Whether you want to establish a new program, add coverage to an existing captive, need a loss reserve analysis/certification, or require projections of future funding, our experienced team can meet your needs. Following is a list of our most frequently requested captive projects:
Captive Feasibility Studies (Alternative Risk Transfer Program Design)
Feasibility studies allow you to make informed decisions about the capitalization of your captive for both internal and regulatory purposes, with a focus on future forecasts of your program’s profitability and solvency. Huggins can help you select risk retention levels that optimize the balance between risk, capitalization, and market conditions. Huggins can also assist you in determining the domicile that best fits your program needs.
Loss Funding Projections (Premium or Contribution Calculation)
Future loss funding for the premium to be charged by the captive insurer (or sometimes contributions to be made for a single parent captive) generally rely on commonly accepted actuarial methodologies, all of which contain certain assumptions about future costs, including; expected loss ratios, loss development patterns, retention levels, benefit levels, recoveries, and trends in costs and exposures. Huggins can provide alternative levels of funding corresponding to targeted probability levels (also known as confidence intervals) that will satisfy you and your board of directors as well as the requirements of insurance regulators.
Pro-forma Financial Statements
Pro-forma financial statements consist of an Income Statement, Balance Sheet, and Cash Flow Statement of the new captive, and are included in the Feasibility Study. Huggins can perform sensitivity analyses using various trend, loss, and growth assumptions to allow you to explore the impact of various factors on the overall expected financial performance of the captive.
Loss Reserve Analysis
Setting a reasonable accrual for unpaid loss and loss adjustment obligations is one of the most critical functions of the captive’s management when preparing the program’s financial statements. Huggins places an emphasis on using the program’s actual data to the maximum extent possible (rather than relying on external benchmarks) in order to reflect your program’s unique loss characteristics. We can also help with interim loss and LAE reserve reviews and roll forward projections.
Loss Reserve Analysis – Reinsurance Reserves
Reinsurance is used to manage the accumulation of risk within a captive by shifting some of that risk to another insurance entity. Huggins consultants can help you decipher your reinsurance contract language and we have the skill sets required to properly evaluate reinsurance risk transfer (a necessary function if you want credit for the reinsurance) and to help you establish loss reserves for your reinsurance.
Certification of Loss Reserves
Insurance regulators require that an actuary be appointed to certify the reasonableness of the loss and expense reserves held by the captive. Huggins actuaries meet the standards for acting as your Appointed Actuary and will issue the required Statement of Actuarial Opinion for Loss and Loss Adjustment Expense Reserves, as well as other related documents necessary for maintaining regulatory compliance.