ALC-Executive Subcommittee
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- October 2, 2026
presentations in response to the captive manager RFP. There'll be, there are 3 presentations are from Aon, Artex, and WTW, which I think is Will's Towers and Watson, and they will go in alphabetical order. Each company has been given 30 minutes for their presentation and then we'll have time for questions. Um, we're also gonna take a real small quick break between the presentations to reset the room for the next presentation. Upon conclusion of the 3 presentations, we will deliberate and may not make a decision until the conclusion of
the broker presentations tomorrow. And um just as a reminder, uh, before each presentation, um, that anyone from any of the other company will have to leave the room during the other company's presentations, so. With that, the first Presentation is going to be from Aeon. Oh they're here. All you 3 are in. OK, well that's efficiency. Uh, if you would go ahead and introduce yourself for the record, uh, and then we'll get started with your presentation and then after that, we'll have the time to ask questions, OK?
Todd Denton
Unverified
1:14
My name is Todd Denton. I am the managing director of
Speaker 6
1:17
the local Aon office here in Little Rock, um, born and bred right here in Arkansas. Um, thank you for taking the time to hear our presentation today, um, Aon, which was founded over 50 years ago, prides itself in specialization and you'll get to see a couple of our specialty groups, um, this afternoon. afternoon and tomorrow morning. Thank you.
Senator Bart Hester
Unverified
1:39
Yeah, good afternoon. My name's Britton Brady. I'm a strategic account manager here in Little Rock with, uh, working with
Speaker 11
1:45
Todd, kind of my responsibilities really are to deliver Aon's products and services to our clients and kind of buck stops
Speaker 13
1:55
here really a long ways. Thank you. Thank you. There you go. Great. Thank you and good afternoon, everyone. I'm Jay Curtis. I'm with our captive practice of Aon up in Burlington, Vermont. I lead our business development and growth opportunities across the Americas. I am here representing Michael Coulter from our South Carolina office who if, uh, selected would be overseeing this captive Mike sends his regards. He had an unexpected
death in his family, uh, and so is tending to that today. I'm sorry to hear that. Thank you. We appreciate your time and want to take a,
Speaker 17
2:26
a, a few moments here to discuss, um, why Aon should be the selected partner here to manage your captive insurance company. Uh, we've got a brief agenda to help cover the written proposal that we put together, uh, we're gonna discuss, uh, some reasons why Aon should be the chosen partner, uh, explain a little bit about the process of the captive formation, uh, and then the ongoing management and advisory services that, uh, we
do provide to to many clients. Um, and then there was some discussions about how many uh hours and and needs of staffing that might be there, uh, required, um, from the various departments to manage a captive insurance subsidiary, so we'll discuss that a little bit in the, the common rules, responsibilities, uh, in an estimated timeline for that. Could you pull that microphone
just a little bit closer to you. Thank you. I'll move forward.
Speaker 19
3:12
Thank you. So we'll move to slide 4, which
Speaker 13
3:18
is understands how we serve our clients, right? Uh, we operate on
Speaker 17
3:22
a day to day basis in this manner, uh, 3 key, uh, uh, structures here understanding your risk. We take the time and effort to understand your risk. Uh, we have over 1400 insurance entities under our captive management practice that we manage. That's 1,004 captive insurance subsidiaries across the globe, um, and then another 300, 400 type entities which can be comprise of those captives which are protected cells. We also
manage a large number of traditional insurance companies where we do the financial and regulatory reporting for those entities. What does that mean? uh, being the largest and, and being one of the largest in large numbers doesn't always mean excellent service. However, how we go about managing our, um, captives under our management and working with our clientele is how we, we continue to drive very favorable results for our clients. Uh, we're not a boutique firm, but we. Provide national and global resources to our clientele to
bring boutique services, uh, we might seem like we're one of the the large giants, but uh you service team will make sure that you are treated, uh, as if they're the only clients that you work for with them. And so we have a dedicated group of team members that we've got outlined here, um, that have the experience, the know it all to, uh, manage an Arkansas captive insurance subsidiary, and we'll cover that a little bit later. Um A firm, you need a firm that you can trust and rely upon, right? We have a very good track record working with the Arkansas Department of Insurance. Uh, we
manage one of the largest captives here in Arkansas. We worked very closely with them, um, as that entity grew and developed and needed changes. Um, there was some very unique structural changes to that entity, so we work very closely with, uh, the, the Arkansas regulators to help them navigate through, uh, you know, real trailblazing the the legislation that was on the Arkansas,
Speaker 13
5:10
uh, books and records in order to make that. for that client. So, and then developing the innovative solutions. It's what we do. We live and breathe insurance is
Speaker 17
5:23
ever changing, uh, dynamic and your needs and your challenges are, are growing. Every organization, uh, right now is experiencing a very difficult times in the insurance marketplace, whether that's be the property market, casualty market, nuclear verdicts, and the auto liability industry, etc. Our team is, uh, we have dedicated to individuals that are out there looking to develop more solutions, innovative solutions, working with the legislature in order to modify uh the, the current legislation to make it relevant to the changing needs of organizations. You're a unique
structure and that uh you are, uh, the state of Arkansas here and part of that, uh, those changes in the legislation would come through yourself as well, uh, to address the needs of even your own captive insurance subsidiary. The public sector is growing in in popularity in the use of captives. For many years it was mostly the private sector that was using captive insurance companies, uh, but your needs and uh insurance needs are changing. as well and it's just as difficult for you to procure risk transfer insurance at an affordable cost. And so, uh, we're seeing a significant
growth in that public sector looking to form captive insurance companies. And, and we've been at the forefront of leading those uh those um implementations. You probably saw some disparity in our proposals in the pricing, uh, etc. of our captives, as I mentioned, we're not a boutique firm. We bring you the breadth and the depth of a hour or 60,000 employees globally. Uh, we have over 1100 public sector companies, um, that we helped serve and so even as a captive manager we work with all of the
various brokerage, um, firms across the the industry. Obviously there are some synergies that can be achieved, um, if in fact the brokerage firm and the captain manager our line, uh, but we work, uh, very closely with all firms, uh, in the captive business as the captive insurance company manager, we are an extension of your organization, your entity, um, right, the captive management services are very unique, um, in, in how we operate. We're executing uh based on the decisions that we're helping you make, um, and all of the results of the captive are for the benefit of you.
Speaker 13
7:30
So if we move to just what makes AN a little bit different. Um,
Speaker 17
7:34
we've got some just some statistics here to help walk through, um, obviously, we have a very extensive leadership team across our US practice. Mike Coulter has 25 plus years of captive experience myself, I've been doing this for 30 plus years and our group of leadership across our practice on average has over 25 years of experience. And what does that mean? That means that we can bring to you with a lot of experiences and, and, um, you know, different solutions that we have across our practice.
And and those individuals that have been a part of this industry and seeing it grow and develop, know how to navigate uh further changes that might be necessary. From an IT platform, uh, we've been investing significantly in our industry. Uh, we've invested and invested over $900 million in infrastructure in the last couple of years. We have a 3 year plan to invest that $900 million in our captive practice, uh, we've gone from our proprietary general ledger system into partnering with Microsoft, uh, in our D 365 and
6 system which helps you track not only the financial results, completion of a general ledger that's true and tried and tested, um, but also to be able to. To integrate your insurance program so all of the documentation and policies of the captive are, are monitored and tracked right into our system. And so this partnership we've been implementing over the last 3 years, and, and we're starting to see the benefits of that now for all of our client base. We also have a proprietary uh compliance system, uh, it's called governance risk and compliance GRC is the acronym,
and that's there to design to help make sure that you sub subsidiary is not only compliant with the Arkansas's regulations filing requirements, etc. but also from a risk and compliance corporate governance perspective, um, we can monitor and track results to make sure, uh, that your captive is a state of the art and continues to be compliant across all measures, including your own internal governance documents. And we have a dedicated insurance or excuse me, compliance officer, fully staffed for this role alone, uh, to handle that for all of our captives across the, the
universe. We also have our service teams are responsible for that, but they do report into the system. He monitors to make sure that everyone is
Speaker 13
9:42
completing that in a timely manner. From a talent perspective, we continue to make sure all of our staff are adequately trained, um, to make sure that they are, uh, staying abreast of accounting changes, insurance changes, etc. We have a very extensive, uh, dedicated team of individuals that
Speaker 17
9:53
train all of our staff, and so these are some of the resources that we put forward to make sure, uh, that we're bringing the best of Aon to you in, in your captive program structure.
We also do extensive external training so for individuals like yourself that may not have the experience or expertise of captive insurance. This is your, maybe your first go around of working and managing a captive insurance company. We, we spend an extensive amount of time to conducting training sessions to help you understand the nuances
Speaker 13
10:22
of owning and operating a captive insurance company. And we take a very Aon united approach, um, as I mentioned, we have 60,000 colleagues globally, um,
Speaker 17
10:31
as a manager, uh, as, as an employee in our
con or a contractor if you will of uh for your captive, you have access to that 60,000 employees. So when there are situations arising, we're happy to bring in those resources to bring you the expertise in your, in your particular industry. We have a dedicated insurance team, so helping to navigate the nuances of drafting insurance policies, reviewing reinsurance agreements, etc. We also, uh, have a dedicated group of 9 individuals now. I think it's 8 listed here. We've hired not expanded that team recently. So
there's now 9 individuals and they come from varying backgrounds of owning their own insurance agency, underwriters at insurance companies, um, and they all come with uh many credentials, um, supporting their expertise in the insurance field. They help with drafting those insurance policies. reviewing the reinsurance agreements, etc. but also help to have coverage in, uh, reviews, etc. as needed, um, for your captive. And finally we've got our risk finance captive consulting practice. We work very closely with our group. This is a dedicated group that works
exclusively. They do feasibility studies, uh, captive utilization and strategic reviews. What does that mean? That means on an average they do have 50 of these studies a year, and they focus on looking at alternative uses of your captive, and so you may start off with your, uh, say a property program in your captive, but very quickly you'll understand the benefits of a captive, and we're here, uh, you, you dedicated team is also experienced in doing that, led by Mike. Coulter and myself, um, but also we have another group of individuals that we bring in uh to share their experiences and knowledge.
