Taking Control with a Captive. Introduction. Speakers: Scott Gemmell, Senior Vice President, Marsh Jon Schmieden, Director, Global Insurance & Risk Management, Alcon Laboratories Moderator: Roger Gillett, Member of the Bermuda Insurance Advisory Committee. Gaining Control of Insurance Spend.
Taking Control with a Captive
Risk Tolerance is…
“the financial ability to pay for own losses from cash flow, provisions and other available liquid funds as a result of risk related events”.
“an acceptable amount of financial impairment that can be retained without a material impact on the business”.
Risk Appetite is…
“how much risk an organization is willing to retain.”
Captive Year 1 Captive Year 2 Captive Year 3 Etc……..
Theory meets Reality
Director, Risk & Insurance
Alcon Laboratories, Inc.
Major DivisionsSales $US Millions
Consumer Products 825
Surgical Products 2,997
Total Employees 15,600
TRICL issues policies and arranges claims handling service and retains risk at agreed level.
Alcon pays premium
Fronting insurer issues policies, arranges claims handling service and pays claims.
Alcon pays premium to “Front”
Admitted Fronting Insurer
AIG, Generali or Aetna
Reinsurance cessions to TRICL.
TRICL retains risk at agreed level and pays claims within retention.
Reduced premium expenses for operating entities
Reduced the group tax expense
Supported business (certificates, M&A, etc.)
Financed loss prevention
Improved risk profiles through risk engineering and BCP
Centralize data and consolidate risks globally
Reduced administration and risk management expenses
Driven down Total Cost of Risk
Strengthened risk management organisation in terms of structure, processes and compliance