Captive Review February Edition

The captive insurance industry has a long tradition of evolving and innovating to serve changing needs and new industries.

Whether it be the group captive concept, cell structures or utilisation of the 831(b) tax election, regulators and service providers have been relatively quick to produce new and relevant solutions.

If 2014 was the year catastrophe bonds and insurance-linked securities were taken to a new level, then 2015 is shaping up to be a watershed for longevity swaps in the pensions sector.

The BT Pension Scheme transfer in Guernsey was widely reported in July last year, while Towers Watson and Willis have teamed up to provide a similar solution to pensions schemes of a more modest size in the same jurisdiction.

I understand Towers Watson is open to the idea of replicating its Longevity Direct product (discussed on p18-19) in Bermuda to serve United States-based pensions clients, while the Isle of Man cannot be expected to stand still in a sector so obviously suited to its own expertise.

The potential in the pensions space is understandably huge and for those large firms choosing the longevity swap route, a new captive or cell company formation will most likely be the answer.

The figures involved are signifi cant, meaning capital requirements are unlikely to match up with a traditional property and casualty captive.

The Cayman Captive Forum (p24) in December rounded off another busy conference season for the industry and it was a pleasure to see many familiar and new faces at the event.

It was a shame, then, that the actions of a handful of executives sitting in the high-rise headquarters of the Royal Bank of Canada were able to sully the event by placing so much uncertainty not just on its clients but its staff too.

While understandably fretting for the future of their own jobs, RBC staffers were left to fend off unanswerable questions from captive owners, managers and the media as to the future of its services in the jurisdiction.

Those professionals were a credit to the bank it quite frankly did not deserve.

Unfortunately the lingering memory from the conference was numerous conversations with unimpressed, beleaguered clients and RBC’s competitors in the bank’s own sponsored meeting room suite.

If ever there was a lesson in how not to handle a withdrawal, then that was it.

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