Speaker 13
12:10
And I'm happy to pause anyways. I know we have a Q&A session later, but if by any means, if you have any questions throughout
Speaker 15
12:17
this discussion, I'd, I'd prefer to be members, you
Representative Jack Ladyman
Unverified
12:23
have any questions? All right. Thank you. Thank you, Mr. Chairman. Uh,
I was looking at the page you were going over there. Uh Under our unique platforms, you talk about benchmarking. Captive benchmarking, how do you do that and who's
Speaker 13
12:37
involved in that? Yeah, so our team has, we have, we manage over 1000
Speaker 17
12:42
captive insurance companies and so every year we conduct a benchmarking exercise whereby we gather the information on an anonymous basis. There is an ability to opt out of that if companies do prefer to opt out, um, but that allows us on an anonymous basis to bring you, uh, information about what other companies are doing, uh, in your segment, so the public sector, uh, what other agencies are using their captives? lines of business are they writing? What's their premium volume, etc. So it helps to, um, again, take a look at not necessarily we don't always like
to see what others are doing, uh, per se to mimic what they're
doing, but it shares what other ideas are out there. Thank you. All right. I don't see
Speaker 13
13:24
any other questions, so you can go ahead and
Speaker 17
13:26
continue with your presentation. Thank you. So just to discuss our unique platforms briefly, um, is, as I mentioned, we've invested significantly recently in this dynamics in 6 system and so this, uh, adds a lot of features to it, most importantly though, it's our comprehensive general ledger system, uh, to allow for
a very structured approach to uh tracking your financial results, um, and it gets audited as with over 1000 captive insurance companies, the majority of those need to be independently audited and so um we also have synergies where the audit firms will come in. and test our systems in order to then reduce the cost of your audit because they've already looked at the procedures and policies of coming in and and looking at that system. But it does allow for a comprehensive tracking of your general ledger, uh, of your account allows us to generate financial statements, uh, and
performance reports on the tracking of the underwriting results of the varying, uh, lines of business by policy or by segment, uh, however you'd like to to to cut and carve up all the data we're allowed to do that in our system. And I mentioned our our GRC platform in the upper right quadrant, um, is our governance platform, um, and that allows for us to input all of the requirements it is already being utilized for the other Arkansas captives and other state, uh, there's about 40 plus states that are out there having captive legislation with a
critical mass of within 10 to 15 of those jurisdictions, but we track all of that information. In addition to that, as I mentioned, we also, uh, manage a lot of traditional insurance companies, so there's much more rigorous, uh, requirements for those insurance companies and so we have a dedicated compliance team, uh, that their sole role is to go out and look at all of the various filing requirements to stay abreast of them. So you can rest assured by the use of this system and the experience of our team that your captive will always be compliant, uh, from our regulatory and corporate governance perspective. Our Aline feature in the bottom
right quadrant is, uh, our document retention or repository, uh, that would give you 24/7 access to the captive information we recognize as the outsource captive management firm that we house a lot of information that is your documentation and your information. This gives you access to that information at your fingertips. There's other features to that system as well, uh, but generally speaking that's what most captive managers are using it for captive owners is to access their data. We have full transparency overall. the transactions and information that we're housing, uh, in
regards to your captive, and so you will already have received some of this information, if not all of the information over time but this allows for a centralized location for it to be stored. And then we do briefly mention the captive
Speaker 13
16:06
benchmarking, uh, that we have. So the core services um of our firm uh include captive formation assistance, and that is
Speaker 17
16:12
to uh very in a structured, very disciplined in a manner, walk you through the formation
of your captive, and that is the review of the feasibility study that's being conducted, taking bits and pieces of that feasibility study and putting together a captive application for the chosen regulator to review. Uh, we have again a very disciplined approach to this, very comprehensive checklist that walks through all of the necessary information. that's needed, um, we usually will start with your desired license date and back backdate as to when we have deliverables due on that to make sure that that delivery date is, is met. So we understand that you have a 7-1 date, uh, to have the
captive license and so if that's your actual renewal date, then we would likely propose that the calf to be licensed in advance of that, uh, right now, even open a bank account it's taking 6 to 8 weeks, um, with the, the comprehensive uh KYC background checks that are happening. So we work with a. re g ul ator s to accelerate their review of the application as necessary to meet the needs of your organization, so. The captive formation services is the team that will be working on your account will be actively involved in that. We'll likely have regularly scheduled calls
with your, uh, in in your your representatives that want to be a part of that to walk through that uh process. We'll give you a weekly updates or more as necessary as to the progress. From our captive management services perspective, we offer a full suite of services and our price and our proposal, it does contemplate the full suite of services. However, some clients do choose not to engage us for all of those services and therefore that that price is uh to be determined as we work through the captive formation process, um.
You know, as, as some in some cases there are certain functions that can be managed, um, by your staff has, has chosen. And then the captive advisory and consulting. This isn't in addition to our service, this is part of our proposal, and that goes again with Mike Coulter and myself would always be consulting with you on alternative uses of the captive, um, or if there's challenges with your current placement, um, and, and how the captive is operating or just the experience that it's having, uh, we're, we're there to bring our expertise to help you navigate those challenges in the first
couple of years in particular, there's a lot of education that happens,
Speaker 13
18:33
um, that our firm will bring. Kind of looking at the captive formation and implementation, implementation timeline,
Speaker 17
18:37
um, it's generally, uh, can be up to a 90 day process, um, or even longer, a 120 day process. We've got some companies that have evaluated a captive for 10 years, um, we're hoping that won't be the case here, and you've got a chosen path forward, and so, um, but we're happy to help assist with that,
um, and so the first couple of on the very bottom, I put the timeline together, the first, uh, red, blue, and, and white boxes really relate to. the feasibility study, your review of that analysis and then a decision to proceed. We're going under the assumption that the decision has been made to proceed at this time, um, and then we start on the, on March 1st date, uh, to really start the, the process of reviewing that feasibility study, uh, getting an understanding of what the proposal will be and then helping to draft and and collate a captive application packet that will do, uh, put together
for the, uh, regulatory review. So the first part of that process can take anywhere from 30 to 60 days, um, and that's all depending upon how quickly decisions are made, um, and then if there's any modifications to the feasibility study that may be necessary as we work through that process. And then the regulators generally want 30 or 60 days to review the application. We'd worked with Arkansas to make sure that they could expedite their review, um, in order to meet the deadline of of July 1st.
So just looking through, how do we go about this? Our client, we use A on client methodology, which really is about discovery, um, development, um, delivery, and then a review process to make sure the cycle continues, so the discovery session is going to be having those kickoff calls, um, with your consultant who completed the feasibility study and are managing this process. Other individuals within this organization, um, and then planning for how we're going to lay out this whole process, right? As I mentioned, we use a very comprehensive checklist to
walk through as to the data needs, um, and then, uh, the decision making that would be necessary, such as who the officers and directors of this entity are going to be. Things of that nature we share ideas as to what other companies are doing, uh, which individuals are generally uh holding those positions and then there is some information, you know, additional information that's needed such as potentially biographical affidavits, um, of those chosen officers and directors. And then we developed the, the, the development stage is really implementation of that and so in
this case it would be the actual creation of the application, um, itself, uh, maintaining that checklist, collating the information, um, and then making sure that the application is very complete and thorough because we don't want any delays in their review. And then it's the uh delivery that's about the execution of the ongoing uh captive as it becomes operational. Right, and so this is the generation of the financial statements we'll share throughout this process. Uh, we'll be sharing sample financial reporting, working with uh the entities that would
be receiving those to make sure that the, the deliverables are identified, met, um, and identify that schedule that they would be needing in the frequency, um, etc. There's also other service providers that are engaged, so we'll be walking through and helping you to identify a qualified individuals, um, and firms that might be able to provide those services such as the independent audit, actuarial, and others. And then we'd lay out the uh the process for an annual stewardship meeting to meeting with your various representatives to identify how the captive is performing, how
Aon is performing, and how other service providers are performing to make sure, uh, that this entity is running efficiently in uh from
Speaker 13
22:18
an operational excellence perspective. On an ongoing captive management, the next slide on page 10, um, just identifies the common services as
Speaker 17
22:24
I mentioned, we've offered a full suite of our services, and that includes the, the major categories of financial reporting, uh, compliance reporting, underwriting or insurance reporting, um, and then also
corporate governance down on the bottom, which is the holding conducting the, um, board of directors or managers meetings, um, and preparation of those materials. I won't go in depth as to what we offer, uh, but obviously they're, they're listed here full extensive financial reporting, including the preparation of budgets and forecasts, uh, updates to those on a regular basis, uh, they start conducting the statutory audit, helping to draft the audit reports, finalizing those all within the required timeline of Arkansas statutes. And regulations
We also provide cash management, uh, whereby we will assist if needed uh to process payments on behalf of your subsidiary, so this is something over time some entities will actually handle that all in house at first and then they'll turn it over to Aon as you become more comfortable with the processes that we have in place. We have a dedicated team of cash management, um, individuals, uh, that handle all of that and conducted at the anti-money laundering background checks, etc. a very extensive process, as you can imagine. From a compliance officer, uh,
we will, from a compliance perspective, we'll make sure not only from a regulatory perspective but also corporate governance perspective that um your captive is running, uh, in full compliance with all of those matters and we'll help draft and coordinate, um, if you have council drafting information related
Speaker 13
23:53
to your board meetings, etc. So moving to the staffing needs, um, just, um, understanding a little bit of what it entails to manage own, operate a captive insurance company.
