Cell Focus Emerging Talent

www.captiveinsurancetimes.com

The primary source of global captive insurance news and analysis 12 May 2021 - Issue 223

A nimble tool RRGs are subject to the same challenges as the commercial marketplace but their ability to be nimble, react quickly and create unique guidelines for operation can help them overcome those issues

Cell Focus Emerging Talent The interest in cell captives Alonso Tello, vice president, captives continues to gain momentum and alternative risk at AXA XL VERMONT CAPTIVE INSURANCE OVER 1,100 CAPTIVES LICENSED

Risk management isn’t about choosing better next time.

When you choose to domicile your captive in Vermont, you can be confident you chose correctly. With nearly 40 years of regulatory experience coupled with an unparalleled service provider network and legislative partnership, Vermont offers companies the sensible, secure and supported domicile they need.

Connect with us and see why Vermont sets THE GOLD STANDARD.

VTC001-20_Captive_Insurance_Times_Full_Page.indd 1 1/13/20 7:30 PM Captive Insurance Times

Issue 223

www.captiveinsurancetimes.com

Published by Black Knight Media Ltd 16 Bromley Road, New Beckenham Beckenham, BR3 5JE

Editorial Editor: Becky Bellamy [email protected] Tel: +44 (0)208 075 0927

Reporter: Maria Ward-Brennan [email protected] Tel: +44 (0)208 075 0923

Contributor: Maddie Saghir [email protected]

Designer: James Hickman [email protected]

Marketing and sales Publisher: Justin Lawson [email protected]

Associate Publisher: John Savage [email protected] Tel: +44 (0)208 075 0932

Office Manager: Chelsea Bowles Tel: +44 (0)208 075 0930

Copyright © 2021 Black Knight Media Ltd All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without permission in writing from the publisher. Company reg: 0719464

www.captiveinsurancetimes.com Contents

News Focus In this issue page 6 Cell Focus

The interest in cell captives continues to gain

momentum with the help of the continued

hard market and the COVID-19 pandemic

page 12

RRG Insight

Risk retention groups are subject to the same

challenges as the commercial marketplace

but their ability to be nimble, react quickly

and create unique guidelines for operation

can help them overcome those issues

page 14

Industry Appointments

Emerging Talent The latest industry appointments within Alonso Tello, vice president, captives and alternative risk at AXA XL the captive insurance industry page 16 page 18

Set up an EU based protected cell with the independent experts Capital, time & cost efficient alternative to a standalone insurer or captive Direct access to the UK and EU market

People you can trust

Atlas Insurance PCC Limited is a cell company authorised by the Malta Financial Services Authority to carry on general insurance business.

4 www.captiveinsurancetimes.com WE KNOW CAPTIVE INSURANCE.

For more than 70 years, no firm has had a more complete understanding of the captive and self- insured market than Milliman. With our global reach, we routinely advise multinationals on cross-border transactions and how to meet each domicile’s unique requirements—key in today’s captive environment.

milliman.com/captives [email protected]

1349PCP_Captive Review_20200211.indd 1 2/12/20 12:09 PM News Focus

PFI closes £6bn reinsurance transaction using Zurich

The international reinsurance business of the This was the first transaction involving this type Greg Wenzerul, head of longevity risk transfer, Prudential Insurance Company of America of structure entered into by PFI and comes on Zurich Assurance, notes: “There are many ongo- (PICA) has closed its first reinsurance transaction after PFI’s international reinsurance business ing benefits for a UK trustee in using a regulated involving an unnamed UK pension scheme using rebranded at the end of 2020. UK insurance company for longevity risk insur- an independent UK regulated insurer, Zurich ance in this capacity, including cost certainty for Assurance, as an intermediary. The transaction, Commenting on the transaction, Rohit Mathur, the life of the transaction.” which closed in March this year and transfers lon- head of transactions for PFI’s international rein- gevity risk associated with £6 billion ($8.4 billion) surance business, says: “Last year, we expanded He explains: “For many sophisticated trustees of pensioner liabilities, is PFI’s third-largest UK our offerings and launched funded reinsurance, of UK defined benefit pension schemes, the longevity risk transfer transaction to date. where we reinsure both longevity and asset risk immediate removal of longevity risk, while for our clients. This transaction further demon- using scheme assets in the most efficient and Willis Towers Watson (WTW) served as lead strates our continued focus on innovating to risk-aware manner, will continue to repre- adviser to the trustee and joint working group meet the needs of our clients.” sent the optimal route to eventually secure all for the transaction. their liabilities.” He continues: “At PFI, we see the use of a third- PICA is a wholly-owned subsidiary of Prudential party onshore UK-regulated insurer as a limited “We expect our strong relationship and infrastruc- Financial (PFI), a financial wellness leader and recourse intermediary as the logical next step ture with PFI to bring further opportunities for UK premier active global investment manager. in the de-risking solutions we can offer clients pension schemes.” in our evolving business model. We continue to This transaction uses a limited recourse or pass- live in uncertain times, so it is more important In March, Willis Towers Watson acted as the sole through structure, meaning the longevity and than ever for us to unlock value for clients and adviser to the AXA UK Group Pension Scheme on default risks are able to be passed through provide them with as many options as we can,” its £3 billion longevity swap with Hannover Re to the insurer. Mathur adds. manage longevity risk in the scheme.

