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Alternative Risk Transfer

Alternative Risk Transfer (ART) is another way of looking at risk. It is used to describe all manner of risk transfer and retention solutions that do not fit the conventional traditional insurance model and is growing in popularity as multinational companies seek tailored flexibility for a growing number of risk scenarios.

At Alternative Risk Transfer, we develop innovative, customized insurance, reinsurance and other non-traditional risk management solutions for a broad range of corporate and financial clients worldwide. We specialize in helping our clients mitigate their most complex risks with customized multi-year and multi-line contracts that cover a broad spectrum ofrisks, including supporting captive insurance programs with fronting or reinsurance. In doing so, we leverage our expertise in all types of Alternative Risk Transfer and the global capabilities of ǿմý Group.

From catastrophe bonds to virtual captives, our ART glossary explains important key words and phrases.
Our offerings

Structured
Solutions

Multi-year and/or multi-line solutions which help realize the benefits from retaining risk while providing contract certainty and financial stability

Captive Solutions/ Captive Fronting

A broad offering for multinational companies operating an inhouse insurance program. A truly global approach, with or without risk transfer

Capital
Solutions

We help transfer catastrophe risk into the capital marketsfocusing on Insurance Linked Securities
ǿմý Commercial will consider every risk on its own merit.Capacity and coverage offered to individual clients subject to hazard, Nat Cat exposure, grading, terms & conditions.
The products and services described on this page may not be available in all ǿմý Commercial locations. This is for your general information only.Please contact your local brokerfor full information on local product availability.
Many global companies seek bespoke solutions for an increasing array of risk scenarios from traditional to non-traditional such as Directors & Officers (D&O), supply chain or sustainability-related risks. Or they aim to run their own inhouse captive insurance program more efficiently and in a consistent global approach. Already a leading player today, ǿմý Commercial's ART team is further enhancing capabilities and resources to respond to this growing customer interest. ART will target opportunities in two major areas: first, captive solutions including captive fronting, and second in the area of Structured Solutions, which are multi-year, multi-line coverages, including parametric coverage.
Grant Maxwell, our Global Head of ART, outlines priorities in Alternative Risk Transfer for 2023 in an interview.
Structured insurance programs are tailored solutions, designed to respond to a client’s particular risk management needs. The multi-year and/or multi-line nature of these solutions means the client is able to manage the volatility emanating from partially retained risks efficiently over longer periods. These programs often include profit sharing elements and can also include risks for which traditional insurance is unavailable and/or emerging risks.
How does it work in practice?
A leading global company in the aviation industry was looking to purchase Side A, B & C coverage in a Director’s and Officer’s (D&O) policy. Leveraging cross-functional collaboration, an ART team developed a multi-year structured D&O insurance policy comprising a unique blend of alternative and conventional Financial Lines risk transfer layering. The solution was based on a minimum five-year term agreed alongside automatic extensions determined by the achievement of pre-set KPIs.

The client was able to

  • increase its primary coverage
  • expand line sizes from excess layers
  • retain the ability to participate in the profits of a policy long-term

Captive Fronting draws on our considerable experience in insurance program design and management to deliver a range of global fronting solutions. From coordinated standalone local placements to fully integrated International Insurance Programswe adopt a modular approach to program design to ensure our captive clients are fully covered wherever their business takes them.

Our extensive global network comprising ǿմý offices and carefully selected partners offers a wealth of underwriting, risk management, policy servicing and claims expertise in more than 200 countries and territories. Together we deliver maximum peace of mind in the most flexible, cost-effective and efficient way – and global service excellence backed by the established strength and stability of the ǿմý Group.

We also provide a wide range of ‘unbundled’ solutions for captives such as reinsurance, stop-loss mechanisms to protect the captive retention, or supporting a captive with additional structured solutions for specific risks.