Speaker 17
24:08
At the very heart and center of the captive, this wheel, if you will, is Aon and the Arkansas captive. Uh, Aon is, as I mentioned, an extension of your organization once we become the captive manager. Uh, we help to coordinate all of the services that are, uh, outlined on the outside, including the independent audit, the third party actuarial review claims management, legal counsel to draft the corporate documents, um, the domicile regulator, uh, working as your liaison with that, uh, group, um, investment. management and then the fronting
and uh reinsurance partners if so necessary. So very comprehensive, uh, we have good relationships with all of the organizations that fulfill these responsibilities, uh, but the primary responsibility for, um, administering all of these functions falls on the captive manager. Um, and so we obviously do that in conjunction with the rosen representatives that are overseeing the captive. common needs of a captive insurance company, um, there are officer and director positions that are needed and to order to
make decisions, right? Aon is in the business of giving you better information to make better decisions, to drive better results, and so that it holds true in the captive division as well, so we're here to help your directors and officers to manage the day to day operations of this entity, so we'll be gathering information, presenting this to the board or committees if that's how it's managed in some cases captives do have other committees rather than. just the board itself, uh, to help guide the uh organization so our role will be to help make sure that everyone is informed
at those meetings, uh, the preparation of those materials, um, and then, uh, answering any questions. In many cases we preparatory calls in advance of the formal meetings to make sure any committees or individuals that are um at those meetings are fully informed of the operations of the captive and the actions that are necessary to be
Speaker 13
26:01
taken at those meetings. Most commonly, the officers of the corporation are a president, vice president, treasurer, and
Speaker 17
26:07
secretary. um, you do have the luxury of ability to have as
many officers as you wish, um, but we do recommend in order to, uh, for there to be, uh, availability for members um to uh take uh take necessary action of the captive, that the board be fairly limited number. The most common is 3 to 5 directors, uh, of the captive and then those, uh, positions there as I mentioned from an officer perspective. With the captive manager handling the majority of the functions of this entity, um, the requirement, um, for other involvement or, you know, necessary for employees uh from
the state would be relatively limited, um, there usually is a, a, um, Various functions within the organization, whether that's from the council, treasury's office, uh, insurance provision, etc. they'll each contribute to some part of this, but on average it would only take about a half of a full-time equivalent to oversee the captive operations. Now we have other captive operations that have grown to be billion dollar entities, and they have 10 to 15 full-time staff working in their captive. So that of course can range depending on how the operations are being managed.
Speaker 13
27:20
That leaves us some time for a Q&A. I'm happy to address any questions, uh, any of you members have with regards to
our proposal. Thank you for your time. Yes, sir. Thank you for that proposal and the information members, any questions?
Representative Keith Brooks
Unverified
27:34
Representative Brooks, you recognize, I think you, Mr. Sharon. I appreciate it over here. Thank you guys for your time. I appreciate that. One thing that as we've gone through this process that, uh, Kyle and the other consultants have talked about pretty consistently is, uh, the Tennessee model and, and how a lot of what we're doing is is looking to base off,
based off what we're doing off of, of the success there, as I understand it, Aon's been involved in that. Can you speak at all to, to how this would compare to what Tennessee has done in terms of their public
Speaker 13
28:03
captive. Yeah, and I, I thank you for that question. I wish I could speak to more specifics and certainly Mike Coulter would have been
Speaker 17
28:09
able to because Mike is responsible for overseeing that, but in speaking with Mike and being prepared for this meeting, um, yes, we do believe this is gonna pretty much mirror the way Tennessee operates their subsidiary, um, with their own statutes, so Arkansas's statutes
are not uh very dissimilar to Tennessee's captive regulations and therefore um likely would be operating very similar to
Senator Bart Hester
Unverified
28:36
that. Senator Hester recognized. Thank you. Hey, my, my question, uh, for, for your local representative, uh, I, I, I
missed your name and what company you're from? Brit and Brady, like the country Britain,
and I'm, I'm with Aon here locally. Oh yeah, with, so you guys have 1400 of these
captives, that's a lot, uh, do you have any in Arkansas that you, uh, and
maybe it's appropriate to name or not. Do
Speaker 17
29:02
you have any captives currently you're managing in Arkansas? Baptist Health has been willing to be a reference in our written proposal, and so that is the, the uh we believe to be the largest captive here in Arkansas and that is one that we work very closely with
Speaker 13
29:15
them to help restructure it. And work with the Arkansas regulators, the insurance regulators, because, uh, it was a very unique restructuring that took place for that
Senator Bart Hester
Unverified
29:22
entity. Uh, and, and how long have you
Speaker 13
29:25
had that relationship, a year or 10? It doesn't matter roughly. It's, uh, I'd have to say I believe it's about 5 years now. It's when they formed we've, uh,
Senator Bart Hester
Unverified
29:35
we were one of the first captives to be formed in in in Arkansas, you've mentioned regulators, uh,
several times. I would just assume that's Arkansas state regulators. That is correct. OK, and, um, Just a question because like if This will come out of like left field,
but just I have to be able to answer this question when I ask people, like, do you guys have any current active like DEI policies.
Speaker 23
29:59
Uh, I believe Aon continues to have a DEI policy, yes.
Senator Bart Hester
Unverified
30:02
Yeah, is that is that is that online? It would be
Speaker 36
30:05
available and I'm happy to make sure you receive a copy of that if you'd like. OK, thank
you. Thank you, Senator. Members, any other questions? I'm done.
Speaker 13
30:19
Thank you. Yeah, just give you the reference, Kimberly Johnson is the individual within the, uh, Arkansas Department of Insurance that we work closely with. She's responsible for the licensing, um, various other responsibilities within the
Speaker 17
30:31
division, but she's our primary contact. Arkansas does
Speaker 13
30:33
not have a dedicated captive regulation team. Um, but Kimberly Johnson is the individual that, uh, Mike Coulter has been working with closely.
Senator Justin Boyd
Unverified
30:41
Senator Boyd, do you recognize? Thank you, Mr. Chair. Uh, thank you for your presentation. I, I think this is a pretty easy straightforward. I hope this is a pretty easy straightforward question, but I, I feel the need to ask it, um, as I've done a little bit of, I've listened to your presentation, done a little bit of research, you seem to be a very large company. Uh, you probably have other
relationships with other companies. What? Can you, what assurances can you give me that when you're doing work for Arkansas, you're in the best interest of the state of Arkansas and not one of your other clients or some other broker or dealer or something can give me some assurance on that. Yeah, absolutely.
Speaker 13
31:15
I mean, we, we have ethical standards as well and so we, we abide by them. Any conflict of interest that may be present, we disclose
Speaker 17
31:22
to you at your board of directors meetings, if there were any conflict there and so it is a commitment that we have from all of our teams. We do
represent that. I serve as an officer and director of many captive insurance companies, uh, that we manage, um, because there are some jurisdictions there's requirements for local um directorship and
Speaker 13
31:41
so we have, uh, we follow that standard to make sure that if there are any conflicts uh that we
Speaker 6
31:50
do in fact raise those to you. You just a further answer that question, um, each. The plant that we engage with, we have a dedicated team for. They do have responsibilities
for other companies, but we have a pretty deep bench on the team. So we never have, you know, a loan standing person that manages the account that might leave it, leave you without services. So, um, I think that's a unique thing about us is that our teams are pretty large, very experienced, and have experienced across multiple clients sizes and shapes. And um, to give you better ideas on What could be done with the captive and what can be done, um, to develop better mousetrap. Yeah
Speaker 13
32:34
We have 550 colleagues in our captive division alone, so we would, if there were a situation where an individual that was assigned to your team did have a conflict, we would remove that individual, but um we do act on your behalf. As I mentioned, we become an extension of your organization and so everything
we do is for your benefit. All right, so no other questions, gentlemen, thank you very much
Senator Bart Hester
Unverified
32:58
for that, uh, all right, no worries. You recognized Senator Brit, your local, uh, you have an office
here, you come here once a week, you're always here. Tell me about that. All right, yeah, um, right now I'm, I'm residing in Atlanta, but I'm relocating here in June. Uh, we have an office down on 3rd Street
Speaker 69
33:15
downtown, um, it's been there for, for, uh, you probably know more longer than I's been there longer than I've been in
Representative Jeff Wardlaw
Unverified
33:24
a long time, so thank you, we are local. Thank you. Representative Wardlaw, you recognize? Thank you, Mr. Chair. Walk me through your key performance indicators and how you measure success in managing captains right now, and particularly, um,
Speaker 13
33:39
Yeah, just walk me through that first. Yeah, for the key performance indicators, it would be about our
Speaker 17
33:44
servicing is is one aspect of it. That's what we would cover in an annual stewardship meeting. Um, as I mentioned, our discovery process will be identifying what your delivery needs are, are your reporting needs, the timing of those needs, um making sure, uh, and regular check-ins, but we would have an annual stewardship meeting, uh, to identify, uh, all of those items. So our, our master service agreement, uh the contract between the captive and Aon would identify what
Services we're providing and we would identify our performance against all of those functions, so we do that on a ideally on a regular basis, we'd have regular check-in calls with you, um, we likely would be doing that anyhow to share the performance of the captive, um, but then on an annual basis at a minimum, usually more frequently in the early years, uh, we would be having discussions on how we're performing and as I mentioned, the performance even of your other service providers to make sure this captive is being delivered, the highest results in the. Service.