6images by moofushi/stock.adobe.com www.captiveinsurancetimes.com News Focus

Captive enquiries in Asia on the rise says Aon’s Alastair Nicoll

Aon has received an increase in captive insur- White Rock cells in the domicile most suitable to He explains that there are several reasons for ance enquiries across Asia including current ones them, based on careful consideration of the pros this, including the legal status of some organ- from China, Japan, the Philippines, Indonesia and and cons. isations. For example, there are the state- Singapore, according to Alastair Nicoll, regional owned enterprises in China that started form- director for captive and insurance management, In Singapore, the Monetary Authority of ing captives over 20 years ago and although Asia Pacific at Aon. Nicoll’s comments come after Singapore (MAS) has recently revealed plans to a few have followed, it is a very limited num- the release of Aon’s 2021 Asia Market Review, look into converting an existing funds structure ber with most of their captives domiciled in which reveals that enquiries from organisations that is in place here into one for insurance. The Hong Kong. about forming a captive or protected cell com- Variable Capital Companies (VCC) Act was intro- pany (PCC) are projected to continue. duced in 2018. “There’s also some reluctance I’ve noticed to invest in consulting services and there can be an ina- These enquiries also continue to grow in the “We continue to hope that they will enable a bility to centralise decision making, especially in wider Asia Pacific region. “Demand from Australia protected cell type structure in Singapore soon,” family-owned enterprises, and sometimes the remains high while we see increasing numbers he adds. results are simply not as compelling as expected,” from New Zealand,” he explains. he adds. Although there is movement within the Discussing PCCs, Nicoll notes that although market, Nicoll points out that compared to In terms of competition, Nicoll suggests that Aon’s PCC White Rock operates in seven different Europe and the US, Asia lags behind in the the Federal State of Micronesia (FSM) is the countries, it does not operate in the Asia region. number of captives owned and managed biggest competitor, as it’s home to many However, Asian corporations are accessing in Asia. Japanese captives.

7 News Focus

“FSM has a special relationship with Japan, where Due to the time requirements for forma- Elsewhere, the report predicts that the general they have set themselves up with Japanese ser- tion, a company looking to set up a captive mergers and acquisitions (M&A) trend will also vice providers and speakers and they have a good won’t be as nimble in preparation as they lead to risk finance reviews for risk retention and double tax treaty,” Nicoll notes. approach renewals. Nicoll suggests they optimising captives. Nicoll notes that although should take a longer-term view early in the captive numbers are decreasing slightly at a The report highlights in its reflections that it annual cycle to test the programme in dif- global level, there are still a lot of new forma- remained crucial to discuss with a broker soon ferent captive scenarios through a formal tions every year. after renewal, not just before and to allow a time feasibility study. frame of up to nine months to form a new captive. “Aon is seeing a lot of M&A activity, which is “We recommend companies to do this as it pro- driving some decrease in the overall numbers Nicoll points out that it’s easier working with cap- vides internal decision-making validation before of captives. The Organisation for Economic tive owners as they approach renewal compared forming their new subsidiary and it takes our Co-operation and Development base erosion and to companies who are thinking about setting up consultants about three months to complete a profit shifting rules and Solvency II regulations in a captive because of the period of time it takes full study — so there’s a time consideration here,” the EU are also resulting in a few companies clos- to set up a captive. he says. ing down their captives,” he explains.

THE MIDWEST’S BEST-KEPT SECRET AT BROWN SMITH WALLACE, our comprehensive tax, insurance and audit services team helps maximize the return on investment for captive insurers. Our integrated approach includes ongoing operational reviews, tax consulting and regulatory audits.

Looking for cost-effective, high-quality services?

Let our team’s industry-leading expertise enhance the performance of your captive program. Contact us today.

