How To Run A Captive Insurance Company

Transcription

1 Overview of Aon s Captive and Insurance Management Capabilities

2 Introduction There are over 6,000 licensed captive insurance companies ( Captives ) across the globe. Nearly all of these employ the services of captive insurance managers to look after their operational requirements. The captive manager provides expertise in the specifics of insurance company operations, knowledge of local laws and regulations, local staffing and an interface with other service providers. Outsourcing these services allows the captive owner to efficiently operate their captive subsidiary, without the expense of hiring additional staff. Aon is the world leader in the management of captive insurance companies. Our clients come from all industries and are of all sizes, ranging from Fortune 500 clients to small privately held companies. Worldwide, one out of every five captives is managed by Aon. Our captive management services are delivered by our specialist division Aon Captive and Insurance Management ( ACIM ). We employ over 470 people in the management of over 1,000 captives licensed in 29 domiciles. We handle a premium volume of US$25bn which emanates from clients across the globe. We are able to draw on the expertise within our global insurance, reinsurance, actuarial and consulting network. Our Global Footprint Europe 33.24% North America 54.87% Caribbean 4.00% Africa 0.88% Middle East 1.46% Asia Pacific 4.19% South America 1.36% Note: Captive owners by region 2

3 Aon s World of Captives More than 20% of all captive owners entrust the management of their captives to Aon. The excellence of our service is evidenced by a 98% client retention ratio. The captives that we manage have combined assets of over $150bn and write annual premiums in excess of $25bn. Covers written include all property and casualty lines, employee benefits, customer programs and customized policies to respond to emerging risks. We manage captives for parents of all sizes, from small privately-held entities to multi-national conglomerates Over $100bn $50bn to $100bn $25bn to $50bn $10bn to $25bn $5bn to $10bn $1bn to $5bn Less than $1bn We manage insurance companies for all industry groups across the globe. Avia.on Business & Professional Services Construc.on Services 1% 1% 1% 1% 4% 4% 4% 4% Energy Entertainment & Leisure 55% 55% Captives by 33% Owner Location 33% Africa Asia Pacific Caribbean Europe Middle East North America South America Africa Asia Pacific Caribbean Europe Middle East North America South America 2% 5% 5% 3% 2% 1% 2% 1% 5% 4% 2% 3% 3% 5% Captives by Industry 5% 2% 18% Financial Ins.tu.ons Food System, Agribusiness & Beverage Healthcare Services Holding Company Manufacturing Marine Natural Resources Non Classifiable 2% 2% 8% 3% 13% 7% Pharmaceu.cals & Chemicals Power Professional Services Public Sector Real Estate Retail & Wholesale Trade Technology & Communica.ons Transporta.on & Logis.cs Global Footprint Industry Expertise Financial Strength Technical Knowledge Excellent Results 3

4 Aon Differentiation through Client Service As captive insurance managers we act as an extension of our clients team. We work with each client to identify and select appropriate services to meet the specific needs of the captive entity. Our dedication to our clients, our deep bench and our exposure to over 1,000 other captives allows us to provide market leading service. Each year we review our service with our clients to ensure that all needs are being met and that we understand what is required for the forthcoming year. Our core services fall into five distinct categories: 1. Financial Accounting/Management Managing an insurance company requires specialized accounting skills as there are differences in the methodology of recording transactions when compared to usual corporate accounting. Our services include: Provision of management accounts; A comparison against budget and other specifically requested schedules such as investment details, and underwriting and claims information; Management commentary highlighting any significant items in the financial statements, budget variances, statutory compliance issues, etc.; Oversight and management of a timely and successful annual audit in conjunction with the captive s auditors; Effective management of operations and assets; Handling all correspondence in relation to the captive s continuing business; All of our reports and financials are peer reviewed prior to release and can be tailored to the specific requirements of our clients. 2. Insurance Services Preparation and issuance of policies and endorsements to ensure suitability within the overall risk financing objectives; Preparation and issuance of certificates of insurance where required by the captive; Assist with credentialing and claims history requests; Liaison with the captive s insurance brokers to ensure its efficient use as a core part of the risk management program; Collaboration with the captive s brokers to structure and place any required reinsurance program behind the captive; Coordination with the appointed actuaries for the captive; Maintenance, reporting and analysis of underwriting and claims statistical records; Underwriting functions such as captive premium recommendation and allocation. 3. Compliance Services Aon is responsible for ensuring regulatory compliance. We will act as the principal representative for the captive as set out under the provisions of the laws of the various domiciles in which we do business and fulfill the following duties: Maintain principal place of business in the domicile, if required Monitor the captive s compliance with insurance regulations and requirements contained in the applicable laws and, if necessary, make recommendations as to corrective action; Prepare, coordinate and submit the annual filings as required by the Law; Arrange for the payment of appropriate local government fees; Prepare and submit business plan amendments for regulatory approval, including the addition of new covers, changes in limits, rotation of directors, etc.; Liaise with the captive s appointed attorneys and auditors. 4

