All-inclusive captive investment product to launch
Wealth management firm London & Capital is planning an investment management product aimed at better use of captive and protected cell (PCC) company assets.
The new platform will offer a one-stop-shop solution for captive investment management, as opposed to captive and PCC owners sourcing multiple investment solutions or undertaking the duties in-house.
The new product arrives during a period of transition, as many captive owners are currently reassessing their captive's investment value. Technology manufacturer Honeywell, for instance, has managed to save over $15m in a year by investing the premium from long-tail risks.
Following the financial dislocation of 2008, many captive owners are still apprehensive about where they invest premiums, as many asset classes - particularly traditional safe harbours, like government bonds - lost value during the economic crisis.
Many captive owners need to increase the variety of assets they invest so as not to assume more risk, increase cost or start to lift premiums, according to Bob Smith, president of Sage Advisory.
“Captive owners should also make sure their money manager knows insurance and is proactive in expanding the captive’s investment universe,” he said.
However, a one-stop-shop solution will not suit all captive owners. John Harris, Wood Group’s group head of insurance and risk management, said London & Capital’s would not appeal to him as his firm’s captive lends everything back to Wood Group with the exception of $10m required to stay in the captive by Guernsey’s regulators.
Mike Squibbs, risk manager for Europe, the Middle East and Africa at UPS, took a similar tack. “We wouldn’t think about using this product because of our reporting line. Investments are all managed by our treasury department. I expect it would be the same for every captive that does reporting through its treasury,” he said.