Do you need a subsidiary captive insurance company? Or if you have one, do you need to diversify your risks – or even close it down?
Many large organisations have set up a ‘captive’, their own in-house insurance company, to support group risk-financing and insurance activity. This can deliver significant cost savings over the longer term, but can also mean short-term volatility. When looking at whether and when to set up a captive, or how to use it, or when to close it down (and where to place your risks if you do), you’ll need the support of an experienced advisor.

Alesco RMS has strong experience of advising businesses on the use of captive insurers. We know that finding the optimal role for a captive is a complex and ever-changing evaluation, which needs to take into account the internal cost of capital, the most effective use of the group’s capacity to retain risk, and the availability and cost of insurance in the commercial insurance market.

How we’ll work with you on captive insurance

To review the potential for captive involvement, we would normally:

  • review the role of a captive within the overall insurance programme
  • run a financial analysis of the captive using industry-standard benchmarks
  • develop a model to forecast future losses to the captive, based upon historical loss data and energy industry loss data
  • develop a dynamic financial model to test alternative captive strategies (retention levels, layering, reinsurance, capital), with financial projections over a 3 to 5 years
  • take you through the result of our modelling in detail, and offer our conclusions regarding your captive strategy.

Why talk to Alesco RMS?

  • We are very experienced – we have many years’ experience of working with large clients on how best to use captive insurance companies
  • We take a tailored approach – because captives are complex, and no two clients are the same
  • We’re independent – we’re not tied to any insurers, so if we think a captive is right for you, we’ll say so
  • We’ll propose the optimal balance of cover – between (a) retention of risk within individual business units, (b) group risk-retention via a captive or central fund, and (c) the risk transfer programme
  • We do detailed modelling – we’ve developed various analytical tools which can greatly simplify the captive decision-making process, but we also take into account important qualitative considerations.
Further advantages of captives

Aside from the more traditional risk exposures, captives can also facilitate efficient risk-financing structures across other insurance coverages, including:

  • potential legal expenses or litigation costs
  • environmental liabilities
  • gratuity & incentive payments
  • future repair or replacement costs
  • rent guarantees for large property portfolios
  • potential pension shortfalls
  • decommissioning costs
  • R&D costs
  • cyber risk.

Please get in touch

If you have a captive, or are thinking about creating one, please do contact us for a no-obligation chat about what we can offer. Our key contacts are listed below.

View our glossary of insurance terms

Captive Insurer Consultancy Key Contacts