Prysmian’s risk manager

Matthew Broomfield

In 2008, Prysmian Group formed a reinsurance captive in Ireland, which covers layers of property damage, business interruption, public and product liability, and UK employers’ liability. Prysmian is now considering introducing into the captive employee benefits (EB), credit insurance or marine and cargo, says Alessandro De Felice, group risk manager of finance, administration, control & IT at Prysmian Group.

Captive Review (CR): What is the reason for considering EB for the captive?

Alessandro De Felice (ADF): With EB (medical expenses), we are finding that the traditional risk transfer is not efficient because the level of claim compared to the level of premium is very low, therefore the loss ratio is very positive. It could be much more efficient for the company to completely self- finance this programme, even without any excess of loss protection, and then buy a fronting service and a service of claims handling from a traditional insurer.

CR: How many territories would the programme cover?

ADF: If you consider that our group in total is 22,000 people, then of course it changes according to the labour contracts from country to country, and the benefits granted by each. But we are talking about at least 9-10,000 people.

“With medical expenses we are finding that the traditional risk transfer is not efficient because the level of claim compared to the level of premium is very low”

CR: How have you found Ireland as a domicile since the captive was formed in 2008?

ADF: We considered the various domiciles by many criteria. The first aspect was that absolutely the domicile could not be seen as a “fiscal paradise”. Captives are a very specific business made for alternative risk transfer, risk financing and risks management activities, but sometimes outside people who are not experienced with captives and their function can perceive it as an exotic way to do something with money.

It was also important to find a location that was offering adequate professional services for captive management, and Dublin offered very qualified and highly professional companies for captive management activities.

Then we considered the availability of specialised consultants and services in the domiciles, and the regulatory advantages and disadvantages of captive domiciles. Then there also were logistical factors, in particular the fact that there were already legal entities consolidated by the Prysmian Group in Ireland.

About Prysmian

The Prysmian Group is a leading player in the industry of high-technology cables and systems for energy and telecommunications, with sales of some €7bn, with subsidiaries in 50 countries, 98 plants, 22 R&D centres and 22,000 employees.

CR: How does your captive sit within Prysmian’s wider risk management programme?

ADF: This is an area of activity that is done together with the internal auditing department, so we are implementing ISO31000 regime in the company, which also includes some aspects of enterprise risk management (ERM). We are not at the moment implementing a full ERM process, but proceeding on a step-by-step basis.

CR: What do you perceive as your main captive challenge?

ADF: Solvency II is a concern, but the QIS5 results relaxed me a little, in terms of the needs of capital requirements and equity. According to the study, I’m not seeing a particular stress to be supported by our captive. Of course there will be an issue to be addressed in terms of additional costs for running a captive, in terms of reporting standards and other things contained in pillars II and III, and these costs are growing larger and larger. However, I expect some additional exception from the EU about Solvency II for captives.

CR: What are your wider risk management concerns?

ADF: Of course, the magic words together are ‘risk’ and ‘management’, which are, generally speaking, being increasingly taken into consideration, particularly by aspects of the company that previously never considered it. This is one of the effects of the financial crisis, maybe we can say one of the positive factors of the crises. Companies are always working and operating in a way that really cannot allow for deviation from the process and business model because we are running an economic period that is not forgiving. So this is causing companies to be really focused on controlling their risks.

Alessandro De Felice

De Felice’s main areas of responsibility as a group risk manager at prysmian are risk assessment, analysis, monitoring and reporting, risk engineering and loss prevention, risk financing and claims management.

He is also managing director of prysmian Reinsurance Company Limited, based in Dublin.

He has previously worked with Pirelli Group as risk manager emea, and marsh & McLennan and Sedgwick.

Tags: Assesment, Captive, De Felice, Domicile, Insurance, Ireland, Pirelli, Prysmian, Risk management

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