Represent world are you good? Can you, um, Kind of walk us through how you envision working
Speaker 13
34:52
with all the parties to meet that 7125 renewal date. Yeah, sure, very good question. We do
Speaker 17
34:56
this day in day out. This is what we do. We help to coordinate those services of various service providers, as I mentioned, we will, um, our comprehensive checklist will identify in in our weekly calls, usually weekly to start, but more frequently if needed, um, but we would schedule those calls not only internally but
with those external service providers, uh, to make sure that the, the roles are responsibilities that they're having are being met as well to achieve those
Senator Jonathan Dismang
Unverified
35:23
dates. All right, Senator Dismay. Thank you. Uh one thing I was looking at and maybe on, when I look at the proposal. All the
Speaker 82
35:32
staff for Arkansas are located in South Carolina or
Speaker 17
35:35
what am I looking at here? Yeah, no, you're, you're correct from a captive management perspective, we've been approved by Arkansas to manage, uh, Arkansas captives out of our
South Carolina office that's very common when there's a jurisdiction, new jurisdiction in the captive industry. So for instance, South Carolina manages our, uh, part of our Georgia captives, um, they do North Carolina and South Carolina if there becomes a critical mass in that jurisdiction, then we open an office there. So for instance, South Carolin I was never there. Uh, we formed that with a critical mass of captives in the South region, um, and then we've worked with the regulators to get approval
Speaker 13
36:08
to service them out of those jurisdictions certainly from an Arkansas perspective we have boots on the ground and if need
Senator Jonathan Dismang
Unverified
36:15
be, we can put staffing in here. Well boots on the ground that are working on this or that's what I guess I was a
Speaker 13
36:20
little bit confused, we do not have boots on the grounds working on captives explicitly, but we
Speaker 17
36:23
have an office space here that if need be, we have an office infrastructure already here, so it'd be very easy to. had a staff member, um, because the infrastructure is already here for us to do it if the if it warranted that we had a critical mass of captives under management. Got you, but when
Senator Jonathan Dismang
Unverified
36:38
we pick up the phone and call, it'll be South Carolina likely, yes, correct.
Speaker 13
36:48
We do have locating from no, yeah, let me, I'm happy to clarify that. You're, you're correct. uh, the gentleman's next to me, the gentleman next to
Speaker 17
36:56
me are going to be assisting in the proposal for property program tomorrow. Um, but, um, Todd is the manager of our local officer, managing director, so he has a vested interest in making sure Arkansas, the services
Speaker 13
37:08
are being met and so um but the servicing for the captive management team will in fact be out of our South Carolina office. We do actually have employees in Arkansas that
do service some of our other clients, so we would very strategically look to make sure that there's an opportunity for those individuals to work on this account then we would
Speaker 6
37:27
do so to make sure that they were local. Thank you. And just, just to add on to that, um, there's a symbiotic relationship. between the broker that works on the property program, the broker that handles the captive management, they have to work hand in hand. A lot of communication, um, a lot of work together. So that's, that's why we're here because we're gonna see it as, it may not end up
Representative Keith Brooks
Unverified
37:52
being both with they on, but, um, if it was, you know, we, we. All right. Thank you, Senator Representative Brooks. Thank you, Mr. Chair and. Uh, so this has been a pretty long process for us. We're about 18 months in to evaluate all this. So as you've kind of followed the process and, and your engagement in it, what are some of the biggest challenges you see for us as a legislative body as a state for implementing this, not necessarily just in our time frame, but also from a long term perspective, what are some of the challenges you see,
Speaker 13
38:22
uh, that could inhibit the success that we need. Yeah, no, very, very valid question. Um, really
Speaker 17
38:29
it's a matter of identifying individuals that can take some responsibility for the captive, right? Because, you know, In the insurance world, opportunities and challenges arise, you know, unexpectedly, um, and so just being able to, to navigate those, that is why you hire an experienced captive manager, um, to, to help with that process, but um that is one of the biggest challenges when we're working with a legislative
body to oversee a captive is that you might be tied up in session, um, but a significant claim has occurred, um, and some, you know, individuals need to be tending to that certainly while you also hire a very experienced brokerage firm that can help navigate those situations, but in, in some cases it does
Speaker 13
39:09
because now you're retaining your, some of this risk, that does make, uh, you know, you a decision maker as well in that process. So I would say that's the, the, the biggest area of, of individuals as they learn to operate and manage a captive and
just sometimes very infrequently, but there's time sensitivity to some some uh some
Representative Keith Brooks
Unverified
39:29
items. Follow So thank you for that. Um, obviously Aon is, and I'm have an insurance background so obviously Aonis is a well-known name, uh, globally, but we have a lot of other well-known names globally that'll be presenting for before this committee. So, um, kind of my, my bottom line is, what's, what's the biggest why? What's the biggest why for us when it comes to, uh, potentially choosing you for this role.
Speaker 13
39:54
Sure, no, that's great, um, I mean it's how we do our business, you know, we
Speaker 17
39:58
are, as I mentioned, we may be one of the largest, we have a very large brand, um, but that, what does that mean? I've worked for Marsh. I've worked for Willis. What does it mean? How we operate. It's our people. How we make sure we understand your needs and how we execute on delivering exceptional service to meet those needs and, and likely those uh competitors are gonna say the same thing, uh, but I've been doing this for 30+ years, and I'm very proud of where I'm at.
Now, uh, we continue to invest in the in the information systems that captive owners need in order to monitor, uh, not only the regulatory compliance, uh, but also their, you know, the standard financial reporting and tracking of your own results. You need program may grow to be several $100 million and you need a team of with integrity, um, data security. Right in the infrastructure and the resources to bring you that, um, we don't, we're not bookkeepers, um, and that's why sometimes our fees are higher
than our competitors because we don't take this as a bookkeeping opportunity. We take this as a value proposition that you're going to get a tremendous amount of
Speaker 9
41:07
value from joining a partnership with AON. Just one more comment, um. So on top
Speaker 6
41:13
of that, When you're developing a captive and we do quite a bit of captive work in the Arkansas office and risk retention group work. You need reinsurance specialists, you need actuarial specialists. You need people that understand
how to place the coverage with the right insurance carriers that will work with the captive. And Aon does this every day. It's not something we dabble in, and I think it, it, it, it shows in many cases, and I, I'd go back to the, um, many unique clients that we have that come up with concepts that most people haven't seen before, that we get to apply to other clients and that they get the benefit of that, right? And so unique
creative structures like you guys want us to develop for you. All right, other questions, gentlemen, thank you very much for the presentation and for your work putting that together. Uh, we will be in touch. Members, we're gonna, uh, recess for just a few minutes, let the staff get the room reset, and the next one will be our text.
All our members, we could get settled in. We're
gonna uh Come back to order, uh, with the second presentation of our text, you gentlemen, if you would please recognize yourself, uh, for the record, and then you can get started with your presentation. You'll have 30 minutes for your presentation, and we're gonna allow 30 minutes for question and answers and you get close to time, I'll let you know where you're at. Go right ahead. Just push that button and you
Barry White
Unverified
49:33
can start. Thank you. um, good afternoon. My name is Barry White. I'm the,
Speaker 96
49:40
uh, uh, EVP sales advisory and analytics at our text, um, on a daily basis, my job essentially is to work with a large organizations regards to, um, you know, looking at alternative risk transfer solutions, especially captives. Does it make sense for an organization to take a cap of what lines of business, where it should be located, reinsured of the structuring or not, where should the captor be domiciled, um, in addition to that, then I probably provide ongoing consulting. those captives and helping them do more with the captive as they can to build up equity on a
capital, basically, can you continue to use it for other lines of business and to get more kind of value for the organization at the total cost of risk perspective. Thanks, Barry. My name
Speaker 101
50:27
is Brendan Heltz. Pull that microphone a little closer too if you would. Is that better? My name's Brendan Holt. I'm a vice president with our text Risk Solutions. Uh, I've been with the organization for, uh, roughly 3 years, uh, over 11 years in the industry at this point. Uh, for the duration, I've been focused on large complex property casualty accounts.
And I've worked on CAPTA for the duration of my career as well. I was actually joking with Barry earlier if I go back a little bit further, uh, I spent my college summers as a congressional intern and Washington DC, so I'm used to sitting behind, uh, folks like yourselves during sessions like this, so not sure which side of the table is better to be on, but, but happy to be here with you
Speaker 96
51:04
all today. Thank you. Go ahead with your presentation. Thank you. And first of all, we're really excited to be here, right? We're privileged to be here as a finalist, um, very excited to
essentially make our case today and to be your appointed captive manager going forward and so over the next 30 minutes we're going to talk a lot about our texts, our capabilities, what we do and how we help clients essentially to form captives, manage them and how we feel our operating business model is, is, is best in class, and this is your team and. essentially right, we've been very specific and regards to how we built this team is going to be led by our global CEO at Arctic, Zeb Holt, um, Zeb
essentially has over 20 years in the insurance industry. He actually started at RE as a captive consultant and then moved into Gallagher retail and property casualty and basically is risen through the ranks there and as a retail broker um and again we have, you know, using that in the perspective of. It's really important that there's such connectivity between your broker and your captive manager as you look to form this captive, so we see him as the bridge between Gallagher and Arcex essentially drive us,
um. Further to that, and west, uh, and basically is responsible for the management of captives across North America are different domiciles. Her team basically brings the valued service to our valued clients in the day to day basis. And as the CPA, uh, has over 30 years of managing captives. We then have Mary Delaro. Mary's one of her managing directors again with more than 25 years of captive experience and again bringing Mary onto this team because she is essentially right now managing a number of captives with complex property insurance programs within.
And finally, we have Justin Vader and Justin essentially will be your day to day captive manager. Justin is based here in Little Rock in Arkansas, at least again again we see that is awesome opportunity to help with the transition of education as we drive things forward and essentially manage your captive on a day to day basis. A little bit about our texts and you know we are part of Gallagher. Gallagher's wholly owned captive management captive consulting firm, uh, you can find this in over kind of 16 different offices around the world and 500.
