Motivations behind a captive will differ from company to company. In recent years, however, the primary consideration lies with using a captive as a strategic risk management tool. This allows the risk manager to focus on their job and not on insurance renewals.

Other benefits of a captive include, but are not limited to:

  • Insuring risks where there is limited capacity in the commercial insurance market
  • Setting a stable premium to give certainty in the budgeting process, and protect against increases in the commercial insurance market
  • Creating a profit centre to share in underwriting profits
  • Controlling claims data and using this to improve the company’s operational efficiency
  • Accessing the reinsurance markets, providing additional and potentially lower cost capacity

Our abilities cover the full breadth of alternative risk financing – from evaluation and creation, ongoing operation, to restructuring or closure.

Jurisdictional analysis

Reviewing and considering the requirements, benefits and drawbacks of potential and/or current jurisdiction(s) – not solely for the subsidiary risk vehicle(s) but also for the parent/shareholder, group companies, and stakeholders. Also comparing options and recommendations on location.

Insurance programme structuring

Risk assessment, allocation and ownership, including calculating the organisation’s total cost of risk – which includes both ‘insurable’ and ‘non-insurable’ risks.  Design of coverage requirements and optimum structure to determine Op-Co retention, group retention, ART/captive participation, and risk transfer to (re)insurance and/or alternative vehicles.

Captive structuring

Bespoke evaluation of the benefits and drawbacks to the organisation of risk transfer. These include forming or continuing to utilise a captive incorporating both quantitative and qualitative aspects, a review of various types of risk financing available, considerations of regulatory, tax, and accounting impacts, and recommendations on further actions.

Operation recommendations

Manager and third party administrator selection/review, broker tender support, capital optimisation, utilisation and release, tax consulting, compliance and governance design and support, and actuarial analysis.

Restructuring support

Mergers and acquisition impact assessment and recommendations, risk financing vehicle restructuring, third party divestment solutions and liquidation services.

Insights for Captives

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