Congratulations Sandy & Ian!

sandyandIan2018Two of Vermont’s best in the captive industry have just been recently honored.

Sandy Bigglestone, Director of Captive Insurance for Vermont’s Department of Financial Regulation, has been named to the Business Insurance 2018 Women to Watch, that recognizes 30 women leaders doing outstanding work in risk management and commercial insurance worldwide.  Business Insurance readers nominated candidates for Women to Watch, and a panel of Business Insurance editors selected the honorees based on those nominations.  Also recognized in this list is Ellen Charnley of Marsh Captive Solutions. Sandy not only does outstanding work for the State of Vermont, but she has become a true leader in the captive insurance industry – someone who is sought out for her advice and her expertise on panels and forums across the country. And she does it all with a great sense of humor and aplomb!

Ian Davis took the reins at Vermont’s Department of Economic Development as Director of Finance only a short time ago and he has already made a name for himself. He quickly became the go-to guy for Vermont in its continuing conquest of the captive insurance world. Vermont Business Magazine named Ian to their 2018 Class of Rising Stars. Award recipients were selected by a panel of judges for their commitment to business growth, professional excellence and involvement in their communities. I couldn’t agree more!

Just two more reasons Vermont is the BEST place for captive insurance. Congratulations Sandy and Ian!

Thank you and I look forward to hearing from you!

Rich Smith
VCIA President

Fred Hackett 1933 – 2018

fred hackett

An early photo of Fred Hackett, in the 1980’s, second from left. Fred was instrumental in the foundation of the captive industry in Vermont.  (From left to right: VCIA Members and captive industry participants Julie Boucher, Fred, Mark Boll, Kathy Davis and Dan Labrie.) 

Former Vermont captive insurance founder and director of VCIA, Luther “Fred” Hackett, died of Alzheimer’s disease on October 8, 2018 at the Wake Robin Continuing Care Retirement Community in South Burlington, Vermont.

After graduating from the University of Vermont in 1955, he served in the Air Force before returning to Vermont to join his father in a new insurance business. He was Chairman of Hackett, Valine and MacDonald Inc., Champlain Captive Management, Inc. and Benefit Investment Advisors, Inc. He was an advisor to the Vermont Captive Insurance Association Board in the early era of the captive industry in Vermont.

In 1965 Fred was elected to the Vermont House of Representatives from South Burlington. He served on the Appropriations Committee, and as Chairman from 1969-1970 and served as republican majority leader from 1967-1968. He was Chairman of the Joint Fiscal Committee of the Vermont House and Senate in 1969. In 1972 he won the Republican Primary for Governor. He lost the Governor’s race to Thomas Salmon in the general election.

Fred was an environmentalist. He proudly assisted with the legislation in 1969 for preservation of certain land abutting the Camel’s Hump State Park, creating a state-owned Forest Reserve that formed Camel’s Hump State Park. He was instrumental in the creation of ACT 250 and heavily involved with the Clean & Clear Task Force for Lake Champlain.

Fred was a sixth generation Vermonter and spent most of his life building a business and aiding ventures he felt would make a positive difference to the future of his beloved State of Vermont. Over the many years Fred received numerous awards and recognition for all he did for our state, but I remember him as a man willing to give excellent advice to an upstart in Vermont (that would be me) with no trace of condescension, and being treated as an equal. I believe that graciousness and community spirit has been successfully imprinted on Vermont’s captive insurance community.

If VCIA had a flag, it would be lowered to half mast today. Thank you for all you did, Fred.

Rich Smith,
VCIA President

Credit Risk

Rich-monopoly-manWith the renewed tension between the US and China, well, lets’ face it, the World, on trade issues, it’s a good idea to look at a captive to help mitigate such risks. President Trump just announced $250 billion dollars in tariffs targeting Chinese products, on top of previous tariffs already announced. One could argue whether it’s a good policy or not, but the facts that there will be increased risks in international trade is a fact.

As countries ratchet up the rhetoric and retaliation, insurers are weighing how companies will deal with the pressure. Trade credit insurance protects companies from the risk that buyers will be unable to pay. If governments implement more tariffs, it could increase the cost of production and ultimately put stress on retailers and distributors to either raise prices on consumers or shrink profits. If the stress is enough to put the buyer out of business, the supplier would activate its trade credit insurance to get reimbursed for defaulted payments, for example.

