Finance, Accounting, and Investments

  The word podcast underneath the icon of a microphone

Surplus Proving Invaluable to Captive Owners in Current Environment

Captive insurance companies holding surplus and excess capital have proven valuable sources of financing for their parents in the economic downturn. Speaking to Richard Cutcher in episode 39 of the "Global Captive Podcast," Ellen Charnley, president of Marsh Captive Solutions, discussed how captives have supported their parents during the pandemic.
October 02, 2020 Read More
  Hand holding globe with face mask on it on top of pile of dollar bills

Captives Advised To Remain Composed in Post-Pandemic Investment Market

The COVID-19 pandemic has had a major impact on insurers' investment activities, an impact that applies to captive insurance companies as well. In this environment, captives are advised to remain composed, not to make rash investment decisions, understand lessons the event has provided, and stay close to their core strategies.
September 14, 2020 Read More
  Billy Onion, Associate Actuary, Milliman

Pro Forma Financials' Place in the Captive Formation Process

Pro forma financials are a significant part of the captive formation process and provide an assessment of the expected financial results for the proposed captive insurance company, according to Billy Onion, associate actuary, Milliman.
June 24, 2020 Read More
  Two Dollar Signs with Guitar Necks on Black and White Background

"The Song Remains the Same" (The Peril of Ignoring Investment Risk)

Individuals and companies are often too quick to forget about investment risk, or assume the risk probability of the event is too small to happen. Real-life examples also illustrate that there will always be investors reaching for yield, especially in low-interest-rate environments, and when they should beware.
June 17, 2020 Read More
  Stephen Nedwicki-SF

Captive Insurance Companies and Investing

Investing for a captive insurance company revolves around the level of risk the captive is willing to take according to Stephen Nedwicki, vice president and institutional investment strategist with the institutional services group at Comerica Bank. Find out more on
November 04, 2019 Read More
  Exceptional Rating 480x377

KBRA Perspective: Captive Insurer Rating Methodology

Kroll Bond Rating Agency (KBRA) says that different rating agencies have their own specific methodologies and perspectives. KBRA describes motivators for captive insurance companies to obtain credit ratings and discusses their own rating methodology.
February 08, 2019 Read More
  Crystal Ball Businessman-SF

Trends in Long-Term Interest Rates

The decline in interest rates, which began several decades ago, has started to reverse. For captive insurers, this is a welcome respite, as most have watched the yield on their portfolios sink on a year-over-year basis.
February 04, 2019 Read More
  Question marks 600x300

5 Questions Concerning Your Captive's Asset Allocation Model

Given recent changes in investment markets, captive insurers should take another look at their asset allocation models. A recent Strategic Asset Alliance presentation presents five potential shortcomings in assets allocation models and five key questions to ask your investment manager concerning their asset allocation model.
April 04, 2018 Read More
  Investment graphic-SF

2018 Musings on Captive Insurer Investments

What does 2018 have in store for captive insurer investments? We look at investment return assumptions and new accounting regulations. We also suggest some questions that should be raised by the captive board members concerning the investment portfolio.
January 24, 2018 Read More
  Umbrella Yellow in Blue Group-SF

KBRA's Unique Global Captive Insurer Rating Methodology

For captive insurers struggling to determine whether it makes sense to secure a financial rating, there is now a new option. Kroll Bond Rating Agency (KBRA) recently released its new Global Captive Insurer Rating Methodology. Carol Pierce shares her thoughts on the new methodology.
November 27, 2017 Read More
  Due Diligence Investment Manager-SF

Why Captive Investment Manager Due Diligence Matters

With the recent revelations concerning the issues at Guggenheim Partners and the New York state pension fund, captive insurers should consider how they conduct investment manager due diligence. Find out what precipitated the scandal and how captive insurers should consider conducting due diligence on money managers.
November 22, 2017 Read More
  Financial Statements-SF

Accounting Rules Impact Captives Writing High Deductible Workers Comp Policies

Johnson Lambert recently released a new white paper on the revisions to Statement of Statutory Accounting Principles (SSAP) No. 65 regarding high deductible workers compensation policies. Any captive insurers using this type of policy need to be aware of the changes and their impact.
September 20, 2017 Read More
  Accounts Filing Forms-SF

PCAOB Adopts New Standards on Unqualified Audit Opinion Disclosures

Why should captive insurers care about new accounting opinion disclosure standards for public companies? The reason is that they bring the United States into closer alignment with international accounting standards and are likely to become "best practices," even for nonpublic companies.
August 28, 2017 Read More
  Passive versus Active 600x300

The Case for Passive "ETF" Investing Grows Stronger for Captives

For captives, especially smaller captives or group captives, passive investing can help reduce frictional investment expenses in a low yield, total return environment. A recent S&P webinar and "Wall Street Journal" article strengthen the argument for passive investing, thereby reinforcing a case for captives' use of passive investing.
June 28, 2017 Read More
  Stability 600x300

Risk Retention Groups Remain Financially Stable Despite Mixed Reported Results

A review of the reported financial results of risk retention groups reveals insurers that continue to collectively provide specialized coverage to their insureds while remaining financially stable, according to the latest Demotech report on the sector. While risk retention groups have reported net income, they have also continued to maintain adequate loss reserves while increasing premium written year over year.
May 26, 2017 Read More
  Kroll Bond Rating Agency-SF

KBRA Announces New Captive Rating Service

The market for captive ratings just expanded with the announcement from Kroll Bond Rating Agency (KBRA) about its new rating option. We interviewed KBRA's insurance specialists at the KBRA home office in New York, and our Q-and-A examines this new option and how it differs from the model-driven philosophy of other credit rating agencies.
May 08, 2017 Read More
  Passive versus Active 600x300

Is Active Investment Management Facing Extinction?

Today’s financial news headlines are filled with stories about the rise of passive investing as investors abandon active managers. Those who own captive insurers or who oversee management of their portfolios should understand the active versus passive management debate and why active investment management, at least for fixed income portfolios, often makes sense. Active management needs to evolve, but it will survive.
April 04, 2017 Read More
  Financial Statements-SF

Loss Disclosures for Short-Duration Insurance Contracts (GAAP Filers)

The Financial Accounting Standards Board has issued ASU 2015–09 for nonpublic, calendar year-end insurance company filers. This Accounting Standards Update requires additional disclosures to provide better insight into an insurer's initial claim estimates and subsequent adjustments and to help financial statements users understand the frequency, severity, and timing of future cash flows related to the estimated claim costs. This article summarizes the new requirements.
March 22, 2017 Read More
  Machine Learning-SF

Uncertain Times Squared: The Future of Investing for Insurers

What new ideas, technologies, and ways of conducting our lives do we see impacting our economy and financial markets? The future of investing for insurers, in the next 7–10 years, will see artificial intelligence and especially machine learning having a very pronounced impact on our careers, companies, and daily life.
March 06, 2017 Read More
  Expand Captive Horizon

Captive Insurance Industry Looks at What Is Next for Bond Yields, Inflation

One of this editor's favorite songs is Elton John's "Where to Now St. Peter?" from the 1970 album "Tumbleweed Connection." It seems extremely apropos to the bond market after the recent election results.
November 23, 2016 Read More