Michael Watchke, head of Computershare Corporate Trust, and Charles Baker, senior vice president, on the services the business offers the captive industry as well as Computershare Corporate Trust’s presence in Bermuda
Captive Review (CR): What is Computershare?
Michael Watchke (MW): Computershare is a world leader in financial administration. We provide services in transfer agency, share registration, employee equity plans, mortgage servicing, proxy solicitation, corporate trust and a range of other financial and governance services. We’re listed on the Australian Securities Exchange (ASX) and operate in every major financial market worldwide. We have more than 14,000 employees globally.
In November 2021, Computershare acquired Wells Fargo Corporate Trust Services and created the new business unit, Computershare Corporate Trust. We provide a wide variety of trust and agency services in connection with debt securities issued by public and private corporations, government entities, and the banking and securities industries.
Trust and agency services include business escrow, 1,031 exchange services, insurance trust, collateral trust, loan administration and securities custody. We also offer conventional and structured debt services. The Computershare Corporate Trust business serves more than 14,000 clients in the United States.
CR: What work does Computershare do with the captive industry?
Charles Baker (CB): Computershare works with captive insurance companies and their fronting carriers to establish and administer trust accounts to hold collateral in support of their captive programmes. At the direction of the captive and the fronting carrier, Computershare Trust Company, NA (CTCNA) works with the parties to establish a trust account.
CTCNA maintains pre-negotiated trust agreements with most carriers and, as a result, can streamline the establishment of an account.
Once a trust is established to hold collateral for the secured party’s benefit, Computershare Corporate Trust essentially works as a financial administrator for the captives by coordinating investments and issuing statements and financial distributions and releases, as required.
In many instances, Computershare Corporate Trust already supports a company’s corporate trust, debt and escrow needs domestically.
There is already a natural synergy with including captive trust services as an additional service. When the cost of letters of credit increases, a captive trust can become an attractive alternative to help reduce collateral costs and free up credit to be used elsewhere.
We regularly work with captives who replace some or all of their letters of credit with a trust to satisfy their collateral needs. The primary role of a captive trust is to satisfy the captive’s collateral requirement to their fronting carrier. However, captive trust can also be leveraged to establish a centralised framework to reduce the overall cost of risk across the business potentially.
CR: What are Computershare’s goals for its work with the captive industry?
MW: We hear from many companies that the length of time and lack of efficiency associated with establishing new captive trust accounts are possibly the number one grievance in the industry.
Computershare’s ‘know your customer’ approach gives our clients a key advantage by ensuring we can establish their accounts quickly and proficiently.
It’s built on our team’s deep understanding of clients, compliance with financial regulatory bodies and potential business risks, and our strong relationships with insurance companies, insurance brokers, captive managers and corporations that use captive companies for self-insurance.
The diversity of Computershare also means that we already have existing relationships with clients that we can build upon in Corporate Trust. Beyond this, our relationship account management team takes great pride in its client service marks.
They are responsive to client needs and questions. Computershare Corporate Trust is also able to provide some additional services to each grantor related to any standalone custody needs they or their captive may have, as well as collateral trust needs related to their surety providers.
We have relationships with the majority of insurance carriers in support of their re-insurance needs as well. As a company, we strive for excellent client service and the cornerstone of our corporate culture is ‘do the right thing’ by our clients, the industry and each other.
CR: How has the integration of Wells Fargo CTS been going?
CB: Computershare Corporate Trust has already exceeded expectations in the fiscal year 2022. We have an extremely high client retention rate, and there are areas of business, such as captives, that are a natural growth opportunity given the state of the market and rising interest rates.
The business is annually ranked among the top service providers in most league tables by both deal count and issuance, and has a best-in-class reputation built on its hightouch approach to client service.
As part of the acquisition, the teams and business structure from the now closed Wells Fargo Corporate Trust Services business moved to Computershare and remained intact.
Many pre-acquisition operational arrangements remain in place, including for the team that services the captive industry, which has helped minimise disruption.
Business has continued as usual, with clients working with the same experienced teams they had been able to trust before the change.
CR: What has the acquisition added to the company, especially from the perspective of how it can benefit captive insurers or service providers in the industry?
MW: Computershare’s acquisition has been advantageous for our captive clients for many reasons, though it delivered two main benefits: our ‘know your customer’ approach to client relationships and our platform.
Computershare offers an investment-agnostic approach not beholden to any specific investment products. We provide tailored investment options to meet our client’s criteria based on their liquidity needs, financial objectives, risk appetite and safety of principal.
For larger trusts, our platform supports the custody of fixed-income securities and other alternative investments allowed for in the trust.
CR: Why is Computershare targeting captives in the Bermuda domicile?
CB: Computershare supports our clients’ captive trust needs across a number of domiciles, both on- and offshore.
Our presence in Bermuda depends on our client’s wishes and jurisdictional needs. Our team servicing captives is familiar with the many captive owners, managers and advisors.
Bermuda is a sophisticated and credible jurisdiction for the captive industry, and the Bermuda Insurance Act offers a designated framework that aligns with countries worldwide.
