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www.captiveinsurancetimes.com 04 March 2020 - Issue 193 Insurtech Insight Emerging Talent Reserve Mechanical What changes need to be made in order Dale McCann Reserve Mechanical Corporation files for the captive sector to keep up with Vice president of captive insurance opening brief with tenth circuit court technological advances? Comerica Bank of appeals Captive Insurance Times Issue 193 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 Cover Image Contributor Maddie Saghir Cover Image [email protected] By gualtiero boffi stock photo ID: 123777226 Marketing and sales www.captiveinsurancetimes.com Associate Publisher/Designer John Savage 04 March 2020 - Issue 193 [email protected] Tel: +44 (0)208 075 0932 Publisher Justin Lawson [email protected] Office Manager Chelsea Bowles Tel: +44 (0)208 075 0930 Follow us on Twitter: @CITimes Published by Black Knight Media Ltd Company reg: 0719464 Copyright © 2020 Black Knight Media Ltd All rights reserved. No part of this publication may be reproduced, Insurtech Insight Emerging Talent Reserve Mechanical stored in a retrieval system or transmitted, in any form or by What changes need to be made in order Dale McCann Reserve Mechanical Corporation files for the captive sector to keep up with Vice president of captive insurance opening brief with tenth circuit court any means, electronic, mechanical, photocopying, recording or technological advances? Comerica Bank of appeals otherwise, without permission in writing from the publisher. B++ Good captiveinsurancetimes.com 3 Contents In this issue News Focus page 6 Market Update Davies Group employees discuss the C current view of the captive insurance M sector along with the firm’s plans for 2020 Y page 22 CM MY CY Emerging Talent Dale McCann, vice president of captive CMY insurance of Comerica Bank K Insurtech Insight page 26 As technology advances, the pressure is on to keep up the pace, but with the ‘technology generation’ lacking in the captive sector - what Industry Appointments changes need to be made? page 16 Comings and goings in the captive insurance industry page 32 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 Contact us on t: +356 2343 5221 | e: [email protected] | www.atlaspcc.eu Atlas Insurance PCC Limited is a cell company authorised by the Malta Financial Services Authority to carry on general insurance business. captiveinsurancetimes.com 5 News Focus WE KNOW CAPTIVE INSURANCE. Reserve files opening brief with tenth circuit court of appeals Feldman Law Firm and Foley Gardere test by receiving more than 30 percent Additionally, the Coalition to Advance have filed the opening brief with the of its gross premiums from reinsuring Captive Insurance filed an amicus curiae tenth circuit court of appeals on behalf pooled and blended risks of more brief with the US Court of Appeals for of Reserve Mechanical Corp, a client of than 150 insureds under more than the Tenth Circuit in support of Reserve. Capstone. 500 direct-written policies, issued by PoolRe Insurance Corporation. The 11 organisations supporting the The appeals brief challenges the US tax recent appeal by Reserve, include court’s rulings in the Reserve captive The brief stated: “Reserve’s direct- the Alabama Captive Insurance insurance case, identifying the specific written policies provided real insurance: Association, Arizona Captive Insurance ways in which the tax court erred in its when Peak suffered a covered loss and Association, Delaware Captive adverse opinion issued in June 2018, made a claim, Reserve paid. Reserve’s Insurance Association, Georgia Captive according to Capstone. risk distributing arrangements imposed Insurance Association, Hawaii Captives real contractual rights and obligations.” Insurance Council, Kentucky Captive In its opinion, the tax court concluded Association, Missouri Captive Insurance that Reserve’s transactions did not “If Peak suffered a large covered loss, Association, Montana Captive Insurance For more than 70 years, no firm has had a more constitute insurance for federal income a substantial portion of the loss over a Association, North Carolina Captive complete understanding of the captive and self- tax purposes. predetermined amount would be borne Insurance Association, Utah Captive insured market than Milliman. With our global by the fifty-plus insurers participating Insurance Association, and the Self- The tax court suggested that Reserve’s in the risk pool. By the same token, if Insurance Institute of America. reach, we routinely advise multinationals on insurance arrangements did not meet one of those insurers responded to a cross-border transactions and how to meet each two of the four necessary insurance large loss, Reserve would also be called The amicus brief addresses and informs domicile’s unique requirements—key in today’s criteria, concluding that Reserve failed upon to pay its proportionate share of on three issues of concern in the original captive environment. to satisfy adequate risk distribution the loss.” Reserve decision: prior loss history, and that Reserve’s arrangement with manuscript policies, and risk pooling. milliman.com/captives its affiliated company, Peak Mechanical Capstone explained that the tax court and Components was not “insurance in employed legal reasoning that was Capstone said that the tenth circuit’s [email protected] the commonly accepted sense”. contradictory to decades of existing decision in the Reserve appeal case law. The tax court also went outside is “expected to carry enormous Reserve’s opening brief explained that the record in making findings that were implications” for the captive insurance Reserve satisfied the risk distribution not supported by the evidence at trial. industry. 6 Captive Insurance Times - Issue 193 1349PCP_Captive Review_20200211.indd 1 2/12/20 12:09 PM News Focus News Focus Alabama to update captive A.M. Best affirms Lincoln Benefit ratings insurance legislation Tennessee licenses A.M. Best has removed from under review The Alabama Captive Association’s statute, that follows the existing 200th captive with negative implications and affirmed the EU removes BVI from ‘grey list’ sponsored bill to update the state’s Alabama Department of Insurance financial strength rating of A- (Excellent) captive insurance legislation passed practice, to allow captives to cease The Tennessee Department of Commerce and the long term issuer credit rating of unanimously in the House Insurance writing business for up to five years and and Insurance (TDCI) has licensed Mattoon “a-” of Lincoln Benefit Life Company The government of the Virgin Islands good governance principles. This is as a Committee on 19 February. remain in existence. Insurance Company, marking the state’s (Lincoln Benefit). The outlook assigned to has welcomed the EU’s decision to result of close cooperation and positive 200th licensed captive insurance company. these credit ratings (ratings) is negative. name the British Virgin Islands (BVI) dialogue with the EU and demonstrates The updates allow for greater economic Finally, the bill will allow for technical as a fully compliant jurisdiction for the BVI’s commitment to meeting and growth and development within the corrections to language pertaining to Tennessee has licensed four captive According to A.M. Best, Lincoln tax purposes. surpassing international standards.” captive industry in the State of Alabama. coastal captive insurance companies to companies already in 2020 with six more Benefit’s balance sheet strength has promote consistent language between captives currently in the approval process, been categorised as strong, as well as BVI was placed on the EU’s Annexe Fahie added: “I, along with my The bill was presented by state Chapter 31(B) and 31(C) of the code. TDCI’s captive insurance section director its adequate operating performance, ll ‘grey list’ while the EU monitored government, remain completely focused representative David Faulkner, who also Jennifer Stalvey revealed. neutral business profile and appropriate compliance in matters related to on ensuring the continued success of presented the previous amendment The change will also remove the enterprise risk management. economic substance. our international business and finance to the Alabama Captive Insurers Act requirement for coastal captive Stalvey said: “2020 looks to be another centre and its role in the global economy. in 2016 sponsored by the Alabama coverages to be fronted through an impressive growth year for Tennessee’s The negative outlooks reflect the In order for the BVI to comply, the We believe there will be significant Captive Association. admitted traditional carrier. captive sector.” continued decline in capital and surplus Economic Substance (companies and opportunities for our territory and our at Lincoln Benefit, as well as its captive limited partnerships) Act was passed on people as we enhance our economic Under this bill, the significant changes Executive director of the Alabama TDCI commissioner Hodgen Mainda, reinsurer, Lancaster Re Captive Insurance the island in December 2018. substance yet further.”