5 Aon Differentiation through Client Service (Continued) 4. Cash Management We undertake the management of cash, including: Coordination of the selected investment advisors to ensure timely reporting; Monitoring cash balances held in the captive s bank accounts and investing surplus funds on a timely basis in accordance with the company s investment policy; Execute checks and set up wire instructions within agreed limits of authority conferred by the captive s Board. 5. Board Meeting Services We provide services for the annual Board Meeting, including: Preparation of a comprehensive Board book of agenda items and supporting material, such as past minutes for ratification, financial and underwriting reports, claims reviews, auditor, actuarial and investment reports and special items for consideration by the Board, such as strategy reviews; Act as the captive s Company Secretary and prepare necessary resolutions and actions of the shareholder and the Board of Directors. In addition to the above tactical services, we also go above and beyond other managers by making the following strategic services available to each of our clients: Analytics Actuarial Budget Evaluation Assessment Management Financial Underwriting Compliance Coordination Reporting Review Expand Innovate Development Measurement Best Practices Benchmarking Key Performance Indicators 5

6 Aon Differentiation through Client Service (Continued) The importance of captive management to Aon can be illustrated by the following statements: Our Promise Benefits to YOU We will be with you every step of the way. We will understand and be aligned to your strategic objectives in our role as your longterm partner and trusted advisor. We will protect your reputation. We will ensure that there is the appropriate level of governance in place at all times. We will deal with all stakeholders and service providers confidentially and ensure all data is securely managed. We will provide best in class resources. We will provide a professional team with extensive industry specific knowledge. We ensure stability and security. We are a leader in the industry and have depth and strength in our resources. We take succession planning seriously and guarantee we have robust plans in place to ensure that we are always appropriately resourced. We will continue to invest in new ideas and solutions. We recognize that innovation is key to sustainability and long-term success... We provide the strength of the world s leading captive manager on your side.... and we invest continuously to develop effective solutions. We ensure industry leading service whenever you need it. Preparation is key. There will be no surprises. 6

7 Aon Differentiation through Personnel The Service Teams in each of our captive domiciles provide our clients with a wealth of expertise including accounting, risk management, insurance, and consulting. In addition, they provide access to resources within the Aon family, such as actuarial and analytics services, complex claims settlement experts and loss control specialists. Our deep bench ensures that we can offer consistent service across all disciplines. Each team is assigned to manage the day to day operations of our captives. Our team also focuses on: Identification and implementation of cost and work efficiencies; Development of client service plans to coordinate and manage all work flows; Meeting our clients operational objectives and adapting the captive to meet any changing needs; Assistance and support for expansion of the captive; Coordination of the various service providers to ensure provision of timely and quality work products. Senior Account Manager Account Manager Account Management Assistant Insurance Officer Internal controls and strict operating procedures are the foundation of our performance and operational capabilities Team members are assigned based on technical expertise relative to the company; Account portfolios assigned to each team member are reviewed to ensure they are balanced both in terms of the number of assigned accounts and to ensure there are no conflicting reporting deadlines; All financial statements and filings are peer reviewed prior to release; Regular staff training is provided to ensure that team members are: Up to date with the latest regulatory, legislative and industry developments, and Proficient with the supporting technology utilized in Aon, e.g., Globe (insurance accounting software program) and AonLine; The assigned team is responsible for creating a specific Operations Manual recording all facets of the captive s operations and processes including a client profile, key personnel contact information, service provider contact information, flowcharts and narrative descriptions of each process, control, authority, etc.; Our Captive Disaster Recovery and Business Continuity Plan includes processes to ensure that even if a disaster were to impact any of our offices then our clients would still have their account serviced in a timely manner. 7

