Developed by Aon Benfield’s Structured Reinsurance team, CapTivate is a reinsurance product tailored specifically to captives, and provides reinsurance cover as a form of collateral, which is required of them by fronting insurance companies. It reduces the need for captives to hold cash or letters of credit, which are a more costly alternative.
In the case of Energi, the CapTivate cover was placed with a leading reinsurance company, rated A by A.M. Best.
Brian McCarthy, CEO of Energi Holdings, said: “With the changing financial environment, banks are now requiring letters of credit to be secured by liquid assets, at the same time increasing letter of credit costs to as much as 250 basis points. Aon Benfield’s CapTivate solution provides a more cost-effective methodology for single parent, group captives, sponsored captives and industrial captives like Energi.
Dan Malloy, U.S. head of structured reinsurance at Aon Benfield, added: “In today's current credit environment, captives are struggling to find adequate and affordable collateral to secure their obligations to insurance company partners. Aon Benfield has designed a solution that is an alternative to arrangements which are dependent upon bank issued letters of credit. Energi has become one of our first captive clients to take advantage of this structure, which is provided by an A-rated leading reinsurer at terms that make sense for all parties."
