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HDI sees fruits of captive investment in Europe – Nuno Antunes

Luke Harrison
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HDI sees fruits of captive investment in Europe – Nuno Antunes

HDI Global sees captives as a “significant and expanding” opportunity for the carrier, both in the Iberian market and across Europe, according to Nuno Antunes, managing director at HDI Global Portugal.

HDI opened an operation in Lisbon in October, which the company said would complement its existing customer and broker platform in Iberia.

“We have made substantial investments to enhance our capabilities in the captive sector, and we are now witnessing the fruitful results of our dedication and hard work,” he told Captive Intelligence.

Antunes said that companies and risk managers may currently feel that the traditional insurance market is falling short when it comes to their risk financing needs.

“The truth is that alternative risk transfer (ART) and captives always allow for more tailor-made solutions and work outside of the classical insurance world,” he added.

HDI Global has been operating in the Portuguese market for more than two decades under a Freedom of Services (FoS) licence, but until now the Portuguese business has been handled by the Madrid office.

“As the business grew, we have seen an ever-increasing demand for our products and service, so the new branch in Lisbon, is a natural evolution of the existing portfolio, and will complement the existing customers and broker platform in Iberia, allowing HDI Global to be much closer to its Portuguese customers and partners,” Antunes told Captive Intelligence.

Antunes said HDI strongly believes in the importance of having a local presence.

“However, our decision to open an operation in Lisbon was primarily driven by the need to be in close proximity to the risk managers, rather than specifically being influenced by discussions surrounding Spanish captive legislation,” he said.

Similar to other countries around Europe, there has been growing discussions around the possibility of Spain introducing its own captive legislation.

“Speaking in a broader sense, we view the increased focus on captives by regulators and the growing public discussions as positive developments,” Antunes said.

Antunes said the introduction of Spanish captive legislation could particularly benefit those who are currently hesitant to utilise certain domiciles.

“By providing an additional option, it would enhance the flexibility and attractiveness of the captive insurance industry,” he said.

“For HDI, captive business is a strategic priority and therefore we are keeping a very close eye on all legislative developments on this matter.”

Helio launched to fill regional gap for captive management

Luke Harrison
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Helio launched to fill regional gap for captive management

A key reason behind the launch of independent captive management firm Helio was the large market for captive business in the middle of the United States, where there is limited choice for captive owners in the region.

Captive Intelligence reported the launch of Helio in March 2023, when experienced captive operator Heather McClure was appointed general counsel and chief risk officer.

“What I saw was an underserved community here in Oklahoma specifically,” Blake Kerr,  Helio CEO, told Captive Intelligence.

The firm is managing captives in multiple domiciles and working with businesses across the country.

Kerr said captives based in the region were previously being served by offices on either coast, and as a result, Helio wanted to provide a more robust captive manager option.

Kerr said that since its launch, Helio has experienced a growing pipeline of new business, largely due to the hardening commercial market.

“I don’t really believe much in luck, but there could not be a better time to launch a captive management and risk consulting firm than now,” Kerr added. “The phone has been ringing non-stop.”

Jesse Olsen joined Helio as chief operating officer in December and said the types of captives he is seeing has become increasingly broad.

“We have irons in the fire right now on association captives, agency captives, and pure captives, for example,” he said.

Olsen revealed that Helio has established captives in multiple states over the past few months, including Oklahoma and Tennessee. 

“That said, we remain domicile agnostic, and we are going to go where the clients want to be and what makes the most sense for them. We objectively help them with that selection process.”

Olsen said there has been interest from faith based and non-profit organisations, as well as healthcare which has been aided by McClure’s extensive experience in that sector.

“With Heather having that healthcare background and the network that she does, there’s a lot of interest in domiciles that are far afield from where we are physically located,” he said.

Earlier this month, Captive Intelligence published a long-read highlighting that companies seeking property coverage will continue to be the driving force behind captive formations in the US in 2024.

