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Authentic raises $5.5m, targets SaaS companies with ‘Captive in a Box’ solution

Luke Harrison
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New York and Ohio-based Authentic, an insurance platform targeting vertical software as a service (SaaS) companies, franchises, and other groups with its Captive in a Box solution and raised $5.5m in a seed round.

The company said its Captive in a Box platform allows for any vertical SaaS company, franchise or association to launch captive programmes for their members in a matter of weeks.

Authentic is offering business owner’s policy (BOP) coverage and is also targeting businesses in food and beverage, salon and spa, retail, fitness, and professional services.

It handles all the logistics of setting up a captive including, legal, underwriting reinsurance and capital, and claims management and customer servicing.

“Captive insurance provides many benefits to organisations and their members, but until now, setting one up was a very long and expensive process,” said Cole Riccardi, CEO and founder at Authentic.

“Through Authentic’s platform, anyone can create their own captive insurance program and realise the benefits within days.”

The company is comprised of professionals from technology and insurance companies, including Next Insurance, Amazon, Canary Consulting, and Aquiline Capital Partners.

The funding round was led by Slow Ventures with participation from Altai Ventures, MGV, Upper90, Clocktower, Commerce Ventures, Mischief Ventures, Core Innovation Capital, and prominent insurance executives.

“Authentic’s ‘captive in a box’ allows them to sidestep the current distribution problems of adverse risk selection that the insurance industry has struggled to overcome,” said Sam Lessin, managing partner at Slow Ventures.

“Authentic’s partners stand to benefit from sharing data to better assess and price risk, as they are the ones that reap the rewards from more successful programs.”

Domicile Wars: Singapore sees captive growth from Asia parented companies

Luke Harrison
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Domicile Wars: Singapore sees captive growth from Asia parented companies
  • Asia-based captives saw 58% increase in premiums in 2022
  • Captive professionals in Singapore not concerned about OECD global minimum 15% tax
  • More local talent needed to compete as jurisdiction grows

Singapore is experiencing “significant captive growth” from Asian parented companies, as the region sees an uptick in captive formations.

Captives can be formed in a number of different jurisdictions in the Asia Pacific region including domiciles such as Labuan, Hong Kong, Micronesia, Mainland China, and the Cook Islands. There is also a small number of captives in New Zealand and Australia.

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UK can offer unique captive proposition in right regulatory framework – Julia Graham

Luke Harrison
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UK can offer unique captive proposition in right regulatory framework – Julia Graham

Airmic CEO Julia Graham believes the United Kingdom could offer a “unique proposition” for captives if a “proportionate and fit-for-purpose” regulatory environment is developed with long term commitment from the government.

Airmic, the UK’s risk and insurance management association, joined a roundtable meeting organised by the London Market Group and City Minister, Andrew Griffith MP, economic secretary to the Treasury, on 18 September, to discuss the potential introduction of a UK captive regime.

It is Airmic’s position that a UK captive regime should be implemented outside of Solvency II/Solvency UK so a more proportionate approach can be taken.

The LMG believes this can be achieved through secondary legislation to create a new class of ‘captive insurer’ as an additional schedule to the Regulated Activities Order.

Graham said Airmic is encouraged by the enthusiasm of the LMG and Government to explore the practicalities of introducing a captive regime in the UK that would provide Airmic members with another captive domicile option.

“The UK, already a world class (re)insurance centre, has the potential to offer a unique proposition for captive owners, with expert service providers and a trusted strong governance community already in place and a talent pool of professionals with a deep knowledge and experience in all aspects of managing risk and risk financing,” she said.

“However, a proportionate and fit-for-purpose regulatory environment for captives would need to be developed with clear guidance published. Strong captive domiciles benefit from committed governments and regulators that demonstrate they are in the captive business for the long term.

“We look forward to engaging further on this topic with the London Market Group and UK government.”