8 Aon Differentiation through Captive Consulting Aon is unique among captive insurance managers in having a dedicated consulting group which provides our captive clients with a wide range of quantitative and qualitative consulting work. These services are provided by our dedicated Risk Financing and Captive Consulting practice ( RFCC ) which provides independent advice to our captive clients. An illustration of the services provided is shown below: Risk Finance & Captive Consulting Practice The Mission To bridge the gap that exists be expectations and the traditional marketplace through comprehen comparative analysis, and pract of risk finance solutions The Team Adrian Richardson, Managing Di (t) (c) Andras Bohm, Chicago, IL (t) (c) Derrick Easton, New York, NY (t) (c) Martin Jackson, New York, NY (t) (c) Steve Kahn, Irvine, CA (t) (c) Kevin Malbon, Los Angeles, CA (t) (c) Debbie Matthews, New York, N (t) George O Donnell, Somerset, (t) (c) Complex Risks: Advice, Strategy, Due Diligence, Implementation Charles Young, Irvine, CA (t) (c) Aon Risk Solutions Global Risk Consulting Risk Finance & Captive Consulting The advantages of having a dedicated consulting group for captive issues are: Commitment to keeping our clients apprised of key developments in the captive insurance industry on subjects such as Solvency II and the Dodd-Frank Act; Highly skilled consultants that work with a broad array of analytical tools and techniques to assist our clients in choosing the best risk financing approach for their particular situation including: Risk bearing capacity analyses to establish your tolerance for unbudgeted losses in the captive and outside; Dynamic risk modeling analyses to determine expected losses, volatility and the distribution of potential outcomes; Assistance with program design and stress testing for captive programs to devise and evaluate alternatives; Premium allocation modeling specifically developed to allocate risk charge backs fairly and with a robust rationale; Captive strategic review service to ascertain whether a captive is operating and being managed for maximum efficiency; Catastrophe modeling, designed for the insurance industry and focusing on event-specific probabilistic modeling to quantify risk for individual locations and for portfolios of aggregate risk. 8

9 Aon Differentiation through Technology Aon has constantly invested in technology to support our captive management practice. Over the last 10 years we have developed the leading captive management software Globe - which is a proprietary insurance and accounting software developed by Aon for our captive clients. We have also developed other tools to assist with streamlined captive management: Captive Industry benchmarking tools that provide reports and data from over 1,000 clients; AonLine web-based reporting, repository of client information, globally accessible 24/7; Aon RiskConsole a comprehensive, web-based Risk Management Information System; Aon Risk Office configurable, interactive online destination providing a single point of access to the most sophisticated tools and leading resources to improve the capability of our clients to understand, monitor and manage risk. These tools allow us to provide our captive clients with the most up to date and comprehensive reporting packages. Aon Differentiation through Dedicated Facilities We have developed a number of dedicated facilities to assist our captive clients meet their risk financing and reinsurance needs including: Access to exclusive captive reinsurance capacity for property, casualty and marine risks; Access to risk pooling to provide controlled 3rd-party business; European Union fronting capacity provided by our WhiteRock suite of protected cell vehicles; Access to low-cost Letters of Credit from leading banks in the US and EU. 9

