SRS Europe
Just over a year on from the launch of its European office, SRS Europe’s four person team, Stuart King, Annette Heaney, Malcolm Cachia and Mary McMorrow, discuss the company’s future expansion
How was 2018 for SRS Europe?
Stuart King: Last year went according to plan. We needed an operational set up and we have that now. We also have four full- time employees and are supported by the other 100 employees in the group. We now move into 2019 with a fairly sizable investment commitment from SRS group. We have the operational delivery platform ready and we have some key professionals in place, so it is about scaling.
What is SRS Europe’s strategy moving forward?
King: The implementation of our strategic plan is on track. Infact dare I say ahead of plan. We are culminating on the overarching strategy to provide independent premier level bespoke risk finance advisory backed up by solid captive management service.
It is a successful and proven business model at SRS Group so we are simply exporting to Europe.
The whole idea is that we get a highly reputable, highly professional, and high quality product out to the captives that need it at the higher end of the market. Working independently to solve complex risk finance needs of emerging risks and supporting clients challenge intermediaries for more effective risk financing strategies.
You are going to see a lot more staff additions to SRS Europe in the coming years. Much of that is down to giving people a platform to do innovative and new stuff so I think you will see quite a few big names joining us.
Annette Heaney: We felt that setting up a central servicing hub, availing of the standardisation of Solvency II making that a more linear and agile way of offering our services. That is when we decided to acquire Ark Insurance Management in Malta.
We will have a team of people specialised in the operational reporting activities and then by acquiring a regulated entity we will service clients across Europe, passport them through the regulated Maltese entity, and set up branches under freedom of establishment basis across all the major domiciles within Europe, commencing with the main ones like Luxembourg, Netherlands, Sweden, and Ireland.
We would then have local representatives on the ground within the local branches that would be available to serve with the clients and have the local linguistic, regulatory and legislative competency to service our clients there.
Malcolm Cachia: What we are trying to do in Malta is do most of the execution work, and build a lean and modern business model. Whereby, we will support the people on the ground servicing our international bays of clients and build a high standard, operating platform to roll out our services in Europe via the people on the ground in the branch operations on a consistent basis.
The aim is to build a centre of excellence to provide the full suite of insurance management services, and an outstanding end-to-end captive management service. Incubating new ideas with a regulator that is very supportive to innovation.
Mary McMorrow: At the moment we are three years into the Solvency II reporting cycle and I think it’s an opportunity to look at things with a fresh pair of eyes. From the captive perspective, I think there really is an appetite for a more meaningful proportionality and more uniformity across the domiciles–that is something that I think we are really equipped to do given the expertise and the presence of SRS Europe that we are going to have next year.
For the moment our plans for the first half of this year, we are starting off on a local basis and organising meetups amongst the independent non-executive directors in Dublin, which will extend to other insurance players as well as captive owners. We are going to cast the net out and hopefully come up with some salient topics how we can guarantee that governance is working as it should be.
What are your key areas of focus in 2019?
King: One of the benefits of Solvency II is that everybody has to be involved in the captive board. Owners are now required by regulators to know a lot more about their captive. Owners are challenging service teams more and I am not convinced they possess adequate experience to answer many complex risk finance questions, particularly for emerging risks. You get a lot more airtime with the CEO now from the captive owners. This is an opportunity for us.
Premium pricing in the market is trending upwards given the unusual level of natural catastrophe losses, capacity is also tightening. This will inevitably benefit the captive industry. What you will find in 2019 generally, captive owners will look to their captive to be more central to the risk finance strategy. Conversations at board level in the captive will generate some new and interesting ideas. One such initiative SRS is backing is and Carbon Risk Solutions.
Can you tell us about your work on proportionality for captives in Solvency II?
King: Solvency II has a review period coming up. Captives are onerously applied the same conditions as a commercial insurer. From the proportional governance standpoint we think captive owners are being unfairly treated. We are currently engaging with stakeholders like the European Captive Insurance and the Reinsurance Owners Association and the team at Federation of European Risk Management Associations to try to identify how best to get governance proportionality for captive owners across Europe onto the European Insurance and Occupational Pensions Authority’s agenda. There needs to be a proportionate approach to ensure captive owners can focus management efforts to grow their captives.
I am pretty confident. I don’t think it will happen in 2019, but, maybe 2020. We are gathering a consensus amongst stakeholders to determine the best approach and really take another go at getting proportionality on the agenda for captive owners
Have you set particular targets that in 12 months you want to have achieved?
King: If we speak in a year’s time and we have management teams in Netherlands, Luxembourg, Ireland, and maybe an acquisition or two in Guernsey or the Isle of Man we would be pretty pleased with that. Lets see.
