Beecher Carlson
CIT talks to Jason Flaxbeard and Matthew Takamine of insurance brokerage and consulting firm Beecher Carlson about being different in captive insurance
How do you view the onshore versus offshore debate?
Jason Flaxbeard: Bermuda and the Cayman Islands were the quickest to market and came into being before the US, so a lot of the legacy accounts are still in those jurisdictions. The deciding difference between domiciles offshore and onshore is often that offshore domiciles have a much better capitalisation structure. It is possible to write more premiums with less capital offshore than it is onshore. Having said that, there are taxation issues in offshore domiciles. Unfortunately, there is also a perception issue offshore too. Companies have been known to ask whether keeping money offshore is an appropriate use of American dollars.
However, offshore domiciles are beginning to really flourish and their growth is continuing. They tend to be the largest domiciles and they have become very good at regulating and looking after captives. Generally, as long as captive domiciles are well run, they tend to equal out. What you have to look for when selecting a domicile are the nuances. For example, the NRRA, which is a part of the US Dodd-Frank Act, may levy a tax on companies providing insurance coverage outside of their headquartered state. If you are headquartered in New York, you may look at New York over Vermont as a domicile for your captive so that you can manage that tax liability.
How do you work with your clients to evaluate these nuances?
Matthew Takamine: We do it on a client-by-client basis. We look at each client’s specific circumstances, which are key to them, and we carry out a domicile analysis comparing what we think would be the top domiciles for that company. We weigh a variety of factors, including geographical proximity to the parent company, the working relationship with the regulator, the cost of doing business, taxes and other relevant factors. We assess all issues and make a recommendation to the company on where they should be domiciled. For our existing clients, we have a duty to periodically review their current domiciles to see if they are client appropriate.
How does Beecher Carlson differentiate itself from its competitors?
Flaxbeard: Beecher Carlson’s history lies in alternative financing solutions and captive management. For more than 30 years, we have helped clients to explore and understand the many alternatives to traditional insurance, having pioneered many of the most innovative captive design concepts that exist in the industry. I would say that our key differentiator is that we are a captive manager and a consultant. We try to look at a captive and consult on new uses of a captive, better uses of assets that are in a captive and better ways of viewing a captive. Our competitors can be transactional in the sense that their consulting services do not join up with their other services, such as accounting. Each one of them has a consulting practice, but what we do differently is present all of our services together. Matt Takamine is capable of doing all of the consulting and all of the accounting for a particular client, as can most of the people on my captive team.
Another differentiator is that we are able to meet the SSAE 16 reporting standard for reporting on the internal controls in our organisation. It is very useful for public companies because it allows them to know that they can rely on the financials that we give them as our controls are being audited by an external party and they can consolidate those financials into their consolidated numbers without additional control work. Indeed, the SSAE 16 Type II report may even reduce external audit fees for our clients.
Takamine: There are some excellent managers out there, so we try to hire the best possible people as a means of differentiating the services that we provide. We are willing to spend more on hiring people who are qualified CPAs and are experienced professionals in the captive insurance industry. Some of our competitors outsource their accounting and back office operations to reduce their costs of labour, but to us, such practices result in a product that is more transactional rather than consultative, and that is where we can truly provide value-added services to our clients and reduce their overall cost of risk.
How does Beecher Carlson integrate its insurance brokerage and captive management services?
Takamine: Of the 30 or so captive accounts that we take care of in Hawaii, I would say that 40 percent are brokerage clients as well. We spend a considerable amount of time working with our brokerage team to properly service those accounts. The remaining accounts are clients who we only provide with captive management services, although we will often provide actuarial and other consulting services to them too.
There is a high degree of coordination between captive management and the other services that we provide. This is all of the time, whether we are building their captive, running it, fitting it in with their overall brokerage operations, or anything else. When these services are provided in an integrated, seamless manner, we can provide a better product.
Flaxbeard: Beecher Carlson is unique in that we offer a single profit centre model so that our clients have access to all of our national, top-tier resources without complicated political or local profit center mentalities. We understand that your exposures are different and work diligently to provide appropriate alternatives, across our service spectrum, to match your needs.
From a philosophical perspective, we try to offer the best services that we possibly can. Any skills that we have or products that we offer give us that extra ability to consult.