As reported in Insurance Business America in June, the potential failure of an agreement on NAFTA also presents risks. If NAFTA fails or is dramatically renegotiated, companies will be forced to redraft their production models and their supply chains. That will take a lot of money, time and could significantly increase their credit risk.

Forward-thinking organizations with international exposure are now seeing the benefits of bringing their own captive insurance company into the equation as a way to control the risks. Thus, trade credit and political risk are joining the growing list of non-traditional lines that captive managers are now using to better leverage the benefits of their captive.  Structured many ways, using a mix of fronting and reinsurance, some of the benefits could be:

  • Diversification of the captive into trade credit risks, which are not historically correlated with property and casualty risks
  • Additional premium flow into the captive and resulting investment income
  • Non-cancelable trade credit insurance coverage
  • An additional set of experienced eyes on the credit risks that the customer is taking onto its balance sheet

Ultimately, trade credit insurance can help companies apply longer-term risk management strategies. However, the continuing trade war puts every part of the economy at risk, and any trade risk insurance can only help so much.

Thank you all very much, and I look forward to hearing from you.

Rich Smith
VCIA President

It was a sizzling conference!

2018collagefinalThanks to all who joined us in Burlington, Vermont, earlier this month for another great VCIA captive insurance conference.  More than 85% of conference survey responses rated our conference the best or better than most. With over 1000 attendees from 44 States and 9 countries, where more than 25% were captive owners, our annual gathering in August has grown to be THE captive insurance forum!

The conference had great energy – people liked the fresh format changes and extra touches, and, as one attendee stated the conference is “the best congregation of the captive industry in the U.S.” while another stated it was “the perfect environment for meeting the alternative risk and captive community”.  Many thanks to our sponsors and exhibitors without whom we could not put on such an event, as well as to the hundreds of volunteers who make it happen.

Now after a little break, we are back to work again looking out for the captive industry. We have a bunch of webinars being planned for the rest of the year, including Regulatory Compliance on September 20th, Captive Benchmarking on October 17th, State of the Union for Captives on November 15th with Dave Provost, Jim McIntyre and me summarizing all things legislatively current, and our annual Captive Taxation Update webinar on December 13th so keep your eyes on our website!

Thank you all very much, and I look forward to hearing from you.

Rich Smith
VCIA President

Time’s a Tickin’

 

rich-hourglass

Hey, you! Yes, you! If you haven’t registered for the World’s Best Captive Conference™ yet, it’s time to get to it!  The Early Bird Rates for VCIA’s Annual Captive Conference expire this Saturday, June 30 and we don’t want you to miss out on the savings.

Top 10 Reasons to Come to VCIA!   Register Now!

  1. The VCIA conference is a great source forcaptive career development and networking; earn CPE / CLE / ICCIE credit
  2. We offer sessions with focus areas for those new to captive insurance, those in accounting / finance, operations, and risk management. Professional development sessions are offered as well. Sessions are interactive and fun.
  3. Nearly 100 companies exhibit at the conference, featuring the newest industry product and service developments.
  4. The event will have two excellent keynote speakersJack Uldrich is a renowned Global Futurist and award winning author; he will speak on trends transforming tomorrow. Joel Cohen is an Emmy award winning writer and producer for “The Simpsons.”  He is a hilarious speaker and will discuss the Simpsons, creative process, group dynamics & innovation.
  5. Risk management tour for captive owners. Captive owners are welcome on a special outing to tour Green Mountain Power, Vermont’s largest utility, and hear from their Risk Managers.
  6. Panelists who are captive owners from some of the most prestigious organizations in the world teach at VCIA. All the industry’s key players will be at the VCIA Conference!
  7. For attendees guests or spouse, there is a fun Vermont outing available.
  8. Global collaborationmake connections with professionals in all areas of captive insurance!
  9. VCIA is great for those new to the industry, or long-time participants. Educational offerings for all levels.
  10. VCIA is a great opportunity to relax, learn and have fun with industry peers!

So get on it! We look forward to seeing you in Vermont in August.
Thank you all very much!

Rich Smith
VCIA President

Actuaries and Hang-gliding!

