Captive news

Asia's interest in captives grows The soft insurance market has not dampened Asia's growing interest in captives, according to Aon Risk Solutions' Asia Market Review 2016. "Whilst interest is spread across the region, China stands out as a country that has finally embraced the captive concept with at least five onshore and offshore captives formed in the last two years, representing some of the largest Chinese state owned enterprises," said Aon. "Formations will continue and when you consider that 80% of companies in the Fortune 500 own at least one captive while only five of the 100 Chinese companies that make up that list have a captive, growth is expected to continue at an increasing rate," it added. The Review noted that insurers are also taking a keen interest in captives and wanting to work with captives and their owners and managers to provide services that can enhance or at least complement multinational captive programmes. Aon said this extends to policy administration services at the front of the captive, to additional capacity in the form of traditional or alternative risk transfer programmes behind the captive.hideAon said that there may be a level of fallout from Solvency II that could benefit Asian domiciles as European captives move to less onerous jurisdictions. "The Asian captive market is expected to continue its upward trajectory and will in the main underwrite traditional lines such as property and liability risks, but we expect that well established captives will be looking to expand their insurance portfolios into areas where traditional insurers do not provide a complete solution. Exposures such as cyber risk, environmental liability, trade credit and employee benefits are likely to find their way into captive programmes where the risks can be incubated or tailored hybrid solutions can be adopted," said the Aon Review. More pension funds transfer longevity risk via captives Captive insurance companies are providing pension funds with a valuable avenue to the reinsurance market for transferring longevity risk, according to a white paper published by Guernsey Finance and written by insurance journalist Helen Yates. The Longevity Risk Market Comes Of Age white paper examined how longevity risk has become a growing burden, particularly for closed defined benefit schemes or final salary schemes. In the white paper, Paul Eaton, New Business Director at Artex Risk Solutions, explained that longevity has been hedged by transferring the risk for many years, but the use of captive insurers is a recent phenomenon. "Historically, commercial insurance companies or banks would be the intermediaries and they would access the reinsurance market to find capacity. What's happened over time is that the loading intermediaries applied to the transaction have led some schemes to look for a more cost effective way of reaching the reinsurance capacity, and this is where establishing your own insurance company comes into play," said Mr Eaton. Incorporated Cell Companies have become the structure of choice for longevity risk driven by reinsurers requiring absolute certainty that there is no contamination risk between cells. "Pension schemes are also aware they may require additional longevity transactions in a number of years' time, as their portfolio matures, so it helps to have a vehicle that is already in place to which you can add further cells," he said. Marsh makes captive appointments Marsh has appointed Will Thomas-Ferrand as Strategy & Operations Leader, Europe, the Middle East, and Africa (EMEA) and Asia Pacific. He will report to Ian Clancy, Marsh Captive Solutions' Practice leader, EMEA and Asia Pacific. According to Marsh, in his newly created role, Mr Thomas-Ferrand will work closely with Ian Clancy and Chris Lay, President, Marsh Captive Solutions, to develop consistent policies, practices, and platforms across Marsh Captive Solutions. Mr Thomas-Ferrand has relocated to the UK from Marsh Captive Solutions in Malta, where he was Head of Office from 2010. He previously led a team in Marsh's captive operations in Bermuda. Stephen Portelli has been appointed as Head of Office in Malta and will be supported by David Galea as Deputy Head of Office. Guernsey promotes its 'third country' status Guernsey is promoting its stable relationship with both the UK and the European Union, as the referendum on the UK's membership and a possible Brexit approaches. In particular, the issue has been raised at meetings held to coincide with the launch of Guernsey Finance's new representative office in Hong Kong. The promotional agency said Guernsey's offer of stability for international business during a period of uncertainty around the relationship between the UK and the European Union has been well received in Asia. Guernsey Finance Chief Executive Dominic Wheatley said that while there is uncertainty about the UK's relationship with the EU, Guernsey's stable relationships with both is an increasingly important part of the island's offer as an international finance centre, along with its continued meeting of the highest international standards in transparency and regulation. "The people we spoke to in Hong Kong appreciated the fact that Guernsey's position with respect to the EU is very clear - we're a 'third country' now and we'd still be a 'third country' in the event of a Brexit. They understood that there would be no change in our relationship with the EU, regardless of how the UK referendum goes," said Mr Wheatley. Guernsey Finance's Asia representative, Wendy Weng, and International Business Development Director, Kate Clouston, will use the Hong Kong office as a base from which to carry out further promotional activities concentrated on the wider South East Asian market. It is also being utilised by the Guernsey Financial Services Commission (GFSC) to provide regulatory advice to those in the region who might be considering Guernsey-specific ventures.

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