Captive owners ‘lack exit strategy awareness’
Lengthy run-off processes are employed by captive owners unaware of the ease of selling captives.
Captive novations are commoner in Europe than a straight-forward sale but if the parent just wants to dispose of the captive a sale is often the best option, experts have said.
Paul Corver, director of insurance investments at Randall & Quilter Investment Holdings, said that captive boards and executives often do not know what options are available. However, he added that Guernsey and Bermuda’s awareness is rising.
Corver said it is likely that run-off strategies will be more frequently sought in light of Solvency II, as companies with many captives want to slim down to only one or two vehicles to free up capital.
Increasingly companies like R&Q are looking at how to consolidate the captives acquired into the group, said Corver. “One company we acquired this this year has been amalgamated into another vehicle in Guernsey.”