Employees recently actually did an acquisition in late Q4, which brings us up to about 650 employees now, um, you know, over 2000 clients right across the globe at 3rd largest insurance manager, and, you know, again over $8 billion in client premiums, so we have scale or essentially like we are managing capitals in a day to day basis, different domiciles from a whole range of different industries for manufacturing to kind of uh m municipalities, transportation with the wide berth.
Across the kind of the sphere of kind of different industries and managing capitals on a day to day basis. This slide is essentially entitled The Leader and Captive Man. What does a leader and captive management actually mean? And we think that being recognized by your peers and and and industry uh kind of comparatives as being the leader in your industry best in class in the industry, and that is why for 3 years running, R was essentially voted captive
manager of the year by the by the captive review and publication. And building on that, right, essentially to be a key captive manager and one of the values again to be part of Gallagher is being able to invest in our people in our in our IT infrastructure. Example, in 2025 we're really excited with the with the thought that we're going to be able to launch a new client portals or clients or captive clients would be able to go online 24/7 and access your information so you see all of your all of your financials in there, your reinsurance
programs, you have to see that and access it with regards to in real life time separately and another product that we're launching this year is uh called, um, be able to go and see your, your board meetings, all of the papers associated with that again. you have that access. And a key thing that we've seen over the last number of years, right, is that regulations for captives across the globe have enhanced and, and we basically have gone out and we've acquired and hired a number of key senior regulators to come in and work
on our team. That has allowed us to basically build up the governance and risk framework and protocols for our clients as this is an areas continuously evolving and we want to essentially make sure that we have the right protocols and policies in place to manage those captives on a day to day
Speaker 101
55:41
basis. Thanks Barry. So, you know, obviously the, the core reason we're here today is to talk about our captive management capabilities, the services that we provide to the state of Arkansas once you're captive is licensed and operational, we also thought it was important to
talk about the process by which the state will get to that point, uh, and so that's really my role with our text. I work with our clients on a day to day basis, getting them from conversations around what is a captive and why do organizations and entities like the state of Arkansas deploy them, uh, all the way to that licensed. active operational status. So we recognize this has been a long and thoughtful process for the state to this point, uh, and we're sort of in the home stretch, right? So if we look at
this process, uh, from a, a high level standpoint here on the screen, um, we really see you all as being sort of in that third box, right? You're, you're in the middle of a feasibility study that's, I believe near completion, um, you know, there's a, uh, a strong thought that the state will move forward with captive formation, and so we really start to think about the formation and implementation of that. selected captive strategy for the state. Uh, we've been following this process closely. We understand a critical question at this point is whether or not the state can implement this for the July 1st renewal for several programs that would be consolidated.
We do believe that's possible, but that implementation typically takes anywhere from 8 to 12 weeks from the time you give a captive manager and other necessary service service providers the green light to really commence work on your behalf. Uh, so in some more detail here, this is how we see the next 8 to 12 weeks playing out if we are selected as the state's captive manager. Uh, formation services are a key part of what we do at our text. It is a multifaceted process. It requires input, uh, and work and coordination across a number of
organizations, uh, obviously we believe the captive manager plays a key role, uh, essentially acting as your quarterback throughout that process, uh, but the broker that you ultimately select uh that needs to consolidate and place coverage in the insurance and reinsurance markets is going to play a critical role as well, and it's important that you're captive manager and that broker are working. Very closely together throughout this process. Ultimately, uh, this starts with an engagement for formation services. Uh, we will work with Pern, uh, who's drafting the
feasibility study for the state. There are key elements in that work product that we need to take to craft a business plan and license application but ultimately submitted to the regulators here in the Arkansas insurance department. The proposed captive insurance company would have an independent board of directors, uh, that you all would be, um, uh, selecting. There is uh can be significant vetting involved with those directors. They're, you know, typically biographical affidavits, other background information.
Um, we work with clients across a broad array of industries and that can always be, you know, a bit of a a process to get through. So the earlier that we can work with you all to identify those proposed directors and officers of the captive, uh, the better position will be for that July 1st date. The program structure captive participation is very important, um. Suffice it to say it's been a very challenging property insurance marketplace in recent years. Uh, it is very dynamic and as we approach that July 1st date, I'm sure there will be a
lot of important decisions that the committee needs to make about exactly where the captive will slot in in terms of participation. Uh, so our text would work closely with the, the state's appointed service providers through that process and ensure the business plan application, uh, reflects that ultimate goal and objective of the state. We also understand there's a um an approval process that you all will be going through as well. And so, you know, sort of the, the bottom line from a timeline standpoint to answer the question as directly as possible, uh, we do this on a
day in day out basis. This is what we do, helping our clients, uh, manage, excuse me, form their captive insurance companies and from our perspective July 1st is a comfortable timeline for the work that needs to be done. Uh, for your brokerage team, right, we've coordinated closely with our, our parent company Gallagher, who's a long history with the state and with these programs and intimate knowledge of the programs and the markets that support it, they're confident that they can combine those programs in place the reinsurance for them effective July 1st, uh, so the, uh,
assuming the state can get through its necessary approvals with enabling legislation. We think July 1st is a
Speaker 96
1:00:12
comfortable and achievable timeline. So a little bit about the, you know, the typical captive operational model that we see, so, you know, one of the questions we get from clients is, you know, we're forming and basically, you know, a regulated insurance entity. Do we need to employ people. I would say 90% of the time people don't, right? Essentially your captive manager works with the board of
directors, right, essentially building a framework where you have a number of different service providers from the the auditors, the actuaries, and basically working through that and again RX is the captain manager will quarterback that. Essentially working with those service providers and working with the board to get all of this in place and, you know, it's very important as as Brennan mentioned again with regards to the formation process is that connectivity with the broker as the programs are being built at the captive manager is aware of that, so basically understand, OK, how much risk is going to be in the captive, so
what capital is needed, how there's going to be structured. It's a very important process in the initial setting up of the captive itself. And I think what we would what we would also commit to do is, OK, that this is a new insurance entity. It's not something that, you know, the state is familiar with on a day to day basis. We're committed basically to come here in the spring only to basically to go through the application to spend time with your staff regards to educating the whole captive operational model, right? What did the financials look like? What's the reporting look like? What are the rules and
regulations around forming a cap. What is the governance like for a captive insurance company, how to board meetings run, but these are key things the success essentially here of getting. your captive set up an operational is also basically, you know, dependent on the state appointing I would say 3 or 4 people right in key functions in your finance, your legal, and your risk teams that our team would basically liaise with as we go through the application process. So basically we have a smooth process back and forth as to how to move things forward.
Speaker 105
1:02:08
And basically what do we do on a day to day basis
Speaker 96
1:02:12
for managing hundreds of single parent captors right across the globe and these four quadrants essentially breaks this down as to what we do on the day to day basis. If you look at the very top left hand side is the financial is the financial running of that captive. So the running of the financial financial statements, your income statement, your balance sheet, getting that back to you, bank bank payments, uh, essentially, uh, running your annual audits or coordinating the audit with the auditors.
With the with the actuaries and basically to make sure any type of reporting, whether to the internally or regulatory is done in a kind of expedient and accurate fashion. We assist with budgets and cash flow forecasts. This is our basically this is the soups and nuts of managing a mini insurance free insurance company on a day to day basis. If he moves to the bottom left hand quadrant, basically this is the whole area of regulatory and compliance, so making sure that you're captive is following all the local rules with regards to how it operates in the. day to day basis to make sure
that its capital requirements are in place that it's following the asset rules, and if you need to change your business plan, if you want to write more business in the capital again we, we would consult with you, we repair the, the business plan and we kind of filed that to make sure that your captive gets up and running in, in a day to day basis. Regulated reporting and filings again are key, and this is something basically again is is our bread and butter if we do on a day to day basis and the top right hand side, we have the governance administrative, so. a governance perspective, how
you set up your board when you have your board meetings, preparation of this board meeting materials, something we do on a day to day basis, making sure you've got accurate uh and action points at the end of board meetings that are then followed up upon. So being that again is a key, a key function of the captive management on a day to day basis. The final quadrant we talk about strategic consulting and, and this is where we think we, you know, what we follow at our text is what we call a model of continuous engagement. So we're basically continuously engaging
with you on how we can support and develop your captive going forward this process also basically always start with stewardship, so each year we will have an official stewardship process with you and we will drive that from the perspective of. Managing hundreds of captives around the world, we always see trends, OK, what lines of business are people writing? where are the challenges people are seeing. What are your peers see from the perspective of the risks that they have been a part of Gallagher we have oceans of metrics so the guards to again benchmarking of limits,
retentions. What are the key risks that are having on a day to day basis. We bring that to you. Basically and we speak with you and basically we talk about how can we help you going forward, where are the challenges? How can the cap to be used in a kind of another fashion to continue to support you whether it's new lines of business or restructuring of these existing lines themselves, so it's a strategic partnership that we basically want to make sure we keep doing. We don't want to set up your captive, let it run for 3 or 4 years. We want to be with you in partnership with you regards to making sure the cap
was fit for purpose and you continue to get best use for it. If you build up equity on that balance sheet. Do you want to let it sit there? Or do you want to use it in a strategic fashion? Are there other lines of insurance, other risks you face as an organization, maybe could be now funded in the captive. It also basically manage your total cost of risk going forward and give you more flexibility and more diversification on your balance sheet. It's great to start with property insurance. So what about the other risks? Could you write some of the liabilities so basically they start to offset one another and uncorrelated
risks. This is part of our job is to make sure you
Speaker 101
1:05:52
can see what the strategy might. So we thought it was important that we talk about these things, not just conceptually, but provide a, a real life example. um, and, and to be frank, I think a key differentiator for our tax is the the leading role we played with property captives. Um, this is a, you know, a specific use case for captives that's become more and more important in recent years, given the distressed nature of that marketplace, so we're fortunate to work with a number of clients who have realized
successful outcomes with property captives. One in particular is a large regional waste management authority, um. This was a company that came to us, uh, unfortunately in a bit of a crisis. There's a maybe a bad cliche in our industry, double, double, 5, you come up to renewal, you have double the premium, double the retention, the level of risk that you have to keep, and you're getting half the limit, half the capacity for the market. This client was in a situation they were probably looking at, you know, triple, triple, and then even worse than that, right? So, uh, they were facing
a capacity crisis and needed a captive as an outlet. To finance the risk that they were being forced to retain by the marketplace, but also to gain access to critical capacity where it was not available in the traditional US marketplace captives as licensed insurance companies would grant the state access on a direct basis to global reinsurance markets, uh, capacity that only transacts with other insurance companies faculty to reinsurance markets in Bermuda, London, Cayman, uh, other jurisdictions as well, so his client came to us, uh,
unable to secure the capacity to really to keep their business. running, use the captive to take on a primary $5 million retention and you can see here on the, the chart on the right, I think it's important that the captive in this case gives us a client optionality. It gives them a seat at the table. It gives them leverage and negotiations. So we think about, you know, opportunistic underwriting where we identify with the work that the Paite has been doing, identify layers in the state's property insurance program that are mispriced, right, misunderstood in the traditional market. It gives the captive the opportunity to take that risk itself.