Senior businessman laughing at office meeting

Two of my favorite jokes about actuaries are:

  1. An actuary, an underwriter, and an insurance salesperson are riding in a car. The salesperson has his foot on the gas, the underwriter has his foot on the brake, and the actuary is looking out the back window telling them where to go; and
  2. Two actuaries are duck hunting. They see a duck in the air and they both shoot. The first actuary’s shot is 20 feet wide to the left. The second actuary’s shot is 20 feet wide to the right. The actuaries give each other high fives, because on average they shot it.

Funny? Well, a little bit any way. Actuaries kind of get a raw deal as being so geeky and numbers orientated that they have trouble fitting into polite company. But I don’t find that true, for the most part.  I did have an actuary friend of mine tell me in all seriousness that he dreams in numbers – really!

USHPA

Here’s where the hang-gliding comes in: we have a number of the best actuaries in the captive business speaking at our upcoming annual conference with the RRG risk management officer for the US Hang Gliding and Paragliding Association. It’s shaping up to be one of our most popular conference sessions and is sure to be fascinating.

Recreation Risk Retention Group (RRRG) was created in 2016 to insure the unique risks faced by the hang gliding and paragliding industry. Tim Herr has over 30 years experience as a transactional and trial attorney in both state and federal courts and has represented the United States Hang Gliding and Paragliding Association for almost 30 years.

Joining Tim at our session entitled Innovative Spotlight: Financing Unique Risk will be Bob Gagliardi, head of AIG’s captive management and US Fronting operations, and Rob Walling, Principal and Consulting Actuary with Pinnacle Actuarial Resources, Inc. Behind the scene we have Mike Meehan from Milliman and Aaron Hildebrandt from Pinnacle providing their guidance and actuarial expertise.

This session explores the process RRRG went through to add unique risks to their program and will include details of the expected and unexpected obstacles encountered in adding the unique coverage, and how the obstacles were overcome.   And here is the kicker that should grab your attention: actuarial considerations will be covered! So come and join us, learn something, and laugh a little…

OK, last joke: How much is two plus two? A marketing VP will say “22”. An accountant will say “4.00”. A mathematician will say “I can demonstrate it equals 4 with the following proof … ” An actuary will ask “What do you want it to equal?”

Thank you and I look forward to seeing you August 7 – 9!

Rich Smith
VCIA President

South Pacific…A Captive Story (Not the Musical)

cyclone-gita-tonga

I read a news story back a few months which I thought was pretty cool. The government of the Pacific Island country Tonga had received a $3.5 million pay-out from a captive, the Pacific Catastrophe Risk Insurance Company (PCRIC), following Cyclone Gita that struck the islands on February 12, 2018.

The PCRIC offers member countries parametric insurance which is designed to payout within 10 days after a triggering event, providing those in need with valuable funds very soon after an event occurs. Something this vital for vulnerable regions when addressing the impacts of natural disasters and climate-related events.  The PCRIC purchased reinsurance from four international reinsurers, with additional capital contributions from the Multi-Donor Trust Fund, which includes contributions from Germany, Japan, the U.S., and the UK, and is managed by the World Bank. Sure enough, funds from the program were transferred after seven days of the cyclone event, providing the Tongan government with appropriate financing to support disaster-relief efforts and effective service delivery to the affected areas.

Gita reached its peak intensity as a Category 4 cyclone before making landfall on Tonga on February 12, where its destructive wind strength caused wide spread damage.  PCRIC chief executive David Traill said, “It is clear that the increased level of coverage provided to Pacific Island countries through the establishment and capitalization of PCRIC by our donor partners has made a positive impact on the support we are able to deliver to the Pacific Island region.”

To me, this story reinforces the growing recognition of climate change and related severe weather events to the insurance world. I believe captives can and will play a more important role as the world confronts this problem.  At the upcoming VCIA Annual Conference August 7-9 there will be a terrific session called Natural Catastrophes and their Impact on Risk Management, which will feature the following experts sharing information on the potential impact of natural catastrophes on risk management:

  • Gillian Galford, an Earth Systems Scientist at the University of Vermont and lead author of the Vermont Climate Assessment
  • Howard Kunst, Senior Modeler and Chief Actuary, at CoreLogic
  • Jason Shafer, Professor of Atmospheric Sciences at Lyndon State Colleges, who focuses on the valuation of weather information within the private sector
  • John Ferrara, FCAS, MAAA, senior manager at Ernst & Young

Register soon at www.vcia.com to get the best rates! Early rates expire June 30th. We look forward to seeing you in Vermont in August. Thank you all very much!

Rich Smith
VCIA President