EMEA CAPTIVE IS PUBLISHED BY NEWTON MEDIA LIMITED 15-17 Newton Way


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EDITOR Nicholas Comrie Email: ncomrie@newtonmedia.co.uk


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EMEA Captive—ISSN 2042-2512 Cover image


© istockphoto.com/Pobytov T


wenty eleven was a diffi cult year for the insurance industry, and while captives might have avoided record catastrophe exposures, the sector was nevertheless buffeted by troubled conditions. The impending Solvency II regime continues to dominate the landscape of concern, with captives wary about their likely treatment under the


measures due to be fully phased in by January 2014. According to Carlos Montalvo, executive director of the European Insurance and Occupational Pensions Authority (EIOPA)—who is interviewed in this edition in ‘Simplifying the complex’—captives can expect to be able to take advantage of a simplifi ed regulatory framework that will apply specifi cally to the sector, but concerns nevertheless remain.


Not everyone is convinced that Europe’s onshore captive industry will not be disadvantaged by


the new ruling. Offshore domiciles in the region that have opted out of Solvency II are certainly hoping that excessive regulation in Europe will attract a raft of new entrants. Talking with Guenter Droese, chairman of the European Captive Insurers and Reinsurers Association (ECIROA) in ‘Concerns, confusion and commercial carriers’, it is evident that despite EIOPA’s assurances, ECIROA and its members are still concerned about their likely treatment and their limited voice in the Level 2 discussions. The next two years of bedding in, and the test case of Bermuda’s application of equivalency upon its captive sector, will probably be the litmus tests.


The investment environment has further added to captive concerns, with the market’s fi nancial woes hardly conducive to sterling returns. Previously safe bets such as treasuries and government bonds have gone sour in Europe and until events reach a denouement—and it is unlikely to be a happy ending—matters are likely to continue to trouble the sector. Economic pressures have also encouraged parent companies to take a closer look at fi nances tied up in captives. Most in the industry, however, would argue that such funds are well positioned to provide benefi ts to their parent companies, as Alan Fleming, head of the captive special interest group at the Association of Insurance and Risk Managers in Industry and Commerce indicated in ‘Understanding your risks’. Captives remain an invaluable risk transfer tool.


Times are, however, changing. A hardening of the commercial market should bring some cheer. Captives can expect a rise in new formations in 2012. The investment environment should also, in time, improve. The architects of Solvency II are looking to assuage the concerns of the captive sector, even if certain worries linger, and the industry continues to grow in experience and stature. Putting 2011 behind us, 2012 should be a good year for the EMEA region’s captives.


The times they are a-changin’


editorial


emea captive 2012 03


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