BROWNSMITHWALLACE.COM | 1.888.279.2792 | A TOP 100 ACCOUNTING FIRM

8 www.captiveinsurancetimes.com Truist Corporate Trust & Escrow Services Our Advantage

Truist has a long history of trust, escrow and risk management excellence with both domestic and international coverage. If you’re choosing a cost effective and convenient collateral trust as part of Collateral your captive and reinsurance solution, we have a broad range of specialties that can help mitigate risk in your insurance business: • Collateralized Reinsurance Trust Services • Regulation 114 Trusts • Captives • Surety Bonds • Insurance-Linked Securities • Deductible Trusts

Our expertise is only one aspect of what differentiates our reinsurance trust business from other firms. Additionally, we excel because of: • Single Point of Contact • Comprehensive Servicing • Rapid Response Times • Team of Reinsurance Specialists • Extensive Carrier Relationships

To learn more about how Truist can support and enhance your collateral posting requirements, please contact:

Donny Tong Senior Vice President 212-590-0976 [email protected]

Barbara Aubry Senior Vice President 212-303-4164 [email protected]

Joseph Monaco Vice President 212-303-1746 [email protected]

SunTrust Private Wealth Management is a marketing name used by Truist Financial Corporation and the following affiliates: Banking products and services, including loans and deposit accounts, are provided by SunTrust Bank and Branch Banking and Trust Company, both now Truist Bank, Member FDIC. Trust and investment management services are provided by SunTrust Bank and Branch Banking and Trust Company, both now Truist Bank and SunTrust Delaware Trust Company. Securities, brokerage accounts and /or insurance (including annuities) are offered by SunTrust Investment Services, Inc., BB&T Securities, LLC, and P.J. Robb Variable Corp., which are SEC registered broker-dealers, members FINRA, SIPC, and a licensed insurance agency where applicable. Investment advisory services are offered by SunTrust Advisory Services, Inc., GFO Advisory Services, LLC, BB&T Securities, LLC, Sterling Capital Management, LLC, Precept Advisory Group, LLC, and BB&T Institutional Investment Advisors, Inc., each SEC registered investment advisers. BB&T Sterling Advisors, BB&T Investments and BB&T Scott & Stringfellow are divisions of BB&T Securities, LLC. Mutual fund products are advised by Sterling Capital Management, LLC. © 2020 Truist Financial Corporation. SunTrust®, the SunTrust logo and Truist are service marks of Truist Financial Corporation. All rights reserved. Industry Appointments

News Focus

brings 40 years of actuarial experience in Cyber attacks and data loss top concerns facing D&Os, surveythe findsre/insurance industry to Aspen. Prior to managing his own consulting firm, The COVID-19 pandemic and changes in work- new procedures and systems overnight due to “We are grateful for the contributions from Clyde & he served as executive vice president and ing practices have heightened concerns around the COVID-19 pandemic with remote working Co which have delivered a valuable new perspec- group chief actuary at Validus Group from cyber attacks and data loss for directors and creating a fertile ground for cyber criminals. tive2010 to to our 2019. interpretation He also held of the various survey senior- results officers, according to a global survey from Willis andlevel have roles enabled for Fireman’s us to deliver Fund, a great Endurance, resource Towers Watson and Clyde & Co. Meanwhile, regulatory and litigation risk con- forand directors KPMG. and risk managers,” Wall comments. tinues to challenge organisations with board Mark Cloutier, executive chairman and The 2021 Directors & Officers Survey showed that diversity now becoming mandatory to most James Cooper, chair of the global insurance prac- Andrew Kudera has been appointed group chief executive officer, commented: some 56 per cent of survey respondents cited businesses.executive vice president and group tice“Welcoming group and headan industry-leadingof the financial institutions expert cyber attacks as a key risk for directors across the chief actuary of Aspen Insurance andof AndyD&O team Kudera’s at Clyde quality & Co, adds: to “Thisour importeam- globe. These respondents noted that the risk was AccordingHoldings to the(Aspen), survey, expected effective concern about 3 tantincreases survey highlightsour capabilities, the changing allowing risk environ us- either ‘very significant’ or ‘extremely significant’. insolvencyFebruary featured 2020. considerably lower than in mentto transform facing key businessesour business, today. Wesimplify are pleased and enhance our operations, and increase the last survey despite speculation of a potential to collaborate with Willis Towers Watson on this Aspen’s previous group chief actuary, Paul accountability across these functions.” Data loss (49 per cent), regulatory risk (46 per wave of insolvencies. survey report which highlights continued con- Frydas, will assume the new role of chief cent), health and safety risk (41 per cent) and analytics officer and will lead strategic cern“Kudera’s around cybercapabilities attacks and dataand loss asfresh well the risk of employment claims (38 per cent) also Jeremypricing, Wall, aggregation head of global management Finex, Willis Towers and asperspective, the impact of pairedregulatory with change Paul on business.”Frydas’ made up the top five risks this year. Watson,modelling. says: Frydas “We are will delighted remain chief to be actuary launch- considerable expertise and experience, ingfor theAspen 2021 Insurance Directors &UK, Officers Aspen surveyManaging which Thewill surveycreate covers a strong the UK, partnership Europe, Asia across Pacific Agency and Aspen Bermuda.Kudera complementary disciplines,” he adds. The report explains that increased vulnerability gathers the views of directors and officers and the US identifies the key risks for directors to data loss is a result of businesses moving to internationally.” across the globe.

