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Real estate captive-en
Aon Risk Solutions manages over 1,250 captives globally, focusing on cost efficiencies and control for real estate companies, with nearly 80% preferring single parent captives. Their 2012 captive management survey highlights property and liability coverage as common insurances for these captives. To evaluate the potential of captives, Aon suggests a feasibility study, with a scoring system indicating the likelihood of value addition based on corporate finance and insurance costs.
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Real estate captive-en
- 1. Risk. Reinsurance. HumanResources. Aon Risk Solutions Captives and Real Estate Companies Aon manages more than 1,250 captives worldwide with annual premiums of over $21 billion, and invested assets totaling in excess of $58 billion. Captives are one of Aon’s core solutions, and we are constantly developing data to assist our clients in determining whether or not a captive will work for their company. Below are four charts from our 2012 Captive Management Survey that indicates: • Aon currently manages 25 captives for real estate companies. • The primary reason real estate companies establish captives is for cost efficiencies. • Property and liability are the two most common lines of coverage real estate captives insure. • Almost 80 percent of real estate companies with captives elect to establish their own captive rather than join an association captive. Captives by industry: Overview Financialinstitutions H ealthcare sector M anufacturing Food system ,agribusiness,and bevarage Pharm aceuticalsand chem icals Retailsand w holesale trade Construction servicesEnergy Professionalservices Transportation and logistics Businessand professional Technology and com m unications H olding com pany N on-classifiableAviation Pow er Entertainm entand leisure N aturalresources Realestate Public sectorM arine 16% 18% 20% 14% 12% 10% 8% 6% 4% 2% 0%
- 2. Ability to establishreserves 11% Cost efficiencies 16% Control on insurance programs 42% Access to reinsurance market 16% Cashflow improvement 16% Primary reason real estate companies have a captive Lines of coverage real estate companies insure partially or wholly through their captive Property Numberoftimeslineofcoverwritten G eneral/Public liability Professionalliability Environm ental O ther Productliability Surety W orkers’com pensation Auto insurance Em ploym entpracticesliabilityTerrorism 16 18 14 12 10 8 6 4 2 0
- 3. We’re here to empowerresults Garry McDonell Senior Vice President and National Director Global Risk Consulting t +1.416.868.5925 garry.mcdonell@aon.ca Peter Kennedy Senior Vice President and National Director Real Estate Practice t +1.416.868.5685 peter.kennedy@aon.ca aon.ca This publication contains general information only and is intended to provide an overview of coverages. The information is not intended to constitute legal or other professional advice. Please refer to insurer’s policy wordings for actual terms, conditions, exclusions and limitations on coverage that may apply. For more specific information on how we can assist, please contact Aon Reed Stenhouse Inc. Type of captive most often used by real estate companies Single parentcaptive Totalcaptives Association/group captive 3rd party reinsurance com pany Risk retention group80% 90% 70% 60% 50% 40% 30% 20% 10% 0 While a captive is a useful mechanism to manage retained risk and to tap into some markets (reinsurance) not otherwise available to non-insurance companies, it’s not necessarily the right solution for Canadian real estate company. To determine if a captive could add value over time, a captive feasibility study is required. A captive feasibility study ranges in costs from CAD 25,000 – CAD 50,000 depending on the amount of actuarial and accounting work required. We do not recommend such an expenditure lightly. To help you determine whether or not the investment in a feasibility study is warranted, we have a captive readiness survey that asks a number of questions about corporate finance, philosophy, objectives and insurance costs. View the survey here: https://www.surveymonkey.com/s/captive_readiness If you decide to complete the survey, we will score it and give you our evaluation of your captive “readiness.” The scoring is simple. If you score less than 50 percent, a captive is unlikely to add value, and if you score more than 60 percent a captive is very likely to add value. A score between 50 percent and 60 percent means a captive may, but may not, add value. In that case, we review relevant questions with you to obtain some additional underlying detail so we can give you a reasoned recommendation.