I have longevity and experience in the captive insurance asset management business, having been working with captives since 1991, and have been witness to the multitude of changes over the last 30 years.

As a “student of the business” I have learned by attending conferences and through experience, and having had that experience recognised I have been a featured speaker in Bermuda and Cayman on asset management for captives for over 20 years. As a further testament to my commitment I recently completed my Associate in Captive Insurance certification making me more valuable in asset management as I have an even deeper understanding of the workings and needs of captives and captive owners.

On the asset management side we have seen numerous changes to the industry in recent years. Many of these changes are designed to protect retail investors, but there are also many that affect captives—particularly offshore captives in terms of enhanced due diligence, disclosure of ultimate beneficial owners, etc. These changes affect all offshore corporate accounts, not just captive insurance companies.

In many ways while these changes have dramatically increased the amount of paperwork needed to establish an investment account, in some ways it has simplified working with captives as there are now virtually no unknowns when working with captives. Changes in the future are typically reactions to new events, so it is difficult to see what additional changes are needed now—but we all know we will know them when we see them.

Market volatility during the peak of the COVID-19 crisis once again taught us the need for liquidity. I can foresee some changes being mandated on liquidity terms for certain portions of captive insurance portfolios.

I keep detailed files by domicile and update them frequently. I believe there is no substitute for “being there”: attending the conferences and continuing education sessions, reading, and talking to other service providers to stay on top of changes. The need to be a student of the business has never been more important than it is right now.

I learn a lot from speaking with captive-specialist attorneys and domicile regulators to stay compliant. I always avail myself of their time.

Last but not least is the International Center for Captive Insurance Education, which is an excellent resource not only for its classes but for connecting you with other professionals.

COVID-19 has dramatically affected my business in terms of getting out there and liaising with clients and the “new normal” of Zoom calls is not my preferred method of communication. I have always been hands-on.

In terms of asset management and asset managers, we had a full bear market and bull market complete their cycles in the last six months, which are record times for both and unprecedented in history. This allowed me (and clients) to see which managers protected clients assets most when the market went down, and who recovered fastest when the markets came roaring back.

These observations will be factored into future asset manager selections going forward, but I have to say I was extremely pleased with how my team of asset managers and internal staff worked under pressure.

Captives present many unique considerations and challenges. As insurance companies, they need to invest in such a way that they have the necessary liquidity, quality, and performance that is mandatory for insurance company portfolios. A challenge is that underneath the company are individuals with vested interests in the portfolio and performance, all of whom have other investments and managers often investing quite differently.

There is an education process in new captives, and keeping overall risk levels in captive portfolios in line with investment policy statement guidelines and prudent investing are of the utmost importance. The latest hot internet or cloud computing stock may be exciting for individuals, but they rarely have a place in captive insurance portfolios.

Conversely, while fixed income investing can be a bore to individuals, that asset class is a backbone for insurance portfolios, providing income, liquidity, and stability in volatile market environments.