It also gives the the captive the opportunity to write layers directly in the captive but then reinsure those out, transfer the risk in a different way. So we think about CAA primarily as risk financing vehicles, but there's also a very important role that they play in giving the state access to additional risk transfer opportunities. This client has been with us for, uh, I believe going on 4 years now, the captive has been, has really become the centralized place that they see in inside the organization's risk that they make important decisions around risk financing risk retention. It's driven a
significant reduction in their total cost of risk and as Barry mentioned, we, we enter into ongoing stewardship conversations with them, and out of those they were written additional lines of coverage in the captive, uh, since it was formed as well. We've obviously uh included our fee proposal in our formal written response. We wanted to include that here today for the group's review as well. We chose to break our engagement with the state into two phases, uh, as mentioned, there's an uh an important uh period between
now and July 1st to get the state to a license operational captive insurance company. We believe our text has an important role to play in that process, uh, for ongoing management, you can see our fee and services here, uh, again, our text has a global team, a local presence here that would work with the state on a day to day basis as well to execute those captive management services. So, uh, in closing here before we open it up for any questions you all may have, we just wanted to kind of pose the question why
our texts, um, I imagine that any firm that's sitting before you all today to talk about their captive management capabilities, uh, is in fact capable, right? can manage the blocking and tackling of a complex captive insurance company and so we believe the things that make our tech stand out or or some of those listed on the screen. We believe we played a leading role in the development of property captives specifically in the complex nuances that come along with them. Uh, we believe that our partnership with Gallagher really sets us apart. I don't
think it can be overstated how important it is as you transition to a captive insurance company that you have a broker that is intimately familiar with the program, the history, the marketplace relationships that have played out over years and decades with the state, so managing that transition, working really closely with our, uh, our counterparts at Gallagher. And Galgarre, I think we'll give the state put the state in the best position for a successful transition into the captive both at July 1st and for many years to come. And I think it's that
affiliation with Gallagher that sets us apart as well, um, culture within Gallagher, uh, is critically important. All of our entities are governed by what we call the Gallagher Way, and it's really a set of tenants that dictates how we do business and how we interact with our clients on a day to day basis and the simplest way to sum it up is that we do business one way and that's the right way. Uh, the last thing I'll mention here is you see the, the sister companies on the right hand side of the screen. Uh, a successful captive is not just a captive manager or
broker, uh, or actuary, right? It takes a number of best in class service providers to ensure the long term successful operation of the captive and the Gallagher family of companies has that leading brokerage services from, from Gallagher Global Brokerage, leading reinsurance placements and reinsurance relationships from Gallagher Reed, the 3rd largest reinsurance broker in the world, uh, wholesale placements with RPS claims management with Gallagher Bassett. And of course captive management with our tech. So with that being said, I think we will wrap it up and open up
for any questions. Alright, thank you. I have a quick question about. I believe tomorrow we are going to be hearing presentations from brokers and one of those is Gallagher. Is that your parent company? OK. Senator Hester,
Senator Bart Hester
Unverified
1:11:39
you recognize. Uh Tell me about Your relationship with Arkansas. Do you have a presence here now? Do you have any captives you manage in Arkansas. Tell me anything about that. Take that.
Speaker 101
1:11:50
So we have two captives that we manage in the state today, um, we have, uh, Justin, as we
mentioned, who is a member of the RTE team. He'd be your day to day captive manager working closely with the state and its representatives. Uh, our parent company Gallagher also has an office here
Senator Bart Hester
Unverified
1:12:08
in Little Rock with over 100 employees locally. OK. Yeah. And you, uh, like the, the captains you're managing here, uh, you've said several times you manage hundreds of captives,
uh, are, are the ones in Arkansas, are they like bigger than what we're looking at? Small,
Speaker 102
1:12:21
I mean So we're not at liberty to disclose who they are specifically, but I would say they're, they're smaller than
Senator Bart Hester
Unverified
1:12:27
the state of Arkansas's programs, yes. OK, uh, and, and this may show some of my ignorance on this, but, uh, it is clearly a
benefit that that you're owned by, uh, uh, Gallagher, but When you go to market, does that preclude other people, you know what I mean? Like
when we go to get bids, do you only use them? Does that, does that even make sense no,
Speaker 96
1:12:49
I said, so basically when, when you're, you know, you, you wanna appoint your broker and they're basically going to, you know, build the structure of the program, access
reinsurance markets. And At our text we work with a number of different brokers essentially or basically that's a part of our part of our role we do it on a on a very low basis. And we do think though, considering, right. The timeline you have considering the fact that you're bringing two programs together that the symbiosis of. Gallagher with their history on the account, knowing the markets having been in London for many years and our text is a really good connection, and we feel is the optimal solution for the
state regards to you know because it's going to be so the timeline we believe is achievable. But there's a lot to do. Like when you're building these reinsurance programs in London and Bermuda, there's a lot of movement. Right, you basically your broker's gonna have to be daily on the phone moving markets to get you the terms that you need, your manager needs to be very tight to them. Right, so what's happening? How's it gonna be structured in the captive? Do we need to come back to you guys and say, you know what, the structure is changing your capital might change, right, so basically it's really important that you have that connectivity.
Senator Bart Hester
Unverified
1:14:00
OK, and my last question, and this is not insurance related, it's you related. Do you guys, uh, have any strong positions on climate change, DEI and. I,
Speaker 120
1:14:12
I believe Gallagher Corporate has uh DEI programs. I'm not specific. I'm not familiar with the specifics though. Yeah,
Speaker 96
1:14:19
no, I mean, I, you know, Gallagher has a DEI program as you would expect from a large listed company with global and. global presence and and uh you know. That's just part of the, the
Senator Justin Boyd
Unverified
1:14:31
business that we we follow on a day to day basis. Thank you. Senator Boyd, you recognize us. Thank you, Mr. Chair. I think this is a simple straightforward question. I, I, I hope it is, but, um, the more and more I learn about the insurance market, the more and more I realize how complex it is and how many moving parts there are and there's not always a lot of transparency. So with that in mind, what assurances can you give me that if we hire you, you're working for the state of
Speaker 96
1:15:02
Arkansas and not somebody else. Well, we, we are working for you. You, you basically are going to sign a management agreement with Artex. It is our job, our role to manage your captives. We will, we. I want to, as they say earlier, manage the nuts and bolts of that mini insurance company on the ground. So that is, you know, we are not involved in broking they're not involved in, you know, other services is managing that captive, as we see in our we have you seen our fee that is our fee. We don't get any other fees, basically is that that is our fee for managing the captive
and everything's essentially is up front and stated in
Representative Keith Brooks
Unverified
1:15:40
our management agreement. Thank you Representative Brooks, you recognized? Thank you, Mr. Chair, over here. I thank you gentlemen for your time. Uh, just a couple of questions if the chair would allow. So, uh, kind of following up on what Senator Hester said, should, should the committee not choose, uh, Gallagher as the broker, uh, services portion of it. What would be some of the successful ways you work with whoever that is, um, to have that symbiotic relationship.
Speaker 105
1:16:05
Yeah, no, I mean like hopefully Gallagher is picked, but again if you looked at um at our book of business, a very large percentage is not Gallagher brokered. There will be a very specific project timeline and schedule put in place and we would essentially. Immediately look to start working with that broker and setting a project plan in place, weekly meetings if needed, right, to see what's happening, and let's say we, we, we do do this on a daily basis.