Graham was joined by Richard Cutcher, in his role as Airmic’s captive ambassador, and several captive owners who are members of the Association, to share their thoughts on the benefits of captive insurance and what a good captive regulatory regime might look like for the UK.

Airmic has an active Captive Special Interest Group, with more than 50 regular participants that own and utilise captives in domiciles all around the world.

Cutcher said Airmic is “always keen” to explore opportunities to widen the pool of solutions and options available to members who own a captive or are considering forming one in the future.

“Airmic members are currently well served by captive domicile options, but the UK, with all the (re)insurance infrastructure and expertise it already has in place, has the opportunity to present something compelling,” he said.

Cutcher said it was important that any new captive environment would be implemented outside of Solvency II, “so captives can be regulated on a more proportionate basis”.

Airmic said it would continue to engage with the London Market Group, City Minister Andrew Griffith MP and Prudential Regulation Authority (PRA) on the initiative.

There is a growing impetus in Europe for more ‘home’ captive domiciling, with France leading the way with new legislation finalised this year and a steady pipeline of new formations materialising.

Singapore captive association to support regulatory, industry dialogue

Richard Cutcher and Luke Harrison
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Singapore captive association to support regulatory, industry dialogue

A captive owner association in Singapore is being developed by PARIMA and could be the first of several such groups in the region.

PARIMA is the risk management association for the Asia region and has a growing number of captive owners within its membership.

Speaking to Captive Intelligence Franck Baron, chairman of PARIMA and group deputy director of risk management and insurance at International SOS, which owns a captive in Singapore, said an association for captive owners in the domicile would be a good way to share best practices and coordinate dialogue with the Monetary Authority of Singapore and industry.

“We are creating a captive association, which is to become the body for captive owners in Singapore,” Baron said.

“This will allow us to have conversations with MAS and help them to promote the domicile because this domicile is extremely supportive to business and risk management.

“We are creating an Association because we believe that there is still a lot that can be done in order for risk managers to look at captives as a strategic risk financing tool.

“We are still seeing too many panic captives, because people look at it as being a way to absorb the insurance premium cycle, instead of creating something with a strong foundation at parent level where captives are viewed as a risk financing tool.”

Speaking on the Global Captive Podcast in June, Baron said there was a wider ambition to launch captive owner associations across the region, but Singapore was a good first step.

“After a long period of time of thinking about what PARIMA can do to supported the development of captives, we came to the conclusion that we have to create captive owner association for Asia, starting with Singapore,” he explained.

“I am very excited about it because we want to gather all captive owners together so that we can have a clear and distinct voice when it comes to talking to the regulator, the market and sharing best practices.”

GCP #93: Interviews from the Bermuda Captive Conference

Richard Cutcher
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GCP #93: Interviews from the Bermuda Captive Conference
Grainne Richmond, Aon
Pierrick Livet, KPMG Bermuda
Michelle Sivanayson, Marsh Captive Solutions
Eduardo Fox, Appleby
Michael Woodruffe, Kirkway International

In episode 93 of the Global Captive Podcast, supported by the EY Global Captive Network, and hosted by Richard Cutcher, we share live interviews from the Bermuda Captive Conference that took place 12-14 September.

01.43 – 07.04: Eduardo Fox, a consultant to Appleby law firm and Davies Captive Management, is the latest recipient of the Fred Reiss Lifetime Achievement Award, in recognition of his contribution to the domicile, particularly in business development for Latin American captives.

07.35 – 11.00: Michelle Sivanayson, recently appointed as Marsh Captive Solutions’ new islands practice leader, based out of Bermuda. She discusses her new role and plans for further development of the captive practice in the region.

11.53 – 20.38: Local reinsurance broker Michael Woodruffe, president of Kirkway International Limited, is focused almost entirely on North American captive and MGA business. He explains why “captive business is the best business” for reinsurers.

21.14 – 27.25: Grainne Richmond, executive vice president and head of captives at Aon Bermuda and director and lead chair of the Bermuda Captive Network. Grainne shares the lates update on developments and progress of the Bermuda Captive Network and why it is important to attract new talent.

