Why cell captives are surging in popularity
Cell captives come with many different names, depending on the domicile. But whether they be segregated cell companies, protected cell companies, portfolio insurance companies or rent-a-captives, a growing number of prospective captive owners are choosing these vehicles for the flexibility they offer, say Lawrence Cook and Chris Mandel of Sedgwick.
Let’s make the Year of the Rat the year of the captive investment portfolio
Nearly 100 years ago, the first single parent captive insurance companies were formed onshore in the UK. There has been tremendous evolution in the captives industry, but there has not been as much progress with the captive investment portfolio, says Callan’s Sara Hakim.
Insurtech and captives: a love story
In an industry viewed as conservative or slow to change, some insurers might perceive insurtech as a fad, or worse, too risky. For the captive insurance industry, however, the upsides of an insurtech partnership are simply too good to dismiss, as Julie Bordo of PCH Mutual Insurance relates.
The ups and downs of bond and equity yields
It is very rare for the yield of the S&P 500 to eclipse the yield paid on US Treasury 10-year notes. When it does, it means either the bond market is overvalued or the equity market is undervalued—or both, says Jack Meskunas at Oppenheimer & Co.
The captive industry’s brain drain
As a generation of experienced captive insurance professionals retires, the industry is at risk of losing a reservoir of experience, brainpower and knowledge. The community as a whole needs to do more to ensure it hires new, young talent to absorb this knowledge—before the baby-boomers are all gone, says Jeff Kehler at Somers Risk Consulting.
Understanding the implications of risk
As the equity bull market continues to roll on, headlines and broad-market investors focus on returns, but risk management should be their principal concern. While it is easy to be tempted by the potential for higher returns that comes with higher risk securities, higher quality credits reduce portfolio volatility, say Brian Allen, Bryan Johanson and Jason Pettner at C.S. McKee.
The coming wave of ownership changes
When a company changes hands there are often significant effects on the underlying business. Employees can be made redundant and departments merged, and the fate of the company’s insurance and captive programmes may also be called into question, but captive managers can protect their interests, says Jeremy Huish of Business Transition Advisors.
Fighting to remain relevant
STICO, the risk retention group for the US storage tank industry, was a huge success in its early years, providing members with insurance coverage that the commercial market was unwilling or unable to provide. In recent years life has been more challenging, as commercial providers have attempted to win back its members as customers, but now it is fighting back, says STICO’s Colin Donovan.
Three reasons to create a captive
Establishing a captive programme can seem a daunting prospect, but there are many reasons for companies to make the effort. Steven Lorady of Carr, Riggs & Ingram discusses three of them.
Falling interest rates, rising volatility
Trade and monetary policy have dominated the financial headlines in 2019. In 2020 the Federal Reserve is expected to cut rates, but some say markets are pricing in too much monetary easing, says Andrew Wang at Runnymede Capital Management.