 Olsen said property has always been one of the most popular coverage lines for captives.

“However, five years ago they were very targeted property placements, whereas now it is much broader.”

“Captive owners are looking at all other perils, wind and hail deductible buy downs, other natural catastrophe type coverages and participating on those risks in a way that we were not seeing captives do previously.”

AM Best affirms rating of Telefonica 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 Luxembourg-domiciled Nova Casiopea Re S.A. (NCRe). The outlook for the ratings is stable.

NCRe is a single parent captive owned by multinational broadband and telecommunications provider, Telefónica, S.A.

The company is based in Spain with operations in Europe and across the Americas, with the captive benefitting from Telefonica’s geographic diversification.

The captive has a broad portfolio mix, but as a pure captive its business profile remains constrained to Telefonica’s operations and strategic decisions.

Recent changes to Telefónica’s business model have not materially impacted the captive’s operations, but AM Best noted that potential spin-offs of Telefónica’s major businesses in Latin America will likely impact the captive’s profile, reducing its natural catastrophe exposure, among other impacts.

In 2023, NCRe restructured its reinsurance programmes and further increased some of its net exposures in response to hardening reinsurance market conditions.

NCRe’s balance sheet strength assessment is underpinned by the strongest level of risk-adjusted capitalisation, on both a standard and catastrophe-stressed basis, as measured by AM Best’s capital adequacy ratio (BCAR).

This assessment is supported by NCRe’s “conservative and liquid” investment portfolio, as well as capital buffers in the form of equalisation reserves.

An offsetting factor is the company’s exposure to natural catastrophe risk, which has the potential to introduce volatility to capitalisation levels.

In 2022, NCRe generated a pre-tax profit of €5.9m compared with €12.4m in 2021, with the reduction being driven by a year-on-year increase in the loss ratio to 69.7% in 2022, from 38.6% in 2021.

Overall, in 2022, NCRe’s combined ratio stood at 89.4%, well above its five-year weighted average combined ratio of 70.4% (2018-2022).

SRS agrees Robus acquisition from Ardonagh Group

Richard Cutcher
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SRS agrees Robus acquisition from Ardonagh Group

Strategic Risk Solutions has acquired captive and insurance manager Robus from the Ardonagh Group, subject to regulatory approval, strengthening its presence in Guernsey and adding Gibraltar to its list of domicile options.

SRS’ acquisition of Robus adds a significant office in Gibraltar, which manages captives, motor insurers, protected cell companies and other commercial (re)insurers.

Brady Young, CEO of SRS, told Captive Intelligence: “The acquisition supports our long-term commitment to Europe and underlines the excitement we feel about growth opportunities for the next 10 years.

“The organic growth of our European business over the last five years has been hugely encouraging. Our recent expansion into the MGA space with SRS Altitude and now the acquisition of Robus will take us to the next level of our development on the continent.

Ardonagh acquired Robus in December 2020 through Geo Underwriting, but the acquisitive broking group has since struggled to expand its presence in the captive sector.

Captive Intelligence understands Ardonagh had previously explored acquiring SRS before the latter’s ultimate investment from private equity firm Integrum last year.

Ardonagh, through Robus, had also been interested in acquiring Allied Risk Management in Dublin, Ireland, which was bought by Artex in May 2023.

Steve Quinn, Executive Chairman, Robus Group said: “Joining a business that is renowned for its specialist insurance management solutions is the natural next step in the development of our business.

“Robus has been on a remarkable journey over the past few years with Ardonagh, which will remain an important trading partner. We’re excited to now work with SRS, a business that shares our same high standards of service, as we continue to deliver some of the best possible captive management solutions available on the market.”

Gibraltar’s captive sector is currently anticipating confirmation of its much-trailed “dual captive regime” which could breathe new life into the domicile in an increasingly competitive European landscape.

Speaking to Captive Intelligence Peter Child, CEO of SRS Europe, said he was excited to further investigate the opportunities in Gibraltar.

“We already provide insurance management services to commercial insurers within the EU, so expanding that commercial insurance practice to include Gib will bring scale that we can immediately leverage,” said Child.

“For instance, SRS already employs a team of actuaries that provide pricing, reserving and capital modelling services to clients in a Solvency II environment.

“I’m sure those skills will be transferable to the Gib client base, and there will be other skills that will be transferable in the other direction.”

Robus’ Gibraltar office is led by Paul Cole, managing director for Gibraltar and group chief operations officer.

In Guernsey, Robus has more than 20 captives, general insurers and PCCs under management by a team led by Jamie Polson, managing director for Guernsey and group finance officer.

“In terms of Guernsey, the addition takes us to a size that will provide greater resilience and flexibility when it comes to applying our resources to an expanded client base,” Child added.

“That client base will be significantly diversified and will enable us to promote specific centres of excellence for different types of licensed insurers: captives; commercial insurers; commercial reinsurers and ILS/SPI vehicles all of which have fundamentally different needs.”

Captive USA 2024 Part II: More 831(b) captives to close, cells continue to prosper

Luke Harrison
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Captive USA 2024 Part II: More 831(b) captives to close, cells continue to prosper
  • Large unknows remain concerning IRS’ next move on 831(b) regulation
  • Service providers distancing themselves from 831(b) captives
  • At least 25% of new Marsh managed captives expected to be cells
  • New states could introduce cell legislation as captives become more mainstream

Further 831(b) captives in the United States are expected to shut down as a result of the proposed regulations from the Internal Revenue Service (IRS), while the popularity of cells is expected to grow further.

Captive Intelligence published part one of our USA trends long-read series last week, highlighting that companies seeking property coverage will continue to be the driving force behind captive formations in the United States in 2024.

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Alberta’s captive legislation can rival established domiciles – Finance Minister

Luke Harrison
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Alberta’s captive insurance programme now rivals established captive jurisdictions such as Barbados, Bermuda and Vermont, according to Alberta’s minister of finance, Nate Horner.

Captive intelligence published an article in December detailing that following the introduction of captive legislation in Alberta, a greater 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 fact, only a few months after legislation was passed, a captive insurance company moved from Barbados to Alberta,” Horner said.

He said Alberta provides an additional insurance option for businesses that may struggle to find the right coverage at a manageable cost through other traditional insurance providers.

“As more captives are established in Alberta, we expect to see a growing hub of specialised skills, including experts like captive managers and actuarial services,” Horner added.

The Energy Province introduced its captive legislation in July last year, and already has 17 captives domiciled in the jurisdiction.

“Alberta’s business-friendly environment continues to prove itself, offering a unique advantage for businesses seeking effective risk solutions in a challenging global insurance market,” Horner said.

Alberta is the second province in Canada to introduce captive legislation after British Columbia.

“I am proud that we are one of only two provinces to provide the captive insurance option,” Horner said.

Horner said that in conversations he has had with people from different industries companies are choosing Alberta as their captive domicile for several reasons, including the province’s six-week turnaround time for licence approvals, and low costs.

“In addition, Alberta’s captive insurance programme allows companies to cover business risks from outside the province within Alberta,” he added.

“Companies have also told us they have an easier time navigating our captive regulation because Alberta’s Superintendent of Insurance is easily reachable, responsive to feedback and prudent in its reviews.”

“With ongoing interest from diverse industries, Alberta’s government will continue to ensure that our captive insurance environment thrives and that businesses view Alberta as a top destination for risk management.”

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.

“The cadence with which Canadians have established their own captives, and with Alberta being an option, I think we are going to start to see a higher proportion of people choosing that domicile over the usual Bermuda, Barbados or Cayman,” Da Costa said.

Enel’s Gabriele Frea expecting more Italian captives to follow

Richard Cutcher
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Enel’s Gabriele Frea expecting more Italian captives to follow

Gabriele Frea, head of insurance and risk financing at Enel Group, the owner of Italy’s first captive, believes “now the path is traced, other groups will follow”.

Enel Erre, owned by Italian multinational manufacturer and distributor of electricity and gas, Enel, received a reinsurance licence from the Italian regulator IVASS on 21 November last year. Aon and local law firm Bonelli Erede supported the project.

Enel’s Italian captive completed the merger with its existing Netherlands-domiciled captive, Enel Insurance NV, completing the re-domestication process and being assigned a financial strength rating of ‘A-‘ (Excellent) by AM Best.

“Now the path is traced other groups will follow us,” said Frea, speaking on episode #99 of the Global Captive Podcast.

“Other captives will soon be set up in Italy, stimulating a more conscious approach to the risk management and the risk financing activities, especially moments of market hardening as the one we are living through today.”

He added that risk managers from other organisations have been in contact and expressed interest in forming or re-domesticating captives to Italy.

“Due to these factors, Italian captives are expected to increase significantly in the very near future,” he said.

Last month, multinational cable specialists Prysmian Group SpA received authorisation for Italy’s second captive, which it plans to merge with its existing Dublin captive.

Captive Intelligence reported in January 2023 that several Italian-owned captives had begun discussions with IVASS on the possibility of re-domesticating captives back home.

Frea said there was a long and intensive period of analysis before a decision was made regarding Enel’s Italian captive.

“We had to calculate all the pros and cons of this solution and all the opportunities and the difficulties,” he said.

“As a matter of fact, I do not believe that everyone at the time was confident that the success would be achieved.”

Listen to the full, exclusive interview with Enel’s Gabriele Frea on GCP #99 here, or on any podcast app. Just search for ‘Global Captive Podcast’.

ReadyCell can lower barriers to entry to wider middle market – Ellen Charnley

Luke Harrison
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ReadyCell can lower barriers to entry to wider middle market – Ellen Charnley

Ellen Charnley, president of Marsh Captive Solutions, believes the launch of ReadyCell should significantly lower the barriers to entry to captives and can widen the appeal of cell strategies to a broader group of insureds.

ReadyCell was launched earlier this month to enable organisations to form their own cell within its Mangrove Protected Cell Facility, domiciled in Washington DC.

Speaking on the episode 99 of the Global Captive Podcast, Charnley said ReadyCell had been in development for several years.

“Our hypothesis is that because we’ve driven down the cost and lowered those barriers to entry, we’re now appealing to the segments of the market that doesn’t currently have captives,” she explained.

“Potentially those smaller companies or those middle-sized companies that have historically thought that a captive or a cell captive is just too far out of their reach from a budgeting standpoint.

“Now we’re saying: ‘Why wouldn’t you? We’ve driven those costs down and we’re making it available to you.’ So that’s what we anticipate.”

Charnley added that ReadyCell is not restricted in what types or sizes of companies can utilise it. She can see potential use cases for larger organisations that have a particular challenge on one line of business and need a “super fast” solution.

“Large organisations that don’t have a captive could easily form a ReadyCell; not know what they need it for, it can sit there on the shelf and then perhaps at their next renewal in a few months’ time they need a property policy or they need an excess layer filled or part of their programme filled with a simple policy,” Charnley explained.

“They can activate ReadyCell and they’re off to the races. So we could see a number of different use cases that are appropriate for clients.”

Marsh has launched ReadyCell using its Mangrove cell company in Washington DC, but Charnley said they were open to the possibility of rolling it out in other domiciles.

“There is no reason why we wouldn’t explore those possibilities for other jurisdictions,” she added.

“If we see it as a success and we see the need in other jurisdictions, absolutely.”

Listen to the full, exclusive interview with Ellen Charnley on GCP #99 here, or on any podcast app. Just search for ‘Global Captive Podcast’.

Thomas Keist to join SRS Altitude as chief commercial officer

Richard Cutcher
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Thomas Keist to join SRS Altitude as chief commercial officer

Experienced captive operator Thomas Keist will join SRS Altitude as chief commercial officer from 1 April, as the start-up managing general underwriter staffs up.

Strategic Risk Solutions announced the launch of Altitude in November, to be led by former Swiss Re executive Loredana Mazzoleni Neglén, and the confirmation of Keist follows the appointment of Paul Fitzgerald as chief operating officer.

Keist has worked for Swiss Re since 2006 and has been global captive solutions leader at Swiss Re Corporate Solutions since 2020.

He will lead SRS Altitude’s business development activities globally and drive strategic initiatives to grow the business across non-standard solutions.

“Having had the privilege of a longstanding acquaintance with Tom, I have great admiration of his extensive knowledge and expertise”, said Brady Young, CEO of SRS.

“I am delighted to welcome him to our team, confident that his presence will significantly bolster our success.”

Keist said: “I am honoured and thrilled to join the SRS family. I am confident that my skills and passion align perfectly with the company’s vision, and I am eager to be part of a team that values innovation, collaboration, and excellence.”

Captive Intelligence understands further hires are expected in the coming months, with SRS Altitude set to begin operations in the first quarter of 2024.

edRISK to launch liability and property cells

Luke Harrison
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edRISK to launch liability and property cells

edRISK, a sponsored captive, plans to launch two new cells on 1 June, edLIABILITY and edPROPERTY, for liability risk and property risk, respectively.

The organisation already operates edHEALTH, a group medical stop-loss captive for higher education and secondary schools, which recently converted to a cell structure.

“Employee benefits are an important item for these schools, and when we think about what a school does, they teach students, and that means taking care of the faculty and staff who are teaching the students,” David White, chief financial and operating officer for edRISK and edHEALTH, told Captive Intelligence.

“Payroll and benefits are a big part of the operating budget of an educational institution.”

The edHEALTH programme is today the largest part of edRISK, a sponsored captive domiciled in Vermont.

“Even 13 years ago, when we were talking about launching a captive, Vermont was certainly the best domicile, but now they’re also the biggest,” said Tracy Hassett, president and CEO of edRISK and edHEALTH.

“It was the access to the regulators, and it was the flexibility that convinced us to domicile in Vermont.”

White said that Hassett first came up with the idea of whether a cell structure would work.

“Creating a sponsored captive allows common service providers across different cells,” he said.

“When we launch edPROPERTY and edLIABILITY, we may use the same investment manager, the same auditor, captive manager, or actuary, and we think that’ll drive efficiencies for all the member-owners.”

White said the sponsored captive approach provides an opportunity to serve new colleges who are interested in property or liability.   

“Schools can decide If they want to join one, two, or three cells.”

White said edHEALTH has never had more inquiries from schools interested in joining because traditional insurance rates keep going up, “and our job at edHEALTH is to bend the cost curve”.

Hassett added that the captive has a very strong focus on trying to help those individuals who are high-cost claimants and need some help navigating the healthcare system.

“We’re also focusing on the rest of the population to make sure they have access to the care they need so they do not become high-cost claimants if we can avoid it,” she said.

Hassett said that she would never tell a school that they cannot join because of their claims.

“That said, what we want to be sure of is that a school is financially stable and has an open mind about controlling their claims,” she added.

“Oftentimes, they come to us because they are looking for some guidance, assistance, support, and some networking with other like-minded people, to help them control the claims.”

In November, White was appointed the new chief financial and operating officer for edRISK and edHEALTH.

“I was the captive manager when edHEALTH was first formed, so I’ve seen the success and I’ve seen how they have achieved it,” White told Captive Intelligence.

“I’ve always enjoyed being part of the team, so now being a bigger part of the team is exciting, especially in this new role because edRISK is growing in so many new directions.”

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