28.00 – 32.00: Pierrick Livet, senior manager in insurance advisory at KPMG in Bermuda. Pierrick and Richard were on the opening panel of the conference where we discussed evolving captive ownership structures, emerging risks and multi-captive strategies.

For the latest breaking news, analysis and thought leadership from the global captive market, visit Captive Intelligence and sign up to our twice weekly newsletter here.

UK captive regime gains momentum with Treasury meeting

Richard Cutcher
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UK captive regime gains momentum with Treasury meeting

A delegation of captive specialists met with the UK government’s City Minister Andrew Griffith at the Treasury today to discuss the potential introduction of a captive regime.

The delegation and meeting was organised by the London Market Group and Griffith and included captive owners, brokers, insurers and the wider risk management community.

The LMG has proposed an ambitious captive regime to ensure it can be viewed as a competitive option alongside established, international domiciles.

“This must sit alongside specific guidance for captives which focuses on reduced prudential risk assessments, a swifter approval process (30 – 60 days from application to licensing), reduced reporting requirements, lower capital requirements and reliance on wider group functions such as auditing etcetera,” the LMG states in its Plan for the Future document.

The LMG believes this can be achieved through secondary legislation to create a new class of ‘captive insurer’ as an additional schedule to the Regulated Activities Order, that would not be regulated under Solvency II or the proposed replacement, Solvency UK.

While the LMG has been exploring the idea of a UK captive regime for the past three years, this is the first time government has convened the market to hear first-hand the potential benefits and practicalities of how one would work.

“It was great to get round the table today with key industry leaders and financial services regulators to explore the case for designing a competitive UK captive insurance regime,” said Griffith.

“I am thankful to the London Market Group for bringing us all together and I look forward to continuing to work with industry to support growth and international competitiveness across the UK’s insurance sector, helping ensure the UK remains a world leading destination for risk management solutions and insurance innovation.”

There is momentum in Europe for more ‘home’ captive domiciling, with France leading the way with new legislation finalised this year and a steady pipeline of new formations materialising.

Captive Intelligence understands a first captive formation in Italy should be completed this year, while discussions are taking place within Spain and Germany’s captive communities about specific captive regulation.

Chris Lay, CEO of Marsh UK & Ireland and a former president of Marsh Captive Solutions, has previously said he believes London could be “a unique and attractive location for captive investment”.

Caroline Wagstaff, CEO of the LMG, attended the meeting and said: “The London Market is very grateful to the City Minister for his energy and focus on helping the market to thrive through the possible introduction of new products.

“Despite being the global hub for risk transfer, the UK’s regulatory regime is not conducive to businesses setting up captive insurers here. This is a rapidly growing global industry; with captive premium estimated to reach US$161 billion by 2030, and other jurisdictions – including France and more recently Italy, are opening their doors.

“If we are to remain the place where business comes for risk transfer advice and solutions, then not having this string to our bow means we are not keeping pace with new and innovative methods of risk management.

“A UK captive domicile would offer participants an extensive financial services ecosystem; London-based global brokers with extensive captive consulting experience, an unrivalled range of local banking and asset management options and the world’s largest and most sophisticated reinsurance market.”

The initiative to introduce a bespoke regulatory regime for captives in the UK is entirely separate from the Captive Syndicate project at Lloyd’s.

In the case of Lloyd’s, a captive would operate within Lloyd’s exactly like a traditional syndicate and would be overseen by the market, while a UK captive would be regulated directly by the Prudential Regulation Authority (PRA).

Artex Capital Solutions acquires Frontier Financial Solutions

Luke Harrison
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Artex Capital Solutions, a division of Artex Risk Solutions, owned by Arthur J. Gallagher & Co, has acquired Bermuda-based Frontier Financial Services.

Frontier is a management firm specialising in consulting, recruitment, business services and immigration services predominantly to reinsurance clients in Bermuda.

Terms of the transaction were not disclosed.