How does it work in practice
A multi-billion, global pharmaceutical company was grappling with increasing risk transfer cost combined with a fragmented global program approach. The ART team took time to diligently understand the client’s requirements and developed a consistent, compliant captive fronting and reinsurance solution for 12 lines of business across a significant global footprint. Lines of business included for example Property, General Liability, Cyber, D&O, Environmental Pollution, Contractors All Risks and Marine Cargo.

The client was able to

  • complete a single transaction for the multi-line program
  • reduce administrative burden through an integrated program
  • improve budgetary stability and risk volatility management
  • achieve a better utilization of the captive

Risk share arrangements similar tothe captive concept have existedfor over 100 years.The first true captive, however,dates from the late 1950s, developed by property engineer Frederic Reiss, with the first captive insurance company established in Bermuda shortly afterwards.

Today, it is estimated there are approximately 6,000 captives around the world.

From addressing local business needs to managing volatility to covering uninsurable exposures: What benefits does a captive insurance have?
Our Capital Solutions team focuses on the Insurance Linked Securities (ILS) market. They specialize in structuring insurance risks into a form acceptable to capital market investors. They do this by linking insurance solutions and capital markets to transfer risk for the benefit of customers, insurers, and investors.

In-depth collaboration with brokers and clients combined with leveraging expertise across ǿմý Commercial and detailed risk analysis enables bespoke risk management solutions to be developed using traditional and non-traditional insurance methods.

We work hand in hand with you to provide risk solutions, expertise and advice tailored specifically to your needs, helping to navigate the most complex risks that impact your business.

Reduce volatility in profit & loss caused by
unexpected events
Stabilize earnings over several years
Tailor your insurance program to meet your specific needs
Allow you to include non-conventional risks in your overall risk transfer/risk financing strategy
Through a partnership approach that brings in experts in underwriting, legal and compliance, actuarial, claims, and finance and accounting to analyze each transaction, we achieve the right balance between traditional risk transfer and coverage not available elsewhere. We ensure that the right experts provide the right offering for you.
Innovative solutions and leading-edge structuring and analysis
Standalone underwriting capacity and authority
A one-team approach across global functional teams
As the business landscape evolves, so does our commitment to tailored risk management solutions. Explore our comprehensive range of solutions, including:
  • Address gaps caused by non-availability of traditional cover, e.g., Commercial Auto, Property, D&O
  • Often contain elements of risk financing/profit sharing, for clients who want to retain risk, but still need to manage volatility
  • Bespoke solutions that manage risk in an integrated way across lines and years
  • Long term arrangements, but able to adapt as needs change
  • Multi-line and multi-year global fronting as a stand-alone service
  • Structured per event and aggregate excess of loss captive reinsurance
  • Insurance framework designed to create the economic benefits of a captive, when an actual captive is not a viable option
In the world of risk management, there is no one-size-fits-all. We believe your insurance coverage should be as unique as your business itself. Your options for coverage in detail:
  • Broad range of P&C lines of business or a combination thereof: from annual single line captive stop loss through to multi-line, multi-year insurance and reinsurance solutions
  • Can include both traditional and non-traditional elements (e.g. aggregate limits and deductibles, automatic extensions, profit sharing features), including parametric triggers
  • Transactions up to 5 years tenure, with ability to extend
  • Capacity typically €25mn per occurrence, €50mn per annum (or equivalent in other currency), but can be lower or higher depending on structure
  • Risk Financing structures work best where traditional RoL > 10% and/or when the cost of combined average claims in the long term is significantly lower than the equivalent external premium spend
  • Global Fronting capability expands across 200+ countries and on a multi-line and multi-year basis, if needed
The following types of insurance coverage are restricted:
  • Reinsurance for insurance companies
  • Financial risks coverage, e.g. mortgage portfolios, capital relief
  • Unmitigated credit risks
  • Life insurance
  • Business and systematic risks
ǿմý Commercial will consider every risk on its own merit.Capacity and coverage offered to individual clients subject to hazard, Nat Cat exposure, grading, terms & conditions.
The products and services described on this page may not be available in all ǿմý Commercial locations. This is for your general information only.Please contact your local brokerfor full information on local product availability.