Representative Keith Brooks
Unverified
1:16:36
In a follow up, Mr. Chair. So this is a similar question when I asked the, the last, uh, presenters. So we've been doing this for about 18 months or so, pretty long extensive process if you have followed the process, don't know how in depth you have, but what are some of the challenges that you see to Arkansas and our specific situation for success. What are some of the challenges that you see that we face that you can help us overcome for this
Speaker 101
1:16:58
program to be successful. Yeah. So there, there are a number of pitfalls and and execution risks that come along with any captive formation, uh, and I think you address those by
going through the process you've done, right? Significant due diligence and vetting of professional service providers that do this business day in and day out, uh, it's our Texas' job to identify and address those potential pitfalls or or challenges before they become an issue, uh, and it is what we do day in and day out for our clientele. Um I don't want to, you know, be redundant here, but the complexity, uh, of combining the state's programs and placing that program, that's probably more of a discussion for the folks you'll be talking to
tomorrow, right? But it's, it's very important that the captive manager is involved in that process and understands exactly how those programs will come together because the captive itself will have to issue policies, we'll have to work very closely with the captive the uh insurance regulators in the state to make sure they have a clear idea of the business plan, so, um, I think managing that process. is going to be probably the most important aspect for the state. Um I think that's probably all I bury anything, anything else? No,
Speaker 96
1:18:02
I, I think again it's a, it's a needs to be a very open,
transparent project plan put in place immediately. Gus to write a granular timeline, granular responsibility, who's going to do what? And I mean when you put that together and we provide regular updates to you, right, as the market start to move to regards to what you're going to need to go meet those markets. You need gonna need to present your risk, and you're not going to the marketplace also with a captive. You didn't have a captive before, a captive shows. More skin in the game. The captive show is basically your formalizing your risk retention, and it can be leveraged to. They now we know going forward that
the state of Arkansas has got a captive and maybe they'll take more risk, so I mean it does provide you some
Senator Ben Gilmore
Unverified
1:18:49
leverage in discussions with insurance markets. Thank you, Coach Eric Gilmore. Thank you, Mr. Chair, and gentlemen touched on it earlier. Thank you for being here, by the way, but you touched on earlier and, and I, and so I just, I want to sort of go back and and talk through it. Um, on the implementation side of things, you have 8 to 12 weeks. What, what can we see, um, to get that
on the shorter end of that, um, time frame. Uh, what, what guarantees that that you can you offer to move expeditiously in
Speaker 101
1:19:17
in that end. Yeah, so it's, it's often and maybe in follow up we could, uh, provide what we usually would phrase as an aggressive timeline and a conservative timeline, right? So to get you all on the aggressive timeline, uh, I think it's about laying out that that clear, um, Clear approach, clear methodology to how we're going to. Work with the Paite team to finish the feasibility study and
beginning that begin getting the business plan, uh, and license application together as soon as possible. Uh, as much as we can have advanced discussions with the regulators who will approve that business plan, um, I think part of the value that our text brings is we have a number of former regulators that are on our staff today. They understand uh how folks within the Arkansas Insurance Department review received this information. So we'll work closely with them to ensure that we're, uh, coordinating those efforts, um. I think that there are uh again
working with you all to anticipate some of the information that will be required for directors and officers. Again, that can be a hang up with any organization that we work with, uh, Biographical of David's background information, the sooner we get started on that, the better as well, so, uh, we worked through that process with, with, uh, many clients.
Speaker 96
1:20:29
Um Or you would have there, typically, if you, if you look across our book and we were when we're managing a process like this in different domiciles across North America, uh, we're advising our clients from whence the business plan is ready and
submitted to the regulator, you should allow yourself 4 to 6 weeks, right? And a key thing right basically is once you have a really sound understanding of what your program structure might look like is having that face to face meeting with the with your regulator to basically outline your business plan, so people you're socializing it, people are starting to understand it and so that when you do submit that application, then people are ready. Like people understand the urgency of it, they understand the business case, so it makes the review.
Speaker 105
1:21:14
And of the application, it could, you know, it
could be quicker, more expedient fashion. All right. Members, any other questions? Singing Nan, thank you gentlemen for
coming down. We appreciate your presentation, and we will be in touch. Thank you. Thank you. Members are gonna take a real quick recess, get reloaded
one more time, then we'll start as quick as we can. Yeah.
Alright, mayors, we can go ahead and get your seats. We'll, uh. Get back from recess and continue on with
these uh presentations, the next group to present is WTW Wills Towers and Watson. If you would just, uh, get your button pressed, recognize yourself, uh, for the record, and then you can begin your presentation. as Terrace Watson. We're good to go. Awesome.
Uh, next slide I mentioned you probably didn't hear this, you got
30 minutes, and if you get to running close, I'll let you know that um that you're running out of time. We're gonna do 30 minutes at no more on the presentation and then we'll have some time for question and answer
Christina Meyer
Unverified
1:27:09
at the end, right? So you are free to go ahead and do your thing. Thank you. Uh,
Speaker 149
1:27:13
my name is Christina Meyer. I am a client advocate in the public sector vertical at Willis, uh, active member of STEMA, which you guys hosted 2 years ago. Thank you, Randy, in the back
Christina Meyer
Unverified
1:27:25
for hosting us. Um, this is Uh,
Speaker 152
1:27:28
Ed Corral, and, and. My responsibility is that I lead captive consulting in North America for Willis Terres Watson, and I've been working with captives for about 40 years. Uh, on the slide
Speaker 149
1:27:41
here, it'll look similar to some facts that we gave a detailed response to in our RFP a little bit about Willis for the 4th largest insurance broker, um, our services are on the other side of the screen, um, but really,
why is this important to the state of Arkansas. We specialize in industry verticals. As I mentioned, I'm part of our public sector and education vertical at Willis, um, we have a sole focus of states, government agencies to really understand their heterogene. operations, uh, risk and broking, captive, uh, we all work together. So Ed and I collaborate to give you enhanced risk management insight and governance. And lastly, why is this important to you? Um, we are known as the analytical
broker. So later on in this presentation, we'll talk about our analytical tools, uh, risk intelligence, uh, central Captive Quantified, property quantified, some really neat tools that would benefit the state. Next slide. I, so when you think about captive utilization, property is just the beginning, uh, the goal of insurance is to hedge volatility and captives are a great resource to rebalance, uh, Arkansas's risk transfer portfolio.
Uh, we know that there's no tort cap in Arkansas. However, I did see on Tuesday House Bill 1204 was aimed at proposing tort reform. Uh, we know about sexual abuse claims. Um, they can be very volatile and Arkansas's revival window just opened back up to file claims through February 2026. Um, sovereign immunity for all states is weakening, and as the plaintiff's bar continues to get privately funded, uh, legal action under federal law
are being used to obtain nuclear verdicts. So all this to say that we understand the nuances of the public sector, and we worked together with Willis and other subject matter experts internally, um, to deliver you a bespoke approach to your
Speaker 152
1:29:47
captive. And just a brief word on captive and insurance management solutions, um. We, um, we manage a lot of captives in a lot of different places around the world, um, there are about 175 of them
located in the United States and we think that what the important things to kind of take away from this message is that, um, we have a different way of approaching captives than we think our competitors do. I think that a lot of our competitors, uh, there's a sales and strategic design team. They talk to clients about creating and forming the captive and implementing the program and in the captivist form that might be the last time you see them. What that what happens is the captives then turned over to a, a group of people who do a very good job usually managing
captives, but they're really focused very much on bookkeeping and compliance and not usually on strategic thinking and thinking about the next thing that the captive can do. And one of the, for me, the one of the pleasures of, of working at Willis Towers Watson has been. That I'm constantly in touch with the people who manage the captives, and we really do feed off one another in coming up with new ideas and, and answering one another's questions. Um, in terms of our, uh, experience with other public
sector organizations and their captive insurance companies. We do manage the captive of the Port Authority of New York and New Jersey, uh, and I was personally involved in the creation of the captive that was owned by the city of New York, uh, following 9/11. So when FEMA was looking to make um a large payment to the city to deal with latency liability claims, uh, it fell on New York to figure out a way of keeping that money, uh, away from other types of uses, and we decided that the captive was the
best way of doing it, and that was how that was created. But one other thing to mention that's very relevant, I think, um, was something that uh Christina mentioned, which was the um erosion of sovereign immunity. One of our other clients is the Colorado, uh, intergovernmental risk sharing agency in Colorado, as you may know, is one of the states where a sovereign immunity is essentially been outlawed That's not maybe the right word to use, but it's been, it's been to some extent reduced or eliminated.
And so we have have had a chance to watch up close what effect that's had on liability claims against the state and law enforcement. So here's a brief look at the team and I think the most important thing to note about our service team is that there's a fair amount of redundancy, um, that's not meant as redundancy to create extra expenses for you, but it's more, more redundancy to create backup and create um um essentially, um, additional people who are
knowledgeable about your account in the event that one person is not there. So Jason Palmer, who runs captive Management for North America, uh, we'll have ultimate re s po n s ibility for managing and servicing the captive, but he's backed up by a deputy manager of that function and also very importantly, um, Christina and I play important support roles in thinking about uh the impact of public of the public sector issues that face the captive and also, um, future
things that you might be able to do with it once you've created the property captive. There are going to be a number of interesting ideas that will, that will follow. And we'll be there to help identify them and bring them to fruition. So some of the things to think about and why we think we're different is that again we're, um, when we think about accounting, it's not just accounting, it's insurance accounting. It's actually a special type of, of knowledge base that is not common to
accountants and there's a lot of uh Specialized knowledge that comes with premium accounting and, and, um. lost reserving and, um, and other aspects that relate to capital adequacy and financial reporting. Um, our people are all very well trained in those specific areas. And I think one area where we are different from our competitors is we have a separate dedicated underwriting team. So underwriting is not a sideline, it's not something
that our accountants do as a, as a, an additional thing. There's a separate team that actually focuses on, on reading, um, risk measurement and, and premium calculation. Um, another thing to mention is that we have a culture of data security, professional skepticism and compliance. It's part of our DNA and we uh take a great pride. In Doing in in. Paying a lot of attention to very, very
Fine details in financial reporting and professional, um, I'm sorry, second pair of eyes towards sorts of things and, and, um, other types of internal controls and make sure that the financials that come out are released once and that's it. And part of that model is also what do we do as your captive manager. The answer is we do everything. We, um, we, there are usually a lot of other things that captives become involved in as they operate. They sometimes have to file reports or other
types of, um, forms with other states if, if, if your operations bleed beyond the borders of Arkansas. Uh, sometimes if terrorism risk is involved and you want to access benefits under the terrorism risks and Insurance Act. There's a data call from the Department of Treasury. Um, all of those things are included. We don't charge extra for any other forms or tax returns or other types of uh business plan changes, it is all included. What we want to do is
build a relationship of trust and um, and open communication where you don't feel the clock is running when you talk to us. And as I mentioned a moment ago, underwriting services, again, we have people who are experienced not as accountants but as underwriters participating on your team. And that means that um understanding how a policy is constructed what an insurance policy endorsement looks like and why they're important. Um, they're on your team and they're not just thinking of it as a, as an administrative thing to do. It's a business thing.
