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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.

US Treasury issues latest TRIA data call for participating insurers

Luke Harrison
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US Treasury issues latest TRIA data call for participating insurers

Insurers that participate in the Terrorism Risk Insurance Program (TRIP), including captives, have been asked to submit information for the 2024 TRIP data call, which covers the reporting period from 1 January, 2023 to 31 December, 2023.

The Terrorism Risk Insurance Act (TRIA) was originally signed into law by President George W Bush in November 2002, and acts as a federal “backstop” for insurance claims related to acts of terrorism.

It is currently reauthorised through to 2027 and has been a catalyst for increasing numbers of US-domiciled captives to provide terrorism related coverage to their parent groups.

Participating insurers are required to register and report information in a series of forms approved by the Office of Management and Budget (OMB).

All insurers writing commercial property and casualty insurance in lines subject to TRIP, subject to certain exceptions, must respond to the data call no later than 15 May, 2024.

The data call relies on four joint reporting templates, to be completed by small insurers, non-small insurers, captive insurers, and alien surplus lines insurers.

For the 2024 TRIP Data Call, an insurer will qualify as a small insurer if it had both 2022 policyholder surplus of less than $1bn and 2022 direct earned premiums in TRIP-eligible lines of insurance of less than $1bn.

Of this group, small insurers with TRIP-eligible direct earned premiums of less than $10m in 2023 will be exempt from the 2024 TRIP data call, however this exemption is not eligible for captives.

Captive Insurers are defined as insurers licensed under the captive insurance laws or regulations of any state.

Captive insurers that wrote policies in TRIP-eligible lines of insurance during the stated reporting period are required to register and submit data to the Treasury, unless they did not provide any terrorism cover.

Christopher Rizek joins Holland & Knight as partner

Luke Harrison
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Christopher Rizek joins Holland & Knight as partner

Christopher Rizek has joined law firm Holland & Knight’s Tax, Executive Compensation and Benefits Practice as a partner and will be based in Washington DC.

Rizek represents taxpayers in all types of federal civil and criminal tax controversy cases, including captive cases.

He supports clients through Internal Revenue Service (IRS) audits, prepares administrative claims, and protests of IRS actions, and litigates tax and tax-related cases in US District and Appellate courts, the US Court of Federal Claims, and the US Tax Court.

Additionally, he has represented taxpayers, financial entities, and professional firms in connection with IRS examinations of tax shelters and related compliance and professional ethics issues.

Rizek will also be a key member of the firm’s nationwide tax controversy team.

“Chris has an excellent reputation and remarkable skills in handling issues that are high enforcement areas for the IRS, including captive insurance cases and employee retention tax credits,” said Todd Keator, co-leader of Holland & Knight’s Tax, Executive Compensation & Benefits Practice.

“Many members of the firm’s tax controversy team have worked with Chris throughout the years, so we have first-hand knowledge of his deep understanding of tax law which will greatly benefit the growth of the team and its nationwide reputation.”

Before joining Holland & Knight, Rizek was a member at Caplin & Drysdale.

Rizek was previously an attorney-advisor and associate tax legislative counsel with the US Treasury Department, Office of Tax Legislative Counsel, with responsibilities for legislation and regulatory actions.

“I’m excited to join Holland & Knight’s highly regarded tax controversy team, as they are known for handling some of the most significant cases being heard by courts today,” said Rizek.

“I look forward to using my experience with IRS examinations and other tax controversy matters to guide Holland & Knight clients as the IRS continues its aggressive approach to enforcement.”

Captive Essentials training course launched in London

Richard Cutcher
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0
Captive Essentials training course launched in London

Captive Intelligence has partnered with RISCS CWC to launch a two-day educational training course for professionals new to the captive insurance industry or keen to join.

The first Captive Essentials course will be held on 22nd – 23rd May at etc.venues Fenchurch Street, teaching delegates everything they need to know about why captives exist, how they are formed and managed, and the broader role they play in risk financing programmes.

