This month, the Risk Retention Reporter looks at the captive management firms that assisted in the formation of the 33 risk retention groups formed in 2005, while providing ongoing services to these RRGs.
SEQ CHAPTER h r 1Two firms tied for first place last year--Risk Services Companies and USA Risk Group, with each participating in the formation of six RRGs.
Risk Services placed first as the captive management firm accounting for the largest number of RRG formations in 2003, with seven formations, and 2004, with 10.
USA Risk, which tied for first place in 2005 formations, placed third in 2004 with five formations.
As insurance companies, RRGs require similar services to those of traditional carriers, some of which are provided by an RRG's captive manager--a role not found in the operation of traditional companies, but required by most states that license RRGs under their captive laws.
Services provided by captive managers typically include:
o Basic accounting
o Regulatory filings
o Underwriting
o Policy management
o Claims
o Reinsurance placement
o Loss control
o Cash management
In addition to these services, the captive manager also serves as liaison between the RRG it manages and the captive regulator in the RRG's state of domicile.
In most states regulating RRGs as captives, the management firm is approved by the insurance department or captive regulator. In addition, Vermont requires that the individual captive manager also be approved.
In 2005, four firms participated in providing services for more than half of the RRGs formed.
Pro Group Captive Management Services--a captive management firm which had not previously participated in RRG captive management--came in third, participating in the formation of four RRGs formed in 2005. The firm, based in Carson City, Nev., was established in 2002 by Pro Group Management. The company was founded in 1994 to address Nevada's ailing workers' compensation system.
Marsh Management Services Inc.--which came in second in 2004 RRG formations with eight--placed fourth in 2005, with only two formations. Several captive management firms that accounted for the formation of two or more RRGs in 2004 accounted for fewer RRGs in 2005.
Looking at the four leading captive management firms for 2005 formations, a clear pattern emerges relating to domicile selection.
o Of the six RRGs for which Risk Services serves as the captive manager, four are domiciled in the District of Columbia.
o Of the six RRGs for which USA Risk Group serves as the captive manager, four are domiciled in Arizona.
o Of the four RRGs for which Pro Group Captive Management serves as the captive manager, all are domiciled in Nevada.
o Of the two RRGs for which Marsh serves as the captive manager, both are domiciled in Vermont.
Captive management firms that participated in 2005 RRG formations but had not previously served as RRG captive managers include: Automobile Consumer Services Corp., based in Huntsville, Ala.; Clarity Group Inc., based in Chicago; and Midlands Management Co., based in Oklahoma City.
As for the first quarter of 2006, which thus far has seen 12 RRG formations, Aon is in the lead among captive managers with four new RRGs, followed by USA Risk Group with two.
Want to continue reading?
Become a Free PropertyCasualty360 Digital Reader
Your access to unlimited PropertyCasualty360 content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Breaking insurance news and analysis, on-site and via our newsletters and custom alerts
- Weekly Insurance Speak podcast featuring exclusive interviews with industry leaders
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical converage of the employee benefits and financial advisory markets on our other ALM sites, BenefitsPRO and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
