SRS makes leap into Europe
What motivations were behind the expansion of Strategic Risk Solutions to Europe?
Brady Young: Our North America business model has been very effective and successful having grown solidly since the management buy-out from Credit Suisse in 2002. Strategic Risk Solutions (SRS) is now the world’s largest independent captive management firm and intends to remain independent for the foreseeable future.
Expanding into Europe and deploying the successful business model is a natural growth opportunity for us. Until now, much of our time and resources have been focused on building the North American operations. Having previously worked in Europe, I have always been interested in working with Europe-based clients and partners. In North America, the captive market has reached a certain stage of maturity and we believe the timing is right to start up a risk consulting firm underpinned by a solid and reliable captive management delivery platform in the European market. We also wanted to wait for the right timing and individuals to lead and grow the business—individuals that know the market and hold the right experience and expertise.
What opportunities will the European office bring?
Stuart King: The timing is right for European expansion with Solvency II beginning to bed down. Captive owners are now open and very keen to grow and put more strategic focus on their captives. There is a certain amount of increased awareness among captive owners following the implementation of Solvency II of the potential to address underserved and emerging corporate risks rather than focus on the regulatory compliance challenges that they have endured in the past.
Solvency II has been a challenge for many captive owners with last year being the first year of implementation. I have been working closely with various multinational companies around some of the more practical challenges of Solvency II compliance, and have found that boards now have more control around the day-to-day reporting. The first year of implementation involved a lot of new reporting outputs, namely the own risk solvency assessment (ORSA) and the solvency and financial condition report (SFCR).
Many of the implementation challenges that presented themselves with Solvency II have been somewhat overcome and boards are now really focused on growing their captives to address underserved and emerging corporate risks.
What services will the European office provide?
King: The holding company office is registered in Ireland with a clear mandate and commitment to pursue establishing a presence in other key domiciles. The business is currently in the start-up phase. We’re finding our feet and building a solid and compliant foundation. Opportunities are already presenting themselves so we are quietly confident that we will be up and running and fully operational very quickly.
Andrew Berry: Consulting is a key part of our value proposition in North America. It has fuelled a lot of the growth we have seen and allowed us to expand into new domiciles.
We are looking to take a similar approach in Europe leading with strong risk and captive consulting and building the captive management capabilities in the domiciles that our clients favour.
Who will benefit from the European offering?
Brady: Aside from the clients we already serve at SRS, we can see there is an unmet demand and gap in the current market that we believe an independent firm can fill. By deploying the SRS business model in Europe, we expect to grow profitably.
We are confident we can establish ourselves successfully in the marketplace and support our clients, their intermediaries and insurance carriers identify growth opportunities for their captive programmes.
What swayed you towards selecting Dublin as the location for the new office?
King: Solvency II and other equivalent regulatory regimes have resulted in a broader and more level playing field across the European landscape.
It wasn’t the case of one location being better than the other when making the decision, as SRS Europe will operate in all the major domiciles.
That said, Ireland is home to many US multinationals and we envisage a certain amount of cross-collaboration with the SRS North American operations.
Ireland is emerging as a global leader in the insurtech space and we find such opportunities quite interesting in the longer term for our operation.
There is also a rapidly developing ecosystem around other types of promising technological developments such as blockchain, so we hope to put ourselves in that space and see what opportunities present themselves and how we can support that community.
Is there a plan to open up more offices across Europe eventually?
King: Yes, whether that is organic or by acquisition, we are continuing to evaluate.
Berry: SRS has experienced solid and steady growth since becoming an independent firm 15 years ago. All our growth has been organic.
We have expanded into new domiciles on the back of strong client demand in those domiciles and finding the right people locally.
That is how I see the European operation expanding: steady organic growth, taking on clients one by one and adding quality people as and when necessary.
Although we will consider acquisitions, it’s never been the way we have grown in the past—that’s not to say it’s something we will never look into.
Hopefully it will be steady as we go, step by step, and in the not too distant future we can come back to you and say we have a successful and profitable operation located in various European domiciles with the same success that we have achieved in North America.