“Artex and Frontier found a highly regarded partner in each other with shared values focused on culture, service, proficiency and performance centred on individual client goals,” said Kathleen Faries, CEO of Artex Capital Solutions.

“Frontiers’ reputation in recruitment and staffing consulting services means we will be better positioned than ever to offer a truly one-stop solution to our clients, including assisting startups and mature companies with their short- and long-term staffing requirements and related services.”

Frontier director and co-founder Peter Brodsky, CEO Derek Winch and all Frontier employees will remain in their current location and continue to operate business-as-usual.

Clients and employees will now have access to Artex’s resources from pre-incorporation concept development, structure design, incorporation, licensing, and through to ongoing company management and advisory.

“Developing talent across career spectrums is a key part of our clients’ growth strategy and we’ll continue to deliver the world-class consulting and recruitment services that Frontier is known for, especially as the demand for top talent continues,” said Brodsky.

“I am confident that our staff will greatly benefit from being a part of a larger network of clients and relationships that Artex will bring to this new partnership.”

In May this year, Artex Risk Solutions completed the acquisition of the Irish independent captive manager, Allied Risk Management.

Risk Strategies consolidates Atlas Insurance Management into RMA brand

Luke Harrison
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Risk Strategies, the specialty insurance brokerage and risk management firm, will consolidate its independent captives group under the Risk Management Advisors (RMA) brand.

The move will include merging Atlas Insurance Management, which was acquired by Risk Strategies in 2020, into the RMA brand and operations.

The newly consolidated operations will be led by managing director, Max Jong, who joined as part of the RMA acquisition by Risk Strategies in 2019. Atlas was acquired by Risk Strategies in 2020.

“At a time when alternatives to traditional insurance approaches in risk management are becoming more important than ever, I’m excited that we are taking this step in building out one of the country’s most knowledgeable and effective captives operations,” said Jong.

“Bringing together our operations will make it easier to build on and add to our capabilities in ways that meaningfully benefit clients.”

RMA specialises in the design, implementation and management of all types of captive insurance companies.

“Bringing these groups together under one brand and structure will have real benefits for both our clients and our overall business,” said John Mina, CEO of Risk Strategies.

“As one group, our professionals can more easily collaborate to solve problems and identify new opportunities as the demand for alternative risk approaches grows.”

AM Best affirms rating of COSCO SHIPPING 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 Hong-Kong domiciled COSCO SHIPPING Captive Insurance Co. The outlook of these credit ratings is stable.

COSCO Shipping Captive is owned by China COSCO SHIPPING Corporation.

The captive’s underwriting book primarily consists of marine hull business for the parent group and its affiliates, which is expected to be its key source of premiums over the medium term. Other business lines include liability, commercial property, cargo, motor, accident and health.

As a strategically important member of COSCO SHIPPING, the captive insurer receives various support from its parent in areas of business development, risk management, managerial and capital support.

The ratings from AM Best reflect the captive’s balance sheet strength, which the ratings agency assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

AM Best’s ratings also reflect the wide range of support the company receives from its parent, which the ratings agency perceives it to benefit from strong governmental support.

COSCO SHIPPING Captive’s risk-adjusted capitalisation remained at the strongest level in 2022, as measured by Best’s capital adequacy ratio (BCAR).

The company’s balance sheet strength is assessed as very strong, underpinned by a very low underwriting leverage and a prudent reinsurance programme.

The captive insurer’s capital and surplus has consistently grown at low- to mid-single digit rates, supported by a favourable dividend retention arrangement since its inception.

However, AM Best said the company is expecting a higher dividend pay-out ratio after it achieves net profits for six consecutive years.

COSCO SHIPPING Captive achieved a net profit each year from 2017 to 2022 and an average return on equity of 4.8% over the last five years (2018-2022).

The company’s underwriting performance continues to benefit from low distribution costs for group-related business and favourable reinsurance commission income, albeit offset by marginal net loss experience due to a small net earned premium base.

