A Game Changing Merger

The merger of Willis and Towers Watson has helped to create the next generation in captive consultancy and management services, bringing together thought leaders from captive management, captive innovation, risk and analytics, and human capital into a single, client-focused team.

This capacity to create unique captive solutions, encompassing life, non-life and pension risks, means that clients can now unlock the potential in their captive in a new and more powerful way. Mark Cook and David Lewis of Willis Towers Watson explain how clients can now tap into that potential, while reflecting on the three awards the firm picked up at the 2017 UK Captive Services Awards in February.

Mark Cook, Director, Willis Towers Watson

Employee Benefits Consultant’

It’s hard to believe that it is now nearly 20 years since Willis Towers Watson helped a global pharmaceutical company to set up the first UK parent-owned employee benefits captive, in 1999. It took 12 months of working with their insurers to establish the appropriate programme structure.

Not only did we need to establish reinsurance treaties, cash and data flows, but we had to help the markets understand what it meant to no longer be the primary risk-takers!

Since then, the employee benefit market has grown exponentially, and I am proud of the fact that Willis Towers Watson has remained the prominent specialist in this field.

Our UK team remains at the leading edge of captive activity and innovation development, having helped to initiate and develop the global insurer networks now capable of facilitating effective EB captive programmes through risk and premium transfer. We now offer the largest EB captive specialist team across not only the UK and Europe but across the globe, with extensive experience in providing advice to companies in relation to EB captive strategies.

The key to that success is, without question, the unrivalled access we offer to a wide group of subject matter experts, including:

• Employee risk benefit specialists;
• Medical and wellbeing specialists;
• International benefits consultants;
• Pension, life and P&C actuaries;
• Risk and analytics modelling specialists;
• Captive domicile experts;
• Reinsurance experts and brokers.

We also provide access to class-leading benchmarking data. In 2016, we conducted a unique Pooling and EB Captive research study, focusing on two of the most popular benefit financing strategies.

The study, the largest of its kind, explored the way that companies use pooling and captive arrangements, and answers many of the questions asked by global business leaders about the advantages and disadvantages of each approach.

This vast bank of data – provided from more than 1,500 client reports relating to over 200 companies – covered all participating benefit plans including life, accident, disability, medical and some retirement plans. It is that exceptional access to data and expertise that really helps clients to make informed decisions and what, I think, really sets Willis Towers Watson apart from our competitors.

It’s rewarding to me that this expertise has been recognised at this year’s UK Captive Services Awards; not only was the award as EB consultant our third successive win as a team in this category, but I was delighted – and a little surprised – to be awarded Captive Professional of the Year too!

Of course, the merger at the beginning of 2016 between Towers Watson and Willis has only served to reinforce that depth and range of expertise, and I am delighted with the way that the newly combined firm has already started to embrace the opportunities that the merger presents for our respective clients.

As interest in captive innovation and value continues to gather pace, there is no question that Willis Towers Watson is perfectly placed to provide companies with the integrated advice they need to develop future-ready captive strategies.

David Lewis, director of development for Willis Towers Watson’s Global Captive Practice

‘Most Innovative Firm’

Having started my career with Willis in 1985, I’ve lived through a number of mergers over the past few years. Unlike those of the past, however, the merger between Willis and Towers Watson in January 2016 is, without question, one of the most exciting.

Unlike previous events, which typically resulted in some degree of duplication and internal competition, this merger has presented a unique opportunity for our combined firms to integrate our specialist captive consultancy services in a way that has fundamentally changed the way in which our clients evaluate, access and optimise the benefits of captives.

In fact, I believe it is now providing a compelling template for a more relevant and dynamic captive marketplace, far better aligned with client needs.

Effective and innovative risk management and risk financing strategies can no longer consider human capital and employee benefits risks, and more traditional property and casualty exposures, as mutually exclusive but, instead, need to view them as two sides of the same holistic risk mitigation strategy.