10 Differentiating Aon from the Competition Team Advocacy Technology Facilities Consulting Innovation 470 experienced staff Multi-disciplined teams Support entire captive life cycle Globally based Regulatory challenges Informational updates Represent our clients interests Monitor tax, legal, audit, regulatory and solvency issues Cutting edge tools Industry leading benchmarking Data processing and storage Client connectivity Exclusive reinsurance Pooling Collateral alternatives Segregated cells Group captives Unique solutions Actuaries Claims management Risk finance Risk control Employee benefits Improve processes Stay ahead of new regulation Deliver new solutions Conclusion Aon has been at the forefront of the captive insurance industry for over forty years and is a world leader in both captive management and captive consulting. Our commitment to the captive industry is demonstrated by Aon s continued investment in innovation, technology and human capital. All of these key features are then used to deliver superior service to our captive clients. 10

11 About Aon Aon plc. (NYSE: AON) is the leading provider of risk management services, insurance and reinsurance brokerage, and human resource consulting and outsourcing. Through its more than 62,000 professionals worldwide, Aon delivers distinctive client value via innovative and effective risk management and workforce productivity solutions. Aon s industryleading global resources and technical expertise are delivered in more than 120 countries. Aon has recognized for the past 40+ years that captives can be used to reduce our client s overall Total Cost of Risk. The inclusion of a captive in a risk management plan can greatly assist in the strategic and tactical negotiations with insurance markets, the retention of risk in a measured, logical, and cost effective manner, and the transfer of catastrophic risk to the worldwide reinsurance marketplace. Our focus and dedication has made us the global leader within our industry as recognized by publications, industry observers, and most importantly, our clients, throughout the world. The integrated solutions we provide are drawn from every aspect of our global organization: Aon plc Aon Risk Services Retail Brokerage Affinity Programs Premium Finance Global Risk Consulting Select Personal Lines Aon Benfield Treaty Reinsurance Brokerage Facultative Reinsurance Brokerage Capital Markets Financial Advisory Analytics & Technical Services Claims Management Aon Hewitt Human Capital Consulting Employee Benefits Executive & Broad-based Compensation Employee Communications Business Process Outsourcing Benefits Administration About Aon Captive & Insurance Management Aon s Captive & Insurance Management team manages approximately 1,200 insurance entities worldwide including captives, protected and incorporated cell facilities, special purpose vehicles and specialist insurance and reinsurance companies. As a business unit within Aon s Global Risk Consulting group, we leverage the diverse risk consulting expertise required for a successful risk management program. Our consulting and management teams work closely together to implement and create innovative solutions. Global Risk Consulting Risk Control Claims & Engineering Risk Control & Mitigation Claims Advisory Services Valuations Fire Protection Services Energy Risk Engineering Captive and Insurance Management Formation Financial & Management Reporting Insurance & Claims Management Treasury Consultation Regulatory Reporting & Compliance Risk Consulting Actuarial & Analytics Enterprise Risk Management Busienss Continuity Management Risk Financing & Captive Consulting Risk Management Outsourcing Note: Readers Choice Award was discontinued after

12 AMERICAS EMEA APAC REGIONAL REGIONAL REGIONAL Business Development Alison Quinlivan (949) Business Development Michael Douglas (215) DOMICILES Arizona Kim Wack (602) Barbados Vinston Hampden (246) Bermuda Robert Johnson (441) Canada Louise M. Fung (604) Cayman Howard Byrne (345) Hawaii Christina Kamaka (808) South Carolina Mike Coulter (843) Vermont Bill Mourelatos (802) Business Development Noel McNulty DOMICILES Gibraltar Dermot Finnerty Guernsey Paul Sykes Ireland Alastair C. Nicoll alastair.nicoll@aon.ie Isle of Man Gaynor Brough +44 (0) gaynor.brough@aon.co.uk Liechtenstein Denis Kallaert denis.kallaert@aon.li Luxembourg Lambert Schroeder lambert.schroeder@aon.lu Malta Dermot Finnerty dermot.a.finnerty@aon.com.mt Netherlands Alex Van den Doel alex.van.den.dowl@aon.nl Sweden Martin Persson martin.persson@aon.se Business Development Vic Pannuzzo (656) vic.pannuzzo@aon.com DOMICILES Australia & New Zealand James Wong james.wong@aon.com Singapore & Micronesia George Ong george.ong@aon.com Switzerland Thomas Overtveld thomas.overtveld@aon.ch 12