While McGill & Partners is focused on broking for large, complex accounts, the prospect of a UK captive regime and further progress at Lloyd’s could tempt the firm into offering captive management services domestically, according to Stephen Cross, group COO & head of innovation & strategy.
Cross was speaking in an exclusive interview on the Global Captive Podcast regarding the scale of McGill’s ambitions in the captive sector, and whether entering captive management is part of the plan.
To date, the broker has had success on the reinsurance broking side for large captives, but Cross has extensive experience, from his time at Aon and International Risk Management Group (IRMG), in captive management and broader captive services.
Speaking on GCP #106, he said captives “is a business that I love,” but explained that to have a serious captive management offering you really need to be in multiple domiciles around the world, which makes it much harder for new entrants.
“Building out a captive management business, in reality, for the large global corporate sector would require you to have a presence onshore United States, probably Vermont at a minimum, Bermuda as the original home of all captives, possibly Cayman for medical malpractice,” Cross said.
“You certainly need at least one or two locations in Europe, maybe something in Asia. So that’s quite a lift for us to do. As I say, we’re just over 500 people right now.
“It’s quite a lift and there’s not a lot of managers left to buy, so buying our way into that space would be a little bit more challenging.”
Cross, however, is a big fan of the Lloyd’s Captive Syndicate proposition and suggests that project, in combination with a potential wider UK captive regime, could provide an opportunity to move into management in the UK.
“I do think that what Lloyd’s is proposing is quite fascinating and we do obviously a lot of business with Lloyd’s,” he said.
Captive Intelligence reported in June the first Captive Syndicate had been launched at Lloyd’s, managed by Apollo Syndicate Management Ltd with additional captive consulting and support provided by Marsh.
“I do think for London and for what Lloyd’s has to offer, there’s a definite opportunity there,” Cross added.
“I’d probably give you a ‘maybe’ for McGill & Partners there for sure. It would be interesting to us.”
As to whether every large broker should be abe to offer captive management services, he said he did not believe it was an imperative and praised the options already available from broker-owned managers and independents.
“I don’t think any broker needs to have a captive management presence, I really don’t,” Cross said.
“I look at SRS, and I look at a number of other independent managers, and they’re superb at what they do.
“Then I think about the broker-owned managers, again, they do a great job and they can bring a lot more elements to that management if they choose to.”