ACE Progress Report Examines Current Trends Impacting Captive Programs

The Latest in a Series of ACE Progress Reports: Critical Research on Current & Emerging Risk Management Issues

PHILADELPHIA--(BUSINESS WIRE)-- The ACE Group of insurance and reinsurance companies today announced the availability of a new report that addresses the challenges, implications, and alternatives available for risk managers when they are evaluating the continuation or implementation of a captive insurance program in the current economic and business environment.

“Darwinism at Work? How the Current Economy and the Market Impacts Captives and Risk Managers,” is authored by Carol Frey, Vice President, ACE Risk Management, and Linda Kane, Senior Vice President, ACE Risk Management, a division of the ACE Group. Ms. Frey and Ms. Kane’s report examines the threats and challenges associated with captives, such as the consideration of non-captive options, the potential for collateral relief through a loss portfolio transfer, as well as the challenges that risk managers face when managing multiple captives. Their commentary is part of ACE Progress Reports^SM, a collection of white papers, articles, and executive reports on current and emerging risk management issues.

Ms. Frey commented on the findings of the report, noting that, “The primary and most important purpose of a captive is to assume predictable risks as well as unique or enterprise-related risks, which otherwise could not be supported or for which coverage was priced conservatively or unavailable in the traditional marketplace. In some cases, these exposures can be more challenging to commute or transfer, especially if a fronting structure is involved. One consideration is a novation to transfer liabilities from one captive to another, in an effort to consolidate management costs and liabilities.”

Ms. Frey concludes the paper with confidence that captives will continue to survive and evolve in order to fulfill an organization’s unique business needs. “Captives can support a global enterprise. Captives are not predatory, but can live side-by-side with, and even enhance, traditional insurance products – all to support the health and prosperity of the parent organization,” observed Ms. Frey. “These evolutionary characteristics are sure to outlast the current economic downturn and will undoubtedly drive the next generation of captives.”

To access the report, please visit: www.aceusa.com/News/Pages/ACEProgressReports.aspx. The material presented in the report is not intended to provide legal or other expert advice. It is presented as information only. Readers should consult legal counsel or other experts, as applicable, with any questions they may have.

ACE Risk Management offers comprehensive risk management programs and services that are uniquely designed and customized to assist companies in any industry deal with the significant costs of financing and managing risk. To learn more about ACE Risk Management’s products and services, visit www.aceusa.com.

Celebrating 25 years of insuring progress, the ACE Group is a global leader in insurance and reinsurance serving a diverse group of clients. Headed by ACE Limited, a component of the S&P 500 stock index, the ACE Group conducts its business on a worldwide basis with operating subsidiaries in more than 50 countries. Additional information can be found at www.acegroup.com.

ACE GroupCarla L. Ferrara, 215-640-4744
Carla.ferrara@acegroup.com

Source: ACE Group