One of the things that we're very proud of at Willis Terros Watson is, uh, our platform called Risk Intelligence Central, and this is something that as a user, as a as an important client of Willis Towers Watson, you would have access to it, and it's a way of maintaining, um, important and secure data about your risks, about your organization. And it's a way of, um, dealing with things like requests for certificates of insurance, and
as a data warehouse, it also provides a means for us to help you with analytics about your risks or about other things you might be thinking about putting in your captive. So again, the initial formation is related to property, but in the event that liability comes in or other types of coverage such as special types of weather coverage, um, cyber coverage, for example, those are very important questions. Uh, the analytics and the ability of of
our group to help you run models to size the risk and price the premium can be done through
Speaker 156
1:37:26
data that's maintained in brisk intelligence Central. And something that we've been rolling out in 2025
Speaker 152
1:37:31
that we're very, uh, excited about is a, is a platform called Synergy 2, and Synergy 2 is kind of an all-purpose uh general ledger system that also maintains, um, again, a lot of exposure and a lot of loss information about your organization.
So, uh, as we, um, as we roll it out, we find that our clients are very excited about it themselves also because it's got um a very big library of potential reports that can be run out of our system without having to customize. It also has the ability to get further customized if that's needed, although. We, um, we don't think it would be. But, um, using our using a kind of an on-demand reporting system has been very, very helpful in getting things quickly and getting things accurate.
So where we think that benefits you really is again the, if I think about the, the, the important takeaways of synergy too. is again the, the. In my mind, the most important one is, is integration with our proprietary analytical models. So as you may recall, we, we did some work in using our property quantified model to size up, uh, the, the property risks that you're proposing to put in the captive. Uh, in addition to that, there's also other models that will look
at your risk on a portfolio basis to understand how they might or might not be correlated with one another, and that in turn will drive things like capital needs as the captive gets bigger and more mature and develops retained earnings, we also will have the ability to use synergy 2 to pull information out and drive, um, portfolio analysis that will help us manage the ability to possibly declared dividends out of the captive and reduce the cost of the insurance in future years.
And again, what it all boils down to a security, uh, we have the highest levels of security, in fact, as, as we've been preparing, uh, this proposal and and responding to requests we've been uh working within our security protocols to make sure that um. That everything is kept as as confidential as possible. Again, what we think is differentiates us is and what we think is in our DNA is the analytics, the analytical
broker, um, just about every year, Willis is releasing a new analytical model for some new, uh, type of coverage. The most recent one is one, on cyber insurance. Excuse me, we had a previous model that was working very well and we've now developed kind of a cyber quantified model on steroids effectively which. Um, sets up a bunch of different scenarios. It has a big scenario library and allows our clients to um collaborate with us and thinking about what different
types of scenarios we should be modeling. In, um, in quantifying the cyber risks that are faced by our clients, we think that as the captive matures, cyber is probably on a very short list of new risks that would enter into the captive, and we would be able to support you with that. Um, some of the other models we would be using um to support the captive, we can talk about right now the one that comes to mind most readily is something called captive quantified. And again, what that would help
with is a capital modeling in the captive. That's how much capital is required to create the captive in the first place. And then over time as the captive grows, we hope and develops retained earnings and develops additional surplus at some point if you, you might want to use that capital to either, um, expand the amount of risk that the captive takes or alternatively expand the number of different risk classes that the captive is assuming. Um, using captive quantified
will allow us to use a portfolio approach using a software package that was, that is proprietary to Willis Towers Watson called Igloo. And using igloo and captive quantified would help us determine, um, whether you should be increasing the capital, decreasing the capital, or expanding the port portfolio of business. And what I can say from my experience is that Of our clients who are using this model, about half of them are using it because they're interested in taking money out of their captive and the other
half are using it because they're interested in putting additional risks into their captive. And so this provides a customizable platform that allows you to say how secure you want the captive to be and how sensitive you might be to the need for capital calls. And that helps us establish what the baseline capital level should be expressed more in terms of confidence level and less in terms of line by line for each line of coverage that's in the
Speaker 161
1:42:28
captive. I'll let you talk about the
Christina Meyer
Unverified
1:42:32
property quantified we actually use property quantified in our RFP response on
Speaker 149
1:42:37
the brokerage side and we stress tests your 3 different, um, policies and the, the one demonstrated here, ASBA, uh, demonstrated that with the estimated value from insurance, um, is saying that you're overspending by about $12 million and that's through a variety of deductible structures. and program realignment. So we
can use this tool, it's malleable to stress test different retention levels, um, different reinsurance needs, and that all kind of goes into the analytical piece of setting up the captive. And I know one of
Speaker 152
1:43:20
the concerns that's been articulated that we were asked to address was whether we thought felt confident that we could have a captive, um, implemented and in place, um. Along the lines that you described, I think by the middle
of the year and, um, we are very confident of that. This is a this is a process that we have completed many times and in fact we've actually already, we already manage a captive that's domiciled in Arkansas, um, and we worked with Leo Liu, and we've also worked with, uh, Kimberly Johnson in the insurance department and. Essentially coordinating with with uh business plan changes and uh filing the required financials. So again, the the process of forming a captive is a fairly familiar one to us.
We've all done it many times and um it's something that um should be relatively routine, obviously, if this is the state of Arkansas, it's not going to be routine because there are some special considerations that will need to pay attention to. But uh I think that our, our, our group, um, collectively has. Several 100 years of experience working in captives. Um, this is an area that we feel very comfortable with and also dealing with lawyers and dealing
with, um, insurance regulators is something that again we've done for many, many years and feel very, very comfortable about. And part of that is um kind of the cyclical process. It, it doesn't quite look cyclical in the picture, but trust me, it is. Once the captive is up and running, I think one of the things that, um, is a. Uh, what I would call a, um, a A pitfall that happens with captive insurance companies, and this is only the both the public and on the commercial side is
that there's a lot of people involved in the formation. A lot of people are paying attention, financial people, legal people, and the captive gets off and running and it's well capitalized and it's got a business plan that fits the need at the time and then it continues to operate and what happens is the environment changes, so the captive, uh, accumulates retained earnings, the insurance. market environment might change, the risk itself will change, new risks will emerge. And if the and if the business
plan of the captive is not periodically re-evaluated. Um, and that includes the capital, but also it includes the amount of risk the company is retaining, their policy wording, possible, um. Possible areas where the insurance market is, is excluding certain types of coverage or excluding certain types of perils that the captive should be picking up or maybe the reinsurance market has become much more, um, competitive and the captive might be better off laying off
some risk in the reinsurance market rather than keeping it. All of those things are part of the ongoing periodic strategic review. Which then would be back fed into a new business plan and new implementation and uh, and, and, and, and beginning the cycle again of implementing operating for a while, doing a refresh and then operating that way. So I guess, uh, I'll go first
and I'll let you finish up, but, um, we, we believe that the important differences, um. Ed Willis are really a, there, there's a handful of them, but they're very important. The one I mentioned earlier is that, that you will not, you'll not see, this is not the last time you'll see me. When you form a captive with Willis, you get not only the management team, but you get a bunch of people who are very dedicated to, um, a career in captive strategy building and also you'll get people who are,
who are very experienced in understanding the marketplace and how it affects people who are self-insuring or using captive insurance companies. So that is one important difference. Another important difference is the attention that we pay to analytics in the organization. We that, um, it's not a sideline, it's not a bell or a whistle. Everything that we do at Willis Towers Watson begins with analytics and everything that we do is informed by analytics and when things don't look right with the analytics, it's when we slow down and ask more
questions, and we think that that benefits our clients and we think it keeps us very much on top of things and on top of our games and our careers and it helps us stay on top of, um, doing the best services we can for our clients and Christina, maybe you'd
Speaker 149
1:47:55
like. To add? Yeah, I just want to say thank you for everyone's attention today. I know it's late in the day and I appreciate you hearing us and just one last comment is, um, we work together, Ed and I, we will be great collaborators together and we specialize in the public
sector space, um, so thank you very much. All right, thank you for that. Can you, you may have mentioned this at the very beginning. What, what is your footprint in Arkansas look like.
Speaker 149
1:48:25
Yeah, the offices here, you're based here. Any of that? So we have satellite offices, and by that I mean we have folks that work from home in the Arkansas area. We do not have a brick and mortar space in the state, um, but we are located in the majority of states in the United States, but we did, um, a
right size modeling for a real estate, and we did dramatically draw back on
Senator Justin Boyd
Unverified
1:48:50
our brick and mortar space. Thank you, Senator Boyd, you recognize? Thank you, Mr. Chair. Um, I think this is a simple, straightforward question. The right here if you're not sure where I where I am, uh, sorry, got me off track with that. There's there, there's a chair blocking you, that's why we can't see you, I get it. So, uh, just to, to be quick, so the insurance world is very complex,
and this is kind of new to me, um, I just wanna know what kind of assurances you can give me that if we hire you, that we can be confident you're working for Arkansas and not some other broker or some somebody else in the. system that we're we're your
Speaker 167
1:49:32
client and. Thank you. Uh, other, other than giving you that, that, that is the that is the
Speaker 152
1:49:38
professional mission of our organization we actually pay a lot of attention to, uh, identifying and documenting and
and walling off conflicts of interest, um. You have our assurance that you we're working for only you and nobody else. Um, there are no other relationships that we would be aware of that would conