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Captive-Trends 2018

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Why Letters of Credit Are the Most Popular Option for Captive Insurers

martin ellis-SF
February 20, 2018

A new Captive Thought Leader Video featuring Martin Ellis, manager of Comerica Bank's Global and Captive Insurance Group, and titled "Why Letters of Credit Are the Most Popular Option for Captive Insurers," has recently been added to the library.

Mr. Ellis 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. 

Fronts like LOCs because of their ease of use. An LOC may be filed away until needed, almost like a blank check, and rolls over each year under the evergreen clause. An LOC is irrevocable—meaning that a bank must pay if the LOC is drawn upon. 

Captives like LOCs because of their investment flexibility. Banks generally allow investments in equities and lower-rated corporate bonds, generating extra investment income and offsetting added cost. LOCs work well for group captives where members post LOCs to the bank as capital and the bank in turn issues a single LOC to the front. 

This section of the site, Captive Thought Leader Videos, currently features 61 short educational videos by 13 captive insurance experts. Among the topics covered in the 1–3-minute videos are micro-captives, tax issues, captive feasibility, captive domicile selection, choosing an auditor, captive management, group captives, healthcare captives, risk pooling, common myths about captives, how to manage a captive efficiently, what makes a captive successful, and benefits in captives.

Along with Mr. Ellis, the captive insurance experts featured in the videos include the following.

  • John Alberici, chairman, Alberici Corporation

  • Gary Bowers, tax partner, Johnson Lambert

  • Jeremy Colombik, president, Management Services International

  • Martin Eveleigh, chairman, Atlas Insurance Management

  • Alan Fleming, chairman, Airmic

  • Debbie Liebeskind, actuary, Human Resources, Towers Watson

  • Michael Maglaras, principal, Michael Maglaras & Company

  • Steven McElhiney, president & CEO, EWI Re, Inc.

  • Michael O’Neill, president & CEO, American Contractors Insurance Group

  • Hugh Rosenbaum, retired principal, Towers Watson

  • Bruce Wright, partner, Eversheds Sutherland (US)

  • Brady Young, president & CEO, Strategic Risk Solutions

Each of these captive insurance thought leaders has decades of broad experience with captive insurance companies, and they freely share their expertise in the videos. This collection constitutes a wealth of information on captive insurance fundamentals that will be especially valuable to newcomers to captive insurance. By watching one or two of these informative videos each day for a month, you will hone your knowledge of captive insurance fundamentals and trends.

There is no cost to view the videos, and you will find them in the Captive Thought Leader Videos section of More videos will be added in the future.



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