Apollo
Apollo’s Andrew Gray and Matt Newman talk to John Savage about the launch of the “first captive syndicate of the modern era” managed by the company at Lloyd’s market
Apollo Syndicate Management launched Captive Syndicate 1100 in June — the first of its type at Lloyd’s — after the London (re)insurance market released a guide for applicants in January 2023, which allows companies to operate a captive within London’s insurance market.
The launch signals the start of a new initiative at Lloyd’s, where large captive clients can retain risk through their own Lloyd’s-rated syndicate instead of via more traditional captive models.
What motivated Apollo to pursue the launch of this pioneering captive syndicate at Lloyd’s, and what specific advantages does this model offer to your major global client?
Since the introduction of Syndicate 1971, our goal at Apollo has been to equip our core long-term partners with bespoke products and risk management solutions, from inception through maturity.
Among these solutions is the opportunity for them to host their captive syndicate at Lloyd’s, enabling them to retain risk on highly rated paper while maintaining control over their risk management processes. Drawing on our extensive real-world experience in establishing and growing syndicates, we are uniquely positioned to partner with entities aiming to achieve this.
We have numerous examples of maintaining close partnerships with our clients from the early stages of their growth to when they become significant players in their marketplaces, capable of retaining a substantial portion of their own risk.
The primary advantages of a Lloyd’s captive syndicate include allowing the organisation to retain significant risk within its own Lloyd’s capitalised vehicle. This comes with several benefits, such as Lloyd’s international underwriting permissions, which include the capability to underwrite direct insurance in 80 countries, and reinsurance licences that enable syndicates to reinsure local direct writers where Lloyd’s lacks direct underwriting permissions. This setup reduces the need for costly fronting arrangements and allows the captive to set and control their own risk appetites, retentions, and wordings, with Apollo serving as their Lloyd’s managing agent partner.
Additionally, captive syndicates benefit from sharing the financial strength rating of the Lloyd’s market, often resulting in lower collateral requirements and the ability to retain both first-party and related third-party risks.
As the first modern captive syndicate at Lloyd’s, what were some of the key challenges or hurdles you faced during the application and approval process, and how did you navigate them?
As with any pioneering effort, particularly when crafting new innovation, our team faced challenges that demanded creative thinking, collaboration, commitment, and patience.
In this venture, Apollo, our captive partner, and Lloyd’s are fully committed to success. Whenever obstacles arose, transparency and a willingness to explore potential solutions are paramount, driven by the knowledge that the ultimate reward would justify the effort.
Future captive syndicates now stand to benefit from innovation and the refined Lloyd’s captive proposition.
We at Apollo eagerly anticipate collaborating with new partners to take advantage of Lloyd’s captive syndicate.
How does this captive syndicate align with Apollo’s broader strategy and commitment to delivering innovative solutions and mutual success through long-term partnerships?
At Apollo, we have enjoyed a collaborative relationship with our global partner for several years, offering tailored (re)insurance solutions to meet their business needs.
Our shared commitment to innovation and aligned values have strengthened this partnership, ultimately leading us to establish a Lloyd’s captive syndicate together.
We take great pride in our ability to deliver customised (re)insurance solutions to some of the world’s most innovative clients. The bespoke Lloyd’s captive syndicate is a prime example of the diverse solutions we offer.
Apollo also brought the first syndicate dedicated to what was described as the gig economy but has now evolved into the broader digital economy to Lloyd’s (Syndicate 1971), the first Lloyd’s innovation consortium to the market, and has been a key contributor and mentor for the Lloyd’s Lab.
Lloyd’s guide highlights the importance of selecting the right managing agent partner. Could you share insights into your collaboration with the managing agent and how their expertise and support facilitated this achievement?
As a Lloyd’s managing agent, we possess deep expertise and a successful track record in establishing new syndicates at Lloyd’s.
Our innovative approach played a pivotal role in the successful launch of this new captive syndicate. By working collaboratively with our partner and Lloyd’s, we developed a proposition that delivers substantial benefits to all involved parties.
Regarding capital and risk management, how did you approach determining the appropriate capital requirements and risk mitigation strategies for this captive syndicate, particularly in light of Lloyd’s capital-setting framework?
At Apollo, we possess a wealth of expertise in risk management, actuarial science, and capital requirements, which is deeply embedded within our organisation. Our profound understanding of risk and Lloyd’s specific capital requirements allowed us to negotiate a capital agreement that met both our client’s and Lloyd’s expectations.
From an operational standpoint, what were some of the critical considerations in establishing the necessary legal arrangements, banking facilities, and licensing arrangements for the captive syndicate?
With the support of our external legal advisers, Norton Rose Fulbright, we developed a legal structure and relationship that met Lloyd’s requirements and addressed the complexities of a captive syndicate. Additionally, we worked closely with our partners to structure the captive insurance programme in accordance with all local licensing requirements, utilising fronting arrangements as needed. Liquidity and investments play a crucial role in the financial management of any new syndicate. To achieve this, we provide support and guidance on a variety of operational aspects, including risk recording, financial and regulatory reporting, claims management, reserving, exposure management, and outward reinsurance.
As the captive insurance industry continues to evolve, how do you foresee this pioneering captive syndicate model impacting the broader captive landscape and potentially inspiring other organisations to explore similar structures?
Lloyd’s is currently the only UK onshore domicile for captives, and it is the go-to marketplace for innovative (re)insurance expertise and solutions. Lloyd’s captive proposition is particularly thrilling and presents substantial potential benefits for organisations seeking to internalise significant risk.
Compared with other captive domiciles, Lloyd’s excels with its global licensing, financial robustness, and flexibility inherent in the Lloyd’s model.
In terms of governance and oversight, what measures has Apollo implemented to ensure adherence to Lloyd’s Principles framework and ongoing regulatory compliance for this captive syndicate?
As established managing agents at Lloyd’s with a track record of managing multiple syndicates, we at Apollo leverage our mature and robust governance framework that aligns with Lloyd’s Principles.
We adapt this framework to ensure that oversight is proportionate and accurately reflects the risk profile and operating model of the captive syndicate.