In Utah, we understand that Utah is recognized as an innovative Utah Captive Insurance, companies are sophisticated and state, fostering and supporting able to take greater control of their innovative solutions. If you are 3110 State Office Building, own insurance risks. It is our goal looking for an on-shore domicile to to provide affordable, diverse and form a captive insurance company, a flexible solutions that protect against Utah domiciled captive is the choice Salt Lake City, any company’s dynamic business for you, where Risk Management, Cost environment. Control, and Regulation connect. UT 84114

40 Captive Insurance Times - Issue 192 10 www.captiveinsurancetimes.com News in Brief

Risk Strategies teams up with CyberCube Cinven and BCI complete Kroger’s captive ratings acquisition of Compre affirmed by A.M. Best Risk Strategies has partnered with CyberCube to roll out its cyber risk analytics platform Compre has completed its acquisition with A.M. Best has affirmed the financial strength Broking Manager for insurance intermediaries. Cinven and British Columbia Investment rating of A (Excellent) and the long-term Management Corporation (BCI), having issuer credit ratings of “a+” of Queen The US specialist insurance brokerage and received all necessary regulatory approvals. City Assurance and Vine Court Assurance risk management firm will also be using appli- Incorporated, both domiciled in Vermont. cation programming interface components In December 2020, Cinven and BCI agreed from CyberCube’s solutions for analytics. to acquire legacy specialist Compre from The ratings reflect the group’s balance sheet existing shareholders CBPE Capital, Hudson strength, which A.M. Best assesses as strong- Structured Capital Management and est, as well as its strong operating perfor- Compre’s management. mance, neutral business profile and appropriate enterprise risk management. Read the full article online Read the full article online Read the full article online

MAXIS GBN launches new interactive AGCS and Nexus sign four-year DARAG reaches reinsurance health and wellness reporting tools financial lines agreement agreement with Lyft’s captive

MAXIS Global Benefits Network has launched Allianz Global Corporate & Specialty DARAG Group has executed a rein- three new interactive health and wellness and Nexus Group have entered into a surance transaction with Pacific Valley reporting tools for its multinational clients. four-year multi-product strategic under- Insurance Company (PVIC), Lyft’s captive writing and claims delegated authority insurance company. The new reporting tools include two agreement for small and medium-sized new interactive dashboards including enterprises customers. The reinsurance transaction, written through the OneWorld Visual and the COVID-19 DARAG Bermuda, covers PVIC’s commercial Dashboard as well as an interactive version Nexus Group will underwrite and handle auto liabilities — predominantly from an of its Paid Claims report. claims for primary and excess business on excess layer for policies with a limit of up to $1 behalf of AGCS, Allianz’s entity for large- scale million per claim — occurring from 1 October corporate and specialty risks. 2018 through 30 September 2020. Read the full article online Read the full article online Read the full article online

11 Cell Focus- By Maria Ward-Brennan

Under the microscope

The interest in cell captives continues to gain momentum with the help of the continued hard market and the COVID-19 pandemic

A cell captive is a flexible risk management solu- Africa’s largest cell captive insurer, was granted “However, a cell captive affords them the oppor- tion that provides many of the benefits of a stan- South Africa’s first micro-insurance cell cap- tunity to realise the vast benefits a captive can dalone captive insurance company, including tive licence by the Financial Sector Prudential afford without the significant up-front costs, features that allow the insured to retain a cer- Authority (FSPA). annual operating costs, administration and capi- tain proportion of its risks and better manage the talisation that a stand-alone single parent would associated expenses but without the operating With the continued hard market and the effects require,” Partlow adds. costs of a standalone captive. of the COVID-19 pandemic, companies are turn- ing to captives, causing a significant increase in It would be remiss not to note that protected cell Cell captives and the use of cells is a growing cell captives. companies (PCCs) have grown beyond just pro- trend in the captive industry and they have viding insurance solutions and are now used in grown remarkably in recent years. Growth in cell Outlining why companies would choose a cell other financial sectors such as investment funds, captives has been reported in domiciles around captive over a single-parent captive, Dustin private wealth structuring and special purpose the world, including Malta. Partlow, senior vice president at Caitlin Morgan vehicles (SPV’s) and longevity transactions. Captive Management, notes that the main con- In 2020, Malta reported a 5 per cent increase siderations are the size and complexity of both Justin Upson, director at Robus Group (Guernsey), in licensed insurance carrying cells to 63 while the proposed captive programme and then highlights that cell captives are mostly used by insurance broker cells grew by a net 20 per cent also the parent company. Partlow explains most corporate types including small and medi- to 12. that for many small-to-middle sized compa- um-sized enterprises (SMEs) and large corporate nies, the costs to set up and operate a captive entities as well as insurance-linked securities (ILS) As a result of this, some domiciles have started along with the administration and capitalisa- fund managers. Explaining the main use for a cell initiatives to improve on their cell captive leg- tion have always been barriers to entry to the captive, Upson, explains that they can be used islation. Earlier this month, Guardrisk, South captive market. in a variety of ways including, but not limited, to

