Managing captives in today’s harsh climate

It’s that time of year again when captive professionals from around the globe gather in Cayman to enjoy all the hospitality, networking opportunities and updates on the world of captive insurance that the Cayman Captive Forum offers. Business Editor Lindsey Turnbull takes a preview at this most popular conference and reports.

Quite apart from the always well chosen speaker list and in depth topics discussed, a big draw for industry professionals has to be the “extra-curricular” activities woven into the Cayman Captive Forum, which gives everyone the chance to network on informal and enjoyable surroundings. For example, the conference kicks off on Tuesday 1 December at 7am until midday with a 48 person golf tournament, held at the host resort, The Ritz-Carlton’s Blue Tip golf course.

Ron Sulisz, Insurance Managers Association of Cayman chairman gives some background to the conference: “The Cayman Captive Forum is the largest reoccurring conference held in the Cayman Islands each year.  At the 2008 conference there were 861 attendees.  Even though the world economic status will have an effect on the number of attendees for the 2009 conference, it is not anticipated to be highly detrimental.  As of October there were already over 550 attendees registered, and from past experience, many people leave it until November to register for the conference.

“The agenda for the conference is set and there are over 30 separate presentations with over 80 speakers involved during the three day event. In addition to the educational sessions, there are scheduled networking functions each evening.  This year all of three evening networking functions are scheduled to occur on-site at The Ritz-Carlton either around the pool, in the exhibitors’ area or on the beach.”

A series of tutorials starts the following day, covering subjects entitled an Introduction to Captives, Tax Beginners, Beyond Basics – Managing captives through incredibly difficult times, Tax Advanced,  Segregated Portfolio Companies and Actuarial views – Consulting Actuary vs. Auditor Actuary. The tutorials therefore cover all the ground that attendees would need to benefit from the conference, from the basics up.

Leader of Government Business McKeeva Bush will give a welcome address to the conference, shortly followed by the keynote speech by Stuart Varney. Business journalist Stuart Varney serves as a business contributor and substitute host for FOX News Channel’s Your World with Neil Cavuto. British-born Varney is a frank, no-holds-barred veteran whose assessment of worldwide politics as it relates to economic trends, opportunities, and hazards is fresh, insightful, and comprehensive.

Another frank, no-holds-barred veteran of the business world then takes centre stage, as the Chairman of Cayman Finance (formerly known as Cayman Islands Financial Services Association), Anthony Travers takes a timely look at the state of offshore business. This session will concentrate on the issues raised regarding offshore jurisdictions and will discuss the mischaracterisations that exist in the offshore world and the reasons why.

An interactive panel of captive owners, support staff and service providers will then discuss strategies for compliance with the Cayman Islands Monetary Authority new Rule on Risk Management for Insurers. Compliance rules to be discussed include: conducting a risk inventory, utilising the obvious, methods for evaluating and assessing materiality, documenting the effort, maintaining currency of the effort, interfacing with service providers and communicating with the board of directors. The panel is comprised of Ruth Kilduff (moderator) – Integro Insurance Brokers; Ellen Banach – Southcoast Health System; Clare Bello – Vertical Claims Management; John Rogers – Berkshire Health System and Gordon Rowell – Cayman Islands Monetary Authority.

The afternoon is again split into different tracks so attendees can get the most out of their conference time.

Topics under discussion include: United States healthcare economics: major changes under the new administration; admitting independent physicians into your captive and risk management observations of a secret shopper (whereby the speaker entered a hospital emergency room with classic cardiac symptoms and observed as a “secret shopper” how the hospital, the staff and physicians treated him throughout the stay and through various tests. After this presentation was given to the hospital in question, hospital management made many changes.)

Group captive structures will also be under the microscope with panelists looking at the benefits and problems of different group captive structures. This will be followed by a cooperative focus for group captives. This track closes with a look at group captive collateral requirements in a difficult market.

Collateral has emerged as one of the key areas of concern for the alternative risk transfer industry. Protecting the issuing carrier company’s credit risk along with member to member obligations in group captives where the members are joint and severally liable has never been more important. This session will describe creative ways to achieve this protection while the group captive remains a competitive alternative to the commercial market.

Sulisz explains why the emphasis on this day focuses particularly on healthcare captives: ‘In the Cayman Islands captive industry almost 36 per cent of the 787 captives are healthcare related.  During the afternoon sessions, it is noticeable that there is a higher percentage of the topics that deal with healthcare than any other captive conference in the world; however since a large majority of the attendees to the conference each year are from the healthcare industry, it makes sense to cater to the masses.”

Sulisz says many of the speakers in the healthcare session come from prominent healthcare systems in the United States or are prominent consultants in the insurance.  Three of the prominent consultants are Bill Cassetta (Honigman), Tom Hermes (Towers Perrin) and Tom Jones (McDermott Will & Emory) who for many years now have been speakers in one or more of the conference sessions.  He says that several years ago these three individuals were honoured by the Cayman Islands government for their significant contribution to the Cayman Islands captive insurance industry. 

He adds: “Even though there is a large healthcare content in the educational sessions, more than half of the topics are not healthcare.  There are sessions for strategies for compliance, evaluating risk factors, integration of risk management and claims management, risk financing, updates on the insurance market place, equipment maintenance management programs, accounting and three sessions relating to group captives.”

A cocktail session in the Exhibitor Hall and Ballroom Terrace at The Ritz-Carlton closes the day, to allow attendees to properly browse all the material provided by the event’s sponsors.

The following day affords attendees the same level of expert information and updates, with discussions on the global economy impact on the market (given by Craig Wright, chief economist at RBC); 2009’s top 10 global risks (the findings of the 2009 Global Risk Management Survey conducted by Aon Corporation presented by Aon’s Stephen Cross), and an investment panel which will be tackling typical, not-so-typical, and downright unusual captive investment scenarios.

The afternoon will see another split in the proceedings with various tracks on offer for attendees to enjoy. The evening finishes with a fireworks display during a networking reception and for the really keen golfers the following day sees another 48 person golf tournament.

Sulisz concludes: “The organisers of this conference, the Insurance Managers Association of Cayman, are extremely grateful to KPMG who are once again the main sponsors for this event.  In addition to the main sponsors, the organisers thank the several returning key sponsors – Butterfield Bank, Deutsche Bank, PricewaterhouseCoopers, Royal Bank of Canada & Wells Fargo Insurance Trust; and the several supporting sponsors – BDO, Captive Resources and Kensington Management Group, Cayman Financial Review, Cayman Islands Government Ministry of Finance, Deloitte, Greenlight Re, Integro Insurance Brokers, PRP Performa, Vanguard.  Without these sponsors the conference would not be the success it has been.”

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Former Leader of Government Business, Kurt Tibbetts with IMAC Ron Sulisz at last year’s conference.

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