3 September 2021ArticleAnalysis

Building an innovative environment

“Our process of consulting and education establishes a strategy of selecting an insurance programme that best supports the goal of protecting the company.” Al Rhodes, SIGMA

Why do you think your firm has been recognised for this award?
What sets SIGMA apart is our desire not only to provide robust analytical tools and consulting to support the captive industry, but also to surround those services with educational tools giving our clients practical knowledge on how to best implement analytics in the captive realm.SIGMA staff assist clients in understanding how captives can be used as a long-term strategy, rather than as a short-term solution to market conditions. Our approach gives clients access to educational resources, consulting, and software tools to navigate various challenges. In all capacities, we pride ourselves on the fact that we produce readable material free of actuarial jargon. To navigate challenges, clients must first understand the analytics and approaches they already have in place.SIGMA also focuses on innovative new ways of incorporating industry data in the analysis of non-traditional emerging risks. These risks are often low frequency and high severity and have limited unique historical data.Finally, SIGMA continues to enhance the production and presentation of feasibility studies related to pro-forma analysis. Our capability in this area has grown significantly in recent years, as has our ability to provide financial statement modelling to assist new or ongoing captives with strategic planning. To maximise the effectiveness of such reports, we present the results with consideration to various financial metrics and adapt risk-based capital formulas for established captives.What would you describe as your wider USPs as a firm?
SIGMA continues to focus on educational resources in the captive space. We have completed “Lunch and Learn” webinars on captive topics and created an educational captive overview brochure.With an increasingly complex and hardening insurance market, we have also re-focused our “Risk Management” blog to assist captive professionals in handling these issues appropriately. We have written recent articles on how to best utilise analytics in a hardening market, how to handle weather-related risks that are typically included in captive risk portfolios, and ways to use and improve captive-specific reserve analyses.We have experience with a broad range of traditional insurance coverages and extensive expertise in the analysis of non-traditional risks for captives. Alongside our experience with these coverages, SIGMA completes review work for captive regulators.Another important facet of our approach is our RISK66 software, which provides many tools that support captive owners, managers, and brokers. Most notably, our software has a loss forecasting tool (Loss Forecaster), a loss run analytics tool (LORAN), and a captive assessment tool.What have been your highlights of the past 12 months?
The 2021 Captive International US and Cayman awards, in which SIGMA won US Feasibility Study Firm of the Year and Cayman Actuarial Firm of the Year, served as a significant highlight. Individual highlights in this area included Al Rhodes winning the US Feasibility Studies Specialist award and Michelle Bradley earning a Highly Commended recognition in the Cayman Actuary category.Throughout the year, we have been active in the captive community and published several articles, such as pieces in Captive International on loss development analysis for captives and how to identify captive collateral concerns. SIGMA staff have also served on multiple committees in the captive space.We have also been pleased to note that our internal “Lunch and Learn” webinar series, which often includes vital information for those in the captive industry, has continued to grow in terms of attendance and participation. Recent topics for this series have offered high-level overviews of potential captive domiciles and stepped through the details of a sample captive feasibility study.What are your goals and objectives for 2022?
We expect 2022 to be a breakout year for captive formations. Video calls have maintained the excitement level, but getting back out to conferences and meeting face-to-face again will spark much more creativity than yet another video call.We plan to attend as many conferences as possible. “Booth duty” has always been an opportunity to get into deeper discussions with clients/prospects/brokers about how captives might serve as a strategy to achieve their risk-related goals. Our process of consulting and education establishes a strategy of selecting an insurance programme that best supports the goal of protecting the company.Our blogs, articles, and “Lunch and Learn” series will continue in 2022. Based on feedback, client insights, and developing trends, we plan to publish information on internal allocations, risk matrices, increased limits factors, aggregate stop-loss levels, and changing exposures.How would you characterise the health of the captives market at the moment in your sector?
We believe the outlook for all captives is extremely positive. The hardening market, along with companies’ increasing interest in addressing emerging non-traditional risks, is encouraging companies to seek alternative ways to handle risk.This trend increased significantly in 2020 and, in our opinion, became even stronger in 2021. We believe captive formation will continue to grow in 2022 because so many companies began the strategic process in 2021.