for captive insurance, discusses the latest captive activity in the State, how 2024 has started and the proposed changes to Vermont’s captive legislation.

17.55 – 27.31: Heather McClure, general counsel and chief risk officer at Helio Risk, tells us why Helio was launched, how it is working with brokers on captive education and her broader thoughts on development of the captive industry.

28.05 – 40.35: CICA president Dan Towle provides his take on the conference, the highlights and other developments at the Association.

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

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