The art of a protected exit.

Expertise for all closure scenarios.

Whether you’re looking to manage legacy programs such as pension longevity or close a captive, we’ve created a number of structures that can manage the changes your business requires.

There are many reasons your organization may choose to close its captive: the desire to eliminate the variability and volatility of long-tail liabilities, a change in company direction or market focus, rationalization in the aftermath of a merger, or the result of regulatory developments. Artex is seasoned in all possible scenarios. We have solutions and insight that aid you in developing the most efficient and cost-effective solutions, for better risk management.

Mitigate longevity risks with solutions for pension sponsors.

Longevity risk – essentially the risk that retirees will live longer than expected and require additional, unaccounted-for pension payments – is a serious risk that cannot be managed through investment strategy alone, particularly in times of economic fluctuation. Artex as the market leader, offers risk transfer solutions to help mitigate this risk and secure certainty for a pension scheme’s future liabilities and member benefits.

Legacy liabilities exit solutions: many options, more opportunities.

There are several options available, depending on the structure of the entity and the requirements of the domicile in which it is located. These options include a novation or loss portfolio transfer of all or a portion of the captive’s business, commutation, restructuring of liabilities and bringing finality to a book of claims – usually with fronting insurance or a reinsurer. Artex has expertise in creating better options that provide confidence and peace of mind.

Innovative solutions that lead to greater control.

Our approach to Legacy risk reduces exposure on many fronts, including release from collateral requirements, full finality of claim obligations, balance sheet clean up and potential accounting benefits on acquisition of companies with contingent liabilities.

Our experience in assisting entities with a captive in run-off by novating contracts into a protected cell to reduce vehicle run-off expenses provides you better risk management in the short and long term. We can manage the captive through the liquidation process and reduce the amount of parent company management time by transferring the insurance risks into a protected cell. Our process uses a blend of market insight and expertise to serve firms seeking relief from the ongoing management and expense of a continuous claims process. We also aid companies:

  • more than $500,000 in accrued liabilities
  • that have inherited large portfolios of claims through mergers and/or acquisitions
  • that have liabilities from discontinued operations
  • with captive insurance companies in run-off
The power of global reach

We provide asset management with access to investment management firms in Guernsey and the UK. This advantage, aids in maximizing the use of assets to meet claim obligations while boosting returns. We can also manage your liabilities to wind down the captive in an orderly way until the end and to settle all interests of the insured. This is an excellent option for shareholders with an average risk appetite and return on capital and who can set fairly realistic claim resolutions.

To find out our how legacy and run-off solutions can help you, start here.

Why work with Artex?

  • Access to an arsenal of strategies to effectively manage the run-off and generate reasonable returns for investors
  • Ability to reduce operational costs and accelerate the process of claims in order to close the company
  • Assistance with containing liability
  • Best-in-class service
  • Payment can be on commission or a straight fee

Pension longevity

We formed Iccaria Insurance ICC Limited, an incorporated cell facility domiciled in Guernsey, in partnership with PricewaterhouseCoopers LLP (PwC). Iccaria is designed for middle-market pension schemes to enable them to use incorporated cells to transfer longevity risk to the reinsurance market. As reinsurers cannot underwrite contracts of insurance directly to the pension scheme, an efficient and cost-effective solution is for the pension scheme to establish a captive insurance company that assumes the longevity risk of the scheme. The captive then passes on the risk to the reinsurance market on a back-to-back basis; i.e., with no retained risk. The transaction is negotiated directly with the reinsurance market via the captive so that optimum pricing for the longevity risk being transferred can be obtained.

This facility works because the captive insurer, as a legitimately incorporated and licensed life insurer, can transfer the risk all the way through to the international reinsurance market, which meets both Guernsey and international reinsurance regulations. Guernsey, as an insurance domicile, is fully compliant with international insurance regulatory best practices and has a wealth of experience in insurance management, including legal, accounting and actuarial service provision. It is also within easy access of London, which is home to a number of international reinsurers with extensive capacity to provide to pension schemes.

Additionally, Iccaria as an incorporated cell company (ICC) provides segregation of assets and liabilities, as each incorporated cell is a separate legal entity. This is important because the pension scheme’s longevity reinsurer will require the transaction to be adequately ring-fenced to guarantee rights, obligations and collateral. If the program has more than one reinsurer, then multiple incorporated cells can be used. Additionally, ICCs enable a corporate group structure to be created with an incorporated cell (or a number of incorporated cells) to achieve ring fencing but with lower administration costs than a traditional group of stand-alone, non-cellular companies would incur.

Our role as insurance manager.

The Artex team adopts a proactive approach in working with a pension scheme and its advisors to develop the necessary understanding, infrastructure, communication channels and agreed working methods to create maximum efficiency and convenience for all. Our services include:

  • Company Formation and Licensing, including ownership and legal structure, selection of service providers, risk management framework, solvency and capital requirements and forecasting
  • Negotiation & Closing of the Transaction, including planning, pre-closing preparation, closing and fulfilment
  • Ongoing management and quality control, including a coordinated approach to manage the insurance business, maintain the books and records and ensure compliance with laws, regulations, codes and rules

Artex has considerable experience in working with pension longevity risks, having worked with BT Pension Scheme (BTPS) during 2014 to form its ICC, which subsequently completed the first-ever pension longevity captive transaction.

Legacy Liabilities Exit Solutions

Many companies have, over time, accumulated significant amounts of accrued contingent liabilities, either through normal continuing operations or as a result of one or more acquisitions. These liabilities often arise from the assumption of risk in the form of large deductible or self-insured programs for workers' compensation, general liability, professional liability and other similar exposures. These balance sheet liabilities can have a material impact on a company’s earnings due to the uncertainty of the related amount and timing of payments for legal expenses or indemnity payments to third-party claimants.

Exit solutions include acquisitions, novations and loss portfolio transfers. Learn more here.

Loss Portfolio Transfers

Loss portfolio transfers (LPTs) are structured transactions that package and transfer a portfolio of known and unknown losses to a commercial insurance company in exchange for a fixed amount of consideration or premium. With an LPT, the company is relieved of its balance sheet liability (as well as any required related collateral) and, as a result, can clean up its balance sheet and achieve certainty of expense for what previously was uncertain and potentially volatile expense recognition.

Learn more about these solutions in our case study. 

The Art of Risk

At Artex, we believe there is more to alternative risk management. As a trusted leader and provider of diverse (re)insurance and ILS solutions, our global team operates at the intersection of art and science—where creative thinking meets expertise and superior outcomes are made. That’s how we’re able to fully understand our clients’ needs and deliver the most comprehensive solutions available.

Established in more than 30 domiciles internationally, we’re here to help you make empowered decisions with confidence, reduce your total cost of risk and improve your return on capital. At Artex, we believe in finding you a better way.

 

Learn more.

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