Due to a challenging capital market environment in 2022, AM Best said the captive’s investment performance experienced some headwinds.

The company will continue to focus on fixed-income oriented assets, which are expected to provide a stable stream of investment income.

Based on its three-year business plan, COSCO SHIPPING Captive expects stable premium growth while continuing to deliver a favourable bottom line.

Nevertheless, AM Best said its high-severity, low-frequency product risk profile and small net earned premium base may subject the company’s operating performance to potential volatility risk.

Negative rating actions could occur if there is a significant adverse deviation in the captive’s operating performance from its business plan.

“Negative rating actions could also arise if there is a reduced level of support from COSCO SHIPPING or a significant deterioration in COSCO SHIPPING’s financial strength or credit profile,” AM Best said.

“Positive rating actions could occur if COSCO SHIPPING Captive demonstrates sustained and favourable results to strengthen its overall operating performance while supporting its current business profile assessment.”

Singapore PCCs would lower barrier to entry, but “complicated” to introduce

Luke Harrison
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Singapore PCCs would lower barrier to entry, but “complicated” to introduce

The potential introduction of protected cell company (PCC) legislation would be complicated for Singapore, and more likely to be driven by the insurance linked securities (ILS) market, but would lower the barrier for captive entry in the domicile.

Singapore is the region’s largest captive domicile, with 82 pure captives active in the jurisdiction at the end of 2022. The idea of introducing PCCs has been discussed by industry and the regulator for some time, but has never materialised.

“The legislation has to fit into the existing legislation governing such matters as forms of insurance, corporate structures and income tax,” George McGhie, independent consultant and strategic adviser to Artex International, told Captive Intelligence.

“If you look at the time and effort and cost of the work to introduce PCC legislation, the potential returns to Singapore in terms of number of corporate cells and premium that might be created, could be quite low.”

McGhie said that PCC legislation could be more justified as a means of expanding the ILS offering into collateralised reinsurance alongside catastrophe bonds which have developed “rapidly” in recent years.

He added that PCC legislation had been reviewed by the Monetary Authority of Singapore (MAS) going back around 30 years.

“So far, they’ve not taken any step to introduce PCC legislation, and any moves to do so are more likely to be driven by the ILS sector than by corporate risk demands, where there’s not really a great drive for it.”

PCC perks

A primary advantage of PCC legislation is allowing a lower barrier to entry for companies who may never have had a captive before or are too small for a single-parent structure.

“What is undeniable is that cell regulation would lower the barrier to entry in terms of risk managers and corporates wanting to test out a captive strategy or dip their toes in,” Kelvin Wu, head of insurance at Singapore-based Weybourne Holdings Pte Ltd which owns Dyson Group, told Captive Intelligence.

“It also allows you to experiment a little bit more in terms of the type of risk that you want to put through a captive, perhaps you want to explore third party risk and so and so forth.”

Labuan is the only domicile in the region that allows for PCC structures, with the legislation being introduced in 2010.

Captive Intelligence understands that there are five additional PCCs currently in development, which are expected to be established in the near future.

Wu noted that the regulation in Singapore is currently “quite vanilla” as it only allows for a wholly-owned captives.

“Fortunately, that fits into the structure and the strategy that we had, but if we were wanting to explore other captive structures that perhaps includes a cell and that sort of thing, then Singapore would be a little bit more challenging,” he said.

Lawrence Bird re-joined Marsh Captive Solutions in May as captives consulting leader for Asia and said that as Singapore currently does not have cell legislation, for businesses that want to use a cell, he is seeing them established primarily in Guernsey, Bermuda or Labuan.

“The latter essentially being the only domicile in the region with cell legislation,” he said.

Ludan Wang, head of corporate risk and broking in Singapore for WTW, believes that PCC legislation should only be introduced with caution.

“I would be concerned if we ran PCCs in a non controlled manner, meaning we’re actually allowing sponsors to set up PCCs without a very clear strategy on what goes into the cells,” he said.

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