Steve McElhiney CICA Board Chair Captives and CICA Moving Forward Adopt a watching strategy on Regulatory risks Broad based networking amp Student Initiatives Captive Innovation CICA Today ID: 803685
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Slide1
Alabama Captive Association – Presentation by Captive Insurance Companies Association (CICA)
Steve
McElhiney
– CICA Board Chair
Slide2Captives and CICA – Moving Forward
Adopt a watching
strategy on Regulatory risks
Broad based networking & Student Initiatives
Captive Innovation
Slide3CICA Today:
Building on partnerships
Going more global -
ECIROA Offering more education Networking Focusing on next generation Advocating on many fronts
Slide4Domicile-neutral trade association for captive industry 400 members, representing 27 countries Early objectives still drive CICA today
Best Practices Professional Development
Networking Advocacy Education
Captive Insurance Companies Association
Slide5CICA – Amplify Women
Foster education, influence and networking among women in the captive industry
Focus on more speaking and publishing opportunities for women
Focus on opportunities to serve on Boards
Focused networking opportunities
Slide6CICA Meeting – Student Essay Contest 2019 was first year – excellent feedback
2020 – increase RMI programs
Mentorship Program – foster leadership and development of young Captive professionals
CICA – Student and Industry Initiatives
Slide7CICA has formed the Captive Association Leadership Council (“CALC”) with various State and international captive association leadersMeetings 2 to 3 times per year to discuss emerging and advocacy issues that affect all domiciles
States are looking into economic impact studies of captive industry’s impact
Discussions of a Washington DC trip to meet with state delegations
CICA – CALC
Slide8CICA – Regulatory Challenges
Regulatory overreach
National Association of Insurance Commissioners (NAIC)
Organization for Economic Cooperation and Development
(OECD)
Base Erosion and Profit Shifting (BEPS)
State overreach
States seeking tax revenue – Washington State
Home state
Slide9Tall Pines Insurance Company (Vermont Single Parent Captive)
AM Best: “B++”, Stable, IV
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Slide10Contran Controlled Units
Contran Corp (Private Corporation)
NL Industries (NYSE & NL)
Valhi, Inc. (NYSE: VHI) Holding Co Kronos (NYSE: KRO) Chemicals
CompX (NASDAQ: CIX) Security Products, Marine Basic Management, Inc. Utilities and Land Development
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Slide11Why Form the Captive, Tall Pines Insurance Company?Risk management evolutionInsures only the risks of affiliated companies
Premiums are based on the loss experience, not overall industry rates
Eliminates insurance company overhead
Offers potential for lower, more stable premiumsCaptures investment income on premium and capital contributionsManuscripted policies—useful in energy nicheEconomic value accretion—tax neutral since inceptionSet deductibles—drives risk management culture at business unitsSome insurance outside of captiveAllows direct access to international reinsurance markets, which normally have lower costs and a greater willingness to underwrite risk
Slide12TPIC—Business Strategy
Independent profit center
Fundamental premise—managed in manner consistent with external P&C companies
Managed on an ROE basis—capital managementPreservation of CapitalBusiness model is exclusively focused on internal risks at this pointExperience with third party assumed business was poor (early 80’s)Placement strategy (reinsurance or primary insurance) is based on market conditionsPeriodically examine potential to retain more risk within the captive
Slide13TPIC—Captive Business Model
Risk into Captive
Reinsurance Overview
Reinsurance Process
Slide14TPIC—Our Success FactorsA long-term focusInsurance Operators involved with captive
Run like an insurance company.
Tax neutral—not a consideration—Risk Management tool/platform.
Active involvement in our state of domicile .Cultivate long-term partnerships with our carrier supporters.Alignment of interests.Risk Management & Safety are in our DNA.
Slide15WHAT CAN CAPTIVE PROFESSIONALS DO?
Tell a better story about captives
Get involved with your local association and CICA
Increased scrutiny is not going away Need to be part of a discussion Together we have a stronger voice