12 images by pinkeyes/stock.adobe.com www.captiveinsurancetimes.com Cell Focus

fronting arrangements, risk retention for most Earlier this year, Guernsey-based Robus Insurance Challenges lines of business such as professional indemnity, PCC had a cell captive pre-authorised for a client property, trade credit and cyber risk. for their professional indemnity programme. Although cell captives have their benefits, some in the industry may feel slightly uncomfortable The cell captive structure has proved to be a very Robus used the Guernsey Financial Services due to the loss of governance and control that convenient and efficient structure for fronted Commission (GFSC) pre-authorisation pilot is inherent in a PCC structure. As an example, group captives whether they are medical stop- scheme for cell captives, which was introduced Upson says: “Cell owner representatives will not loss (MSL) group captives or even standard in December 2020. be a component part of the board structure and A-fund, B-fund type primary property/casualty its governance and control. However, we usually group captive structure. Robus Guernsey’s PCC, Robus Insurance PCC, was find that the benefits of a cell far outweigh any approved in December for participation in the challenges and these types of concerns are usu- “The cell captive structure has also proved to be GFSC pilot scheme. ally mitigated once the structure is explained in a valuable tool for existing group captive struc- more detail.” tures such as risk retention groups (RRGs) where The scheme applies to insurance-licensed PCCs the RRG is looking to put together different insur- owned by an insurance manager and is avail- Partlow expands on the challenges by outlining ance programmes to enhance value for the mem- able for captive cells writing a single line of one of the biggest challenges he is seeing is the bership,” Partlow adds. general insurance business to meet an urgent regulation of cells. business need. The regulatory scrutiny of each individual cell Innovation It must meet the standard formula minimum cap- is nowhere near as stringent as that of a stand- ital requirement and prescribed capital require- alone single-parent captive, he explains. The biggest trend in the cell space is just innova- ment, with no regulatory adjustments available. tion, in terms of the uses of the cell captive facility. All of the traits that make a cell more attrac- Upson highlights that this innovative move has tive in terms of less capitalisation, easier to Commenting on how cell captives promote inno- allowed Robus to act quickly to meet urgent set up and shut down, etc. also add additional vation, Partlow states one of the primary areas he client needs. regulatory risk. believes cell captives promote innovation is by reducing the barriers to entry. An example of this, he explains, was when a Partlow continues: “A lot of the responsibility in client is experiencing challenges around its terms of scrutiny of each cell lies with the cell He explains: “For a new innovative insurance renewal due to increased premium rates or a captive facility owners, which in general I think product, where it could take a number of years shortfall in capacity and this is despite the cli- just opens up the possibilities further of these to really get the premium volume built up and ent’s good risk management framework and cells that are less regulated on an individual basis where a captive is required to assume risk, with- loss history. than a stand-alone captive running into regula- out the availability of a cell captive solution, the tory issues.” required capital, start-up fees, and time required Upson states: “The ability to set up in as lit- to get a stand-alone facility licensed could be tle as 48 hours on a pre-authorised basis, Partlow suggests that the regulation of cell cap- real deal-breakers.” providing that the appropriate documen- tive facilities is an area that will take some time tation is submitted to the GFSC within 14 to adapt. “However, having a cell facility where the days of commencement of the business, has up-front costs, capitalisation, etc. are reduced, been extremely helpful to clients who may “There are some added complexities to regulating lead to more of these innovative new pro- have a statutory or regulatory obligation to a cell captive facility that will take domiciles and grammes taking a chance and launching,” ensure that no break in the continuance of regulators some time to fine-tune their processes he adds. cover occurs.” specifically for these facilities,” he adds.

13 RRG Insight- By Maria Ward-Brennan

A nimble tool

Risk retention groups are subject to the same challenges as the commercial marketplace but their ability to be nimble, react quickly and create unique guidelines for operation can help them overcome those issues

In the late 1970s, many businesses in the US were contractors, as well as other industries with remain committed to maintaining adequate cap- unable to obtain product liability coverage at any professional liability. ital to handle losses, according to Demotech’s cost resulting in the US Congress needing to act. Risk Retention Groups Report Favourable Results Troy Winch, vice president, director of cap- in 2020. The Liability Risk Retention Act was passed in tive insurance at Risk Services, explains: “Once 1986, which paved the way for risk retention formed, RRGs provide a solution for groups that According to the author, Douglas Powell, senior groups (RRG). either need an insurance solution to a unique financial analyst at Demotech, Vermont had the exposure or to support an industry sector not most RRG’s in 2020 than any other jurisdiction This federal law allows the ability to form an adequately supported by the traditional insur- with 84 RRG domiciled. insurance company operating throughout the ance market.” US to cover their liability exposures. RRG can The report adds that South Carolina was home to operate on a multi-state basis on a single dom- “RRGs are speciality carriers, focusing on homoge- 36 RRGs, while the District of Columbia recorded icile license. Also, ownership is restricted to the nous memberships and thus often able to better a total of 31 RRGs. Hawaii and Nevada rounded policyholders of the RRG. serve their member’s needs than large multi-line out the top five states of domicile by having 15 carriers,” he adds. and 12 RRGs, respectively. RRGs are restricted to liability coverage, and tend to insure medical providers, product In 2020, risk retention groups (RRGs) continued Powell explains that RRGs reported direct writ- manufacturers, law enforcement officials and to have a great deal of financial stability and ten premium (DWP) for nine different lines of

