McGriff has formed a new group captive platform and appointed industry veteran Steve Aldrich to lead the practice.
The new practice, McGriff Captive Solutions, will serve both as an advisory resource for companies looking for more cost-efficient ways to finance risk while also offering members the potential to earn their own underwriting profit. These economic outcomes, McGriff explained, will be tied to a client’s own performance as well as the group’s collective experience.
Group captives allow companies to collectively increase their retentions and share in the benefits of effective claims management and loss control.
Traditionally, these group captives have provided workers compensation, general liability and auto liability coverage, although recently there has been a trend in the vehicles also providing medical malpractice protection.
Group captives are designed to underwrite the risks of their members so that loss exposures are shared via a communal risk pool and then transferred out via collective reinsurance. As owners, the members of the group captive all benefit from the underwriting and investment performance of the platform.
The formation of the captive solutions platform is the next step in the evolution of McGriff and parent company Truist Bank’s alternative risk transfer operations, the company said. MBT Ltd, a Bermuda-based single-parent captive and reinsurance company that was founded in 2001 by BB&T, is already owned by Truist Financial Corporation and also managed by McGriff.
“Captives are a critical risk mitigation strategy for our clients,” said McGriff’s CEO Rick Ulmer.
“Steve was instrumental in the original formation of the Truist captive and is the right person to develop a strong captive strategy for our firm. He understands the business and is uniquely positioned with our McGriff industry practices and Truist Bank verticals to help drive the strategy, structure, and engagement between our various stakeholders.”
Aldrich (pictured) joined McGriff in 2001, and in his new role he will manage the company’s global captive programme formation for middle market clients. He will ensure programmes are in compliance and follow best practices, while Aldrich will also work with clients and broking partners to create new captive products and resources, McGriff said.
While Aldrich will lead the new captive practice, he will also remain McGriff’s industry practice group leader.
“Given the hard market we’re now experiencing, clients with strong balance sheets are looking for options to control their own destiny, rather than exposing their business to the up and down cycles of the insurance industry,” Aldrich said.
“I’m excited about building on our success and solid reputation in the captive and alternative risk transfer space with a new entity designed to position us very well for the future,” Aldrich added.
As this publication has previously reported, the current state of flux in the US commercial insurance market where pricing has continued to increase and carriers in some specific business lines have pulled back capacity or withdrawn altogether has shone a spotlight on the captive market.
AM Best highlighted late last month that the market dislocation could provide opportunities for the specialist captive market to increase in prominence as risk managers and corporates alike look to manage their insurance costs in the face of escalating rates.