Drawing on experts from across the captive industry and covering topics from captive management, domiciles and investments, to fronting, reinsurance and governance, Captive Essentials is the ideal one-stop shop for everything you need to know about captive insurance.

On Day Two of the course, delegates will have the opportunity to apply all the knowledge gained by working in teams on an extensive captive case study exercise.

“Captive insurance has never been more relevant and as we see new domiciles emerging, particularly here in London at Lloyd’s and a prospective UK captive regime, it has never been more important to provide high quality education and training,” said Richard Cutcher, founder of Captive Intelligence.

Oliver Schofield, managing partner at RISCS CWC, said he believed the course should be ideal for anyone with a growing interest in captives or for companies keen to enter or expand their presence in the fast-growing sector.

“We see new companies entering the captive industry every week,” he said. “Whether that is (re)insurers and fronting partners keen to work with captives, MGAs utilising a captive structure or new captive owners and captive managers.

“Captive Essentials has been designed to ensure delegates leave with a strong grounding in how captives work and why they are increasingly valuable to corporates and the wider commercial market.”

The first Captive Essentials course will be held in London on 22nd and 23rd May with other dates and venues to be announced later this year. 

Captive Essentials costs £1,750 per delegate with group discounts available for bookings of three of more delegates from the same organisation.

The course fee includes all educational sessions, case study exercise, lunch on both days, coffee and refreshments, drinks reception and an optional delegate dinner on 22nd May.

For more information on the course agenda and timings, download the Captive Essentials brochure here. You can sign up to express your interest here, or email Richard.

Nevada expecting 50 dissolved captives to re-form if IRS backs down

Luke Harrison
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Nevada expecting 50 dissolved captives to re-form if IRS backs down

Nevada’s deputy insurance commissioner believes that if the Internal Revenue Service backtracks on proposed regulatory changes for 831(b) captives, around 50 of the 62 captives that were dissolved in the State last year will look to relaunch in the future.

Captive Intelligence reported in April 2023 that the IRS had put forward major changes to the way captives making the 831(b) are treated, including deeming some as “listed transactions” and labelling others as “transactions of interest”.

The proposed changes, which were the subject of a public hearing in August and divided opinion amongst some industry experts, have even prompted intervention from US Congress members in support of the 831(b) tax election for small captives.

Nevada licensed seven new captives in 2023, while 62 surrendered their licence, taking the total number of captives in the domicile to 100.

“With the assumption that it does not get adopted, they would certainly look into potentially re-forming their captives,” Nick Stosic, Nevada’s deputy insurance commissioner, told Captive Intelligence.

Stosic said the potential of being treated as a tax shelter led to these captives making the decision to close.

“It was something where even though it has not been adopted yet, they just wanted to get ahead of it,” he said. “I would say that we know 50 of those dissolutions were absolutely due to that.

“It was all reacting to the proposed 831(b) IRS rule, and they just felt more comfortable starting the year not having active captives. Unfortunately, we got hit with one shot with that.”

The State’s insurance commissioner Scott Kipper previously told Captive Intelligence Nevada was “awfully bullish” on the future of captives in the domicile.

Stosic said Nevada is expecting to launch a significant number of cells this year that will be focused on writing crop insurance.

“That’s something that we’re anticipating seeing more of this year,” he added.

He noted that sponsored captives have been the most active in terms of trying to form additional new cells in Nevada.

“We’re still continuing to see some of those sponsored captives come in with ideas for new cells,” he said.

“In terms of individual captives, I’d say we’re going to continue to try and be out there and promote Nevada, and we still think Nevada has got some incredibly positive assets that make it a great place to have a captive.”

Nevada’s legislature meets for 120 days every two years, and during this period captive regulatory changes will be proposed, with the next meeting starting February 2025.

“At this point we are starting to put together some potential topics to be in our bill for the next session, but we don’t have anything finalised,” Stosic said.

Kipper said they have already had good internal discussions about items that they may want the legislature to consider, “but I think it’s still early in the game”.

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