11 January 2021Analysis

Mars increases the use of its captive to keep cash in-house

Mars has increased the use of its captive in recent years, backed by reinsurance, to “maintain cash internally for as long as we can,” according to Christopher de Wolfe, the global director of risk management at Mars.

Speaking to Aon as part of its Virtual Reinsurance Renewal Season series of fireside chats, de Wolf noted that a growing number of corporations with large balance sheets have been doing the same thing.

De Wolf also hailed parametric insurance as “the next cool thing to come into our industry.”

He admitted parametric solutions for risk transfer can be challenging, due to issues around data availability. However, it is “relatively easy, with the right technology,” to use predictive analytics to price a parametric programme for weather risk, he said, due to the availability of data.

De Wolf said: “I’m totally into the concept of parametric programmes; I think they’re fantastic; I think it’s the next cool thing to come into our industry. One day, when computing power becomes more effective and more data becomes available, I hope that parametric-type programmes will become available for a broader range of risks.”

De Wolf said alternative capital is of interest to Mars, both for protecting the captive and in terms of providing wider risk solutions.

He urged insurers to use their expertise in assessing and quantifying risk to help clients establish strategies to protect their balance sheets and earnings.

De Wolf stressed the importance of focusing not only on insurance but on broader risk management, risk mitigation and business continuity planning.

The fireside chat was hosted by Andy Marcell, chief executive officer of Aon’s reinsurance solutions.