Reinsurance and Fronting

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Risk Pools Have Served the Insurance Market Admirably

A new resource from the Captive Insurance Companies Association (CICA) addresses misperceptions and outlines commonly accepted practices for risk pools. Hear from CICA's board chair, Joel Chansky, about the association's latest guidance document for risk pools.
February 05, 2019 Read More
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Captive Insurance Runoff Trends

According to EWI Re, runoff is increasingly seen as a means of allocating dedicated capital as an alternative permanent risk funding mechanism for entities seeking an exit from a particular segment of business. This has created a more secure global insurance system and has reallocated capital and insurance capacity efficiently.
January 08, 2019 Read More
  2019 Starting Lin-SF

Captive Insurers and the 2019 Reinsurance Markets

We look at early indications of renewal rates for 2019 reinsurance placements and comment on how they may impact the captive insurance market. Specifically, we review reports issued by JLT Re and Willis Re on the January 1, 2019, renewals and what captives can anticipate.
January 07, 2019 Read More
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What Is a Fronting Arrangement, and Why Do Captive Insurers Use Them?

An insurance pundit once observed that "fronting" is the same as "backing." That seemingly oxymoronic comment is not far off the mark in describing the relationship between a captive insurer and a fronting arrangement. Read on to find out more about fronting arrangements and captive insurance.
November 12, 2018 Read More
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Key Concepts for Captive Insurance Reinsurance Contracts

We take a look at some key concepts and reinsurance contract clauses that can help minimize the likelihood of a disagreement with your reinsurers. And, should these disagreements arise, the concepts and contract wording can provide additional protection to a captive insurance company.
October 31, 2018 Read More
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ILS in a Nutshell and Collateral in the ILS Market recently caught up with a few members of Wilmington Trust's collateral team to find out about their expertise with collateral trusts and how it relates to the team's involvement in the insurance-linked securities (ILS) market. Read on to find out about the ILS market and ILS collateral.
October 17, 2018 Read More
  Steve McElhiney

Growth in Reinsurance and Captive Insurance Runoff Transactions

Runoff and related transactions present an enormous opportunity in the property and casualty industry, says Steve McElhiney, president and CEO of EWI Reinsurance. There are many captive insurance companies around the world that are subject to using runoff solutions, and many great opportunities for growth in runoff transactions exist.
October 15, 2018 Read More
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US-EU Covered Agreement—an Overview

Eversheds Sutherland provides us with an overview of the US-EU covered agreement. The agreement will eliminate collateral and local presence requirements for qualified US reinsurers operating in the EU insurance market, and will eliminate the requirement for collateral for qualified EU reinsurers operating in the US insurance market.
September 24, 2018 Read More
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The NAIC Continues Work on the US-EU Covered Agreement

The National Association of Insurance Commissioners (NAIC) held its 2018 Summer National Meeting August 4–7 in Boston, Massachusetts. A noteworthy matter of interest was the NAIC's continued work related to the US-EU covered agreement.
September 24, 2018 Read More
  Growing Indicators

More Insurers Using Reinsurance Strategy To Manage Volatility

The latest risk appetite survey from Willis Towers Watson confirmed that risk appetite is increasingly central to insurers' business decisions. The survey found that, more and more, insurers are using reinsurance for earnings protection and volatility reduction.
August 16, 2018 Read More
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Parametric Insurance: A New Spin on an Old Product

Parametric insurance is not an indemnification product. Instead, parametric insurance is a coverage where a benefit payable is determined in advance of the policy purchase by estimating the loss as accurately as possible, subject to certain conditions being satisfied. The policy cost is based on a predetermined trigger.
July 09, 2018 Read More
  Steve McElhiney

Reinsurance Transactions for Runoff Are Often Misunderstood

According to Steve McElhiney, president and CEO of EWI Reinsurance, reinsurance transactions for runoff are generally not well understood. He says there is a perception that runoff deals involve failed companies and failed transactions. In fact, runoff has evolved to be a key strategic tool.
May 21, 2018 Read More
  Michael Maglaras-SF

Is Brexit the End of Lloyd's?

Michael Maglaras, principal of Michael Maglaras & Company, considers what Brexit means for the Lloyd's of London market and for those with captive insurance companies in the Lloyd's market. While Mr. Maglaras believes that Lloyd's is not going anywhere, he expects some changes.
May 07, 2018 Read More
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5 Reasons We May Never See Another Hard Insurance Market

Five reasons we may never see another hard market: an intellectual discussion all captive insurers should be having. For captive insurers that came of age during hard market conditions, the end of market cycles, if true, has significant implications. This blog post, reprinted with permission of James Twining, offers a peek into the factors driving this possibility.
May 02, 2018 Read More
  Steve McElhiney-SF

Captive Reinsurance Runoff Transactions

Steve McElhiney, president and CEO of EWI Reinsurance, says about one-third of global captive insurance companies are dormant, meaning they are being used on a limited basis, or they may be a result of a merger. While these dormant captives may still have ongoing transactions, there is a way to unwind a dormant captive.
March 27, 2018 Read More
  Steve McElhiney-SF

Runoff Transactions: Commutations, Loss Portfolio Transfers, and Assumption

Steve McElhiney, president and CEO of EWI Reinsurance, explains that different core reinsurance transactions may be employed to manage runoff liabilities depending on what drives the transaction. The common tools used for runoff transactions include commutations, loss portfolio transfers, and assumption agreements (novations).
February 26, 2018 Read More
  martin ellis-SF

Why Letters of Credit Are Popular with Captive Insurers

Martin Ellis, manager of Comerica Bank's Captive Insurance Group, explains why letters of credit (LOCs) are the most popular collateral option for captive insurers. An LOC is a simple one-page document that is universally accepted and governed by international customs and practices.
February 20, 2018 Read More
  martin ellis-SF

Captive Insurance and Collateral

Martin Ellis, manager of Comerica Bank's Captive Insurance Group, discusses how captive insurers use two main types of collateral. A letter of credit is issued by the bank to the front for a fixed amount. A reinsurance trust is a three-party agreement among the captive, the front, and the bank.
January 08, 2018 Read More
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Non-NatCat Insurance-Linked Securities: Identifying Opportunities

One of the most important market trends has been the rise in non-life insurance-linked securities (ILS) that transfer risks outside of the natural catastrophe space. Aaron Koch of Milliman provides an overview of "non-Nat-Cat" ILS market potential and offers his view on next steps.
December 13, 2017 Read More

2018 Reinsurance Outlook for Captives

Reinsurance is an integral part of most captive insurers' risk management programs. Due to a confluence of events, reinsurance pricing has been fairly benign over the last several years. However, this may change in 2018. Find out why captives need to focus on reinsurance renewals.
December 06, 2017 Read More