Captive owners are, understandably, now seeking greater innovation and creativity from captive advisers, providing new strategies that offer increased financial and strategic value.

Our view is that, provided the captive industry can respond to these new demands by changing the quality of our engagement, we can reinforce the financial, operational and strategic benefits that captives can provide, helping to drive a healthy, dynamic and modern captive marketplace.

To achieve this, we have worked hard over the past few months since our merger to seize this opportunity to build what we believe to be a unique and wholly-integrated approach to captive consultancy that combines:

• World-class human capital benefits expertise;
• Long-established non-life captive consultancy; and
• Market-leading analytics and solution development capabilities.

By purposefully combining our resources to offer clients a single-point of access to a comprehensive directory of expertise and pioneering innovation, we believe that we will be better placed to provide captive solutions that are fit for modern purpose and which are genuinely valuable to clients.

With the impact of external factors such as Solvency II, base erosion and profit shifting (Beps), and increasing rates of IPT continuing to place additional demands on captive owners, it is more important than ever that captive consultants and managers step up the way in which we offer more sophisticated, relevant and innovative solutions. I think we are now perfectly positioned to respond to this demand.

I am genuinely excited about the future – I believe that we are moving in a different direction to our competitors and offer a unique proposition that is unmatched in our market.

I was delighted to have won the ‘Most Innovative Firm of the Year’ award at this year’s UK Captive Services Awards as I’d like to see that as an endorsement of the work we have done – and continue to do – to offer a distinct and genuinely stand-out service to our clients.

‘Risk Consulting Initiative’

Over the past year or so, we have seen a significant increase in the number of clients approaching us to conduct independent reviews of their current captive strategies.

There are a number of reasons for this – captive owners need to find more effective ways to use existing captives to drive better financial, operational or strategic value; mergers or acquisitions have left companies with multiple captives that require a considered approach to optimum rationalisation or consolidation; the impact of external factors such as Beps is providing a focus on the re-evaluation of existing captives; or, equally importantly, clients are simply undertaking a good governance review to ensure that their captive remains relevant to their changing business strategy.

In response to this increased demand, Willis Towers Watson has invested in developing a consultancy approach that is unique in meeting client demands.

The merger between Willis and Towers Watson in January 2016 obviously provided us with the opportunity to provide an integrated EB and P&C approach – in today’s world, captive optimisation really demands that consideration is given to both sides of what is, essentially, the same risk financing coin.

In addition, we have invested heavily in an analytics capability that is class-leading, enabling our strategic review methodology to be firmly founded on robust analytics. Our approach to risk consulting and strategic review projects is, therefore, completely holistic, and is, in most cases, focused on:

• The identification of short-term ‘quickwin’ opportunities;
• The identification of longer-term strategic opportunities based on a clearly-defined analysis of expected cost-benefits, an effective implementation timeline and comprehensive project management capabilities as required.

Crucially, we adopt a wholly independent, unbiased viewpoint – we enter into such projects with no preconceived recommendations or conclusions. Our clients want an approach that is genuinely creative and not directed by either vested interest or ‘off the shelf’ solution. We view this approach as a genuine differentiator.

Understanding our clients’ business is critical, and we invest time in gaining a clear picture of their business objectives, structure and risk exposures, both current and emerging. Data analysis is a critical component of any project, and substantial attention is always given to the identification, collation and subsequent analysis of key information.

The key to the success of our risk consulting capabilities lies, however, in our ‘blue sky’ approach.

We approach projects with an open mind and with a willingness to challenge the status quo, considering new solutions that might well be bespoke to a particular client’s needs, whether that be related to P&C risk, human capital or, in all likelihood, a combination of both.

It is our capacity to seamlessly access such a wide range of expertise and experience that, I believe, enables us to provide stand-out solutions and clear, unambiguous advice.

Therefore, I am delighted by our success in the category ‘Risk Consulting Initiative of the Year’, and view it as a testament to that differentiator.

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