14 www.captiveinsurancetimes.com RRG Insight

business in 2020, with 54.3 per cent in medical depends on a variety of factors. He points out: “This issue is often resolved by a third party sup- professional liability. “Many states who have seen the developing finan- porting the RRG initial capital through the pro- cial issues with RRG programmes have begun to vision of a LOC or cash capital in exchange for a The report notes that medical professional liabil- look at elevated capital requirements.” surplus note, that is then retired as the RRG mem- ity, other liability and commercial auto liability bership capital base grows,” he adds. lines continue to report year-over-year increases Silvia explains: “For instance, even though to DWP. the minimum capital requirement might be Meanwhile, Johnson believes the challenges $1 million some states are asking for $1.5 mil- faced by RRGs often vary significantly by risk type Despite “political and economic uncertainty”, lion as the minimum capital in order to pro- and geography. the report found that RRGs remain financially vide a financial buffer for the success of stable while providing specialised coverage to the programme.” He explains: “Solvency risk is correlated with their insureds. soft market cycles for RRGs, especially for Earlier this year, the Alabama Captive Insurance those RRGs that are in direct competition with Commenting on how well RRGs are doing in the Association (ACIA) revealed its 2021 captive bill commercial carriers.” current environment, Peter Johnson, senior actu- amendments, which if passed, will see the intro- arial consultant, property and casualty practice duction of three new alternative risk vessels, “Part of the issue is competition in the commer- lead at Spring Consulting Group, says: “Coming including one for RRGs. cial market during soft market cycles can lead into the pandemic in early 2020, some RRGs were to flat market rates for a long period of time or already seeing difficult market conditions with The ACIA also collaborated with the Alabama even rate decreases, thereby causing low/neg- low or negative earnings.” Department of Insurance, which will see the ative underwriting profit margins and possi- department issue the RRG regulation to set the ble surplus shortfalls if adverse loss experience He explains: “The exacerbated soft market condi- National Association of Insurance Commissioners persists. This was evident with certain medi- tions drove some carriers to the point of under- RRG standards in one convenient place. cal professional liability and auto liability RRGs,” pricing exposures to keep market share. This he adds. adversely impacted RRGs directly competing with these carriers. Certain medical malpractice Bumps along the road As the insurance market continues to harden in RRGs saw this issue.” 2021, Silvia states what he expects to see with Reflecting on the challenges RRGs face, Winch RRGs over the next 12 months, he says: “The best Through the COVID-19 pandemic, the market suggests startup capital as the largest hurdle a RRG programmes with strong insurance leader- continued to harden with rising carrier rates for new proposed RRG faces ship and management will grow and be success- many liability lines and which Johnson suggests ful for its insureds.” could be a big benefit for RRGs that saw these Startup capital refers to the money that is rate competition issues. required to start a new business, whether for Silvia explains: “Insurance hard markets are pre- office space, permits, licenses, inventory, prod- cipitated by difficult insurance problems related “The social inflation issue, which is a current hot uct development and manufacturing, marketing to coverages and or unexpected claims activity.” topic, is another thing to keep in mind and has or any other expense. had an impact on upward loss trends on cer- “RRG programmes are subject to the same tain liability lines and rates will need to respond Winch explains: “As while the proposed mem- challenges as the commercial marketplace accordingly,” Johnson adds. bership typically represents an adequate cap- is but their ability to be nimble, react quickly ital base, getting all those members to con- and create unique guidelines for operation Asserting that RRGs are still considered financially tribute their capital at the same time, exclu- can help them overcome those issues in a stable, Dennis Silvia, executive vice-president at sive of their respective renewal dates, can way that the traditional marketplace can’t,” Davies Captive Management, believes that it be difficult.” he concludes.

15 Emerging Talent

AlonsoVice president, Tello captives and alternative risk AXA XL

“I first met Alonso in the UK before he worked for AXA XL. He had a strong reputation in the captive business, so when the opportunity arose to hire him in Canada I was very excited. Alonso has delivered everything we hoped for and within 18 months of joining has helped underwriters win a number of new captive programmes and established AXA XL as a leading market for captive fronting in Canada.”

Matt Latham, head of global programmes and captives, AXA XL

“Alonso has a unique understanding of risk transfer mechanisms, collaterals, guarantees and regulatory frameworks. He works with brokers and clients to understand their needs and implement captive solutions that are customised and deliver a partner experience.”

Renato Rodrigues, CEO, AXA XL, Canada

How did you end up in the captive industry?

Though I think the tides are changing as more schools offer insurance programs, I definitely fit into the category of those who ‘fell’ into insurance. However, when it comes to my entry into captives/alternative risk, this was definitely intentional. One of my

16 www.captiveinsurancetimes.com Emerging Talent

assignments during the rotational programme The London market is like no other, and my bilities to the Canadian market. As for the long- I took part in, was with the alternative risk team three years there were amazing, both personally term, I want to keep developing my leadership in Toronto. and professionally. skills, and cement myself as a leading source of knowledge for our business partners and clients, I really enjoyed my time with the team and made when thinking about how to optimise their insur-

it my sole objective to apply for a role, as soon What is your impression of the industry? ance programme and retain more risk in a struc- as an opportunity arose. This took a few years, tured manner. but in the meantime I was able to get hands on The captive industry is full of intelligent, fun, and claims experience, and P&C underwriting under driven individuals but I feel we can do a better Though my little family is comfortable in Toronto, my belt, while speeding through my insurance job of raising awareness, and building a healthy we’ll also never count out embarking on another designations and risk management certifications. pipeline of (diverse) talent. I’ve noted initiatives in adventure abroad, for the right opportunity the US and globally by organisations, to help this (and climate). cause, but as a community, we can always keep

What has been your highlight in improving how we tell our story and communi- the captive industry so far? cate our value proposition, in order to attract top What advice do you have for someone talent now and in the future. What I love about considering a role in the industry? Very cliché, but it’s 100 per cent the people we the captive space, is that our focus is on solutions, get to interact with daily — whether it be col- and not just pushing products. Network, network, and did I say...network? leagues, clients, brokers, consultants or captive Though it can be intimidating to reach out to a managers, etc. In addition, being part of a global stranger, I’ve yet to meet a captive professional

business, and niche segment of the commercial What are your aspirations for your who doesn’t perk up when asked about what we insurance industry, I feel very fortunate to have career in the captive industry? do, and how we contribute to the insurance value a network that spans all continents that I speak chain. Also, if you’re just considering insurance with and bounce ideas off of frequently. In the short term, I want to continue building out as a whole, I honestly feel that our industry has a our captive practice in Canada, and help bring place for any background — from art history, to more of AXA Group’s many alternative risk capa- climate science, IT and beyond.

What/who have been your influences in the captive industry? Personal bio: Born in Lima, Peru, my family migrated to Canada in the 1990s and though I’ve One of my first mentors in the industry was a mostly lived in Toronto, I have also spent several years in the US and UK. I’m a huge football gentleman by the name of Dean Cox, who also (soccer) fan, but I have also started running since the beginning of the pandemic. Aside from eventually became my first boss in a captive/ getting outside, I now run as a form of meditation — even in Canadian winters. alternative risk role. Dean was very well respected

within the Canadian insurance community, and Professional bio: I graduated from the University of Waterloo with a degree in Business and seen as an expert in the captive space. He’s now Legal Studies. After graduation I was hired as an Associate in Zurich North America’s Rotational retired, but we still catch up at least once a month, grad program, based in Schaumburg, Illinois. This role gave me a lot of exposure to different and he continues to ‘drop’ knowledge on me and parts of the commercial insurance business, and one of them was in the alternative risk space. keeps me humble. After the programme, I worked in claims for a while, before getting a chance to delve into property and casualty (P&C) underwriting, in Toronto. Soon after, I joined the alternative risk team, Though there are several other mentors who’ve and eventually transferred to Zurich’s London office, in a senior role. After three years in the helped me grow throughout my career, my time UK, the chance to build out AXA XL Canada’s Alternative Risk Transfer (ART) practice was too in the UK was another key development mile- tempting to pass up, so I moved back to Toronto in 2019 and have been here since. stone for me in the space.

17 Industry Appointments

Strategic Risk Solutions (SRS) has promoted Kirk Cyrus as the new chairman for the firm’s Barbados operations.

Cyrus has replaced Chris Evans after he member of our executive management struc- announced his plans to retire. Evans took on ture. This well-deserved promotion is a nat- the role of chairman in May last year. In addi- ural next step as we continue to execute our tion to the chairman role, Cyrus will continue to strategy of expanding our customer base and carry out his responsibilities as managing direc- geographic reach as we have done recently in tor in Barbados, which he was appointed to in other jurisdictions.” May 2020. “In welcoming Cyrus to his new role, we SRS entered the Barbados market in November extend our sincere appreciation to Evans, 2017 with the acquisition of CGE Group, which who has played an integral role in devel- was formed by Evans. oping a great operation in Barbados, as well as a stellar team and client list. We Brady Young, CEO of SRS, says: “During the past wish him all the best in his retirement,” year, Kirk Cyrus has proven himself to be a key Young concludes.

TJ Scherer has joined NFP risk and insurance strategy collective (RISC) as a senior captive consultant.

RISC is a specialty practice within NFP that pro- Tencellent and Stopford both joined NFP in vides a range of technology-focused alternative October 2020. risk, captive consulting and ongoing captive management solutions. The team will provide strategic captive consulta- tion and planning to clients evaluating the utili- Scherer joins NFP with over ten years of experi- sation of a captive insurance company and those ence in the captive and tax space, specialising in with existing captives. complex captive design and management. Most recently, he worked as a consultant for Artex Risk Commenting on Scherer’s new role, Tencellent Solutions, where he managed captive insurance says: “We are excited to have TJ join NFP and our companies while collaborating with and mentor- RISC team. He brings an innate ability to solve ing a team of industry professionals. problems and develop solutions, expanding our ability to cultivate and grow strong strategic risk In his new role, Scherer will work closely with management relationships with our clients and Kara Tencellent and Tracy Stopford, managing help them overcome complex risk challenges.” directors and co-leaders of RISC, to drive domestic and international business development. He In April, Jonathan McKenzie and Ramon Ramos will report to Tencellent. also joined NFP’s RISC.

18 www.captiveinsurancetimes.com

Industry Appointments

International specialist legacy group Compre has appointed Marialuisa Petrella as claims director and Connie Tregidga as group merger and acquisition (M&A) director, both based in London.

Reporting to Simon Hawkins, COO, Petrella The appointments follow a series of develop- brings more than 17 years of claims experience ments at Compre during the last 10 months, across a broad range of classes and jurisdictions. including the launch of a class 3A reinsurer in Bermuda Pallas Re. Petrella will join Compre in May from Armour Risk Management where she served as head of Compre also established Lloyd’s legacy syndicate European claims. She has also worked for QBE 1994 and gained significant additional capital and is a lawyer by profession. backing from Cinven and BCI. Iacovides adds: “Connie Tregidga is an out- Meanwhile, Tregidga will join Compre’s business Hawkins says: “Marialuisa Petrella brings a broad standing and highly-respected corporate lawyer, generation team in July also from QBE where she variety of technical, managerial and strategic abil- whose deal skills will be a considerable addition most recently worked as head of retrospective ity to Compre, with an exceptional track record to our growing team and I am delighted to wel- solutions and group reinsurance counsel. of managing high value and complex claims. I come her to Compre. Both appointments com- very much look forward to working with her plement and strengthen our business and will In her new role, she will report to chief develop- and am extremely pleased to welcome her be great assets as we look to fulfil our vision and ment officer Eleni Iacovides. to Compre.” achieve our ambitious growth plans.”

Marsh has promoted Alex has also held senior business transforma- Dahlmann to head of office for its tion and financial planning roles at AIG and Swedish captive operations, Marsh American Express. Management Services AB Sweden. Thomas-Ferrand says: “Clients are increasingly Based in Stockholm, Dahlmann will report to looking to captive insurance vehicles as a means William Thomas-Ferrand, international practice to manage risk and reduce volatility during these leader, Marsh Captive Solutions. uncertain times. Under Alex Dahlmann’s leadership, we are well-placed to deliver the services Dahlmann new will see him responsible for the and solutions that our Swedish captive clients development and delivery of captive manage- require to plan for their long-term success.” ment, insurance, accounting, regulatory compli- ance, and consulting services to captive owners Dahlman adds: “Sweden is renowned for its in the region. He joined Marsh in 2018 and was strong risk management culture and is quickly previously chief operating officer for the Benelux gaining an enviable reputation among the global and Nordics region. captive community for its innovative approach to captive insurance. I look forward to supporting Prior to Marsh, he was a governance risk com- our captive clients as they evolve and adapt to pliance consultant at Transcendent Group. He new and emerging risks.”

20 www.captiveinsurancetimes.com geb.com

Employee benefits. We have the solutions.

A comprehensive range of Employee Benefits solutions, A multicultural team of professionals providing customised including Life, Disability, Accident, Health and Pension plans, service, risk evaluation, full technical support, central for both local and mobile employees. coordination and quality reporting thanks to the most advanced IT tools. A Network of over 120 world-class local insurance partners, covering more than 100 countries and territories around the The security and stability of the Generali Group, one of the globe. world’s leading insurance and financial players. A high-degree of flexibility to meet the group insurance and Along with the traditional multinational pooling options, the pension needs of multinational corporations wherever they GEB Network is leader in Reinsurance to Captive and offers operate. innovative, cost-efficient multinational pension solutions.

52 Boulevard Marcel Cahen, L-1311 Luxembourg, Grand Duchy of Luxembourg – [email protected] Tel:+352 24 84 46 C

CMY