Solvency II has given captive owners a deeper understanding of what their captives can do for them and resulted in many captives “growing up”, according to panellists at the 2018 European Captive Forum.
Panellists in the ‘Solvency II and captives’ session, explained that in the build-up to Solvency II’s implementation many captives faced a decision on whether to stay in the market and or close their captive.
Speaking from her experience in the Irish market, Teresa Ready, senior supervisor, insurance supervision division at the Central Bank of Ireland (CBI), said: “Coming into Solvency II, many captives faced the question of ‘do we stay or do we go?’”
“The decision of whether to take it on and grow bigger or we decide to leave the market altogether. Those who stayed have grown their captive and now have more sophisticated strategies.”
“Where the captives have decided to stay in the market, they have grown. They have taken Solvency II seriously and they have done a really good job.”
Annick Felten, from the Luxembourg regulator, Commissariat aux Assurances, said many of the captives in the Luxembourg market were very small and had made the decision to close before the regulation came into force.
She commented: “Captive owners have told us that Solvency II has given them a better view of the risks held in their captives and future risks which may be taken on board.”
Felten added that Solvency II had meant more people were required to be involved in the management of the captive, which she said: “Makes the groups that own captives more aware of the tool they have.”
“It was a learning curve, but the captives are now grown up.”
She said: “Now when we meet with captive owners, it is them, not the captive managers as in previous years, who talk to us about the risks they have in the captive, the risks they want to take on board, and the strategic orientation.”
“I know that it was enormous of the industry to come to that level, and we are thankful that it has gone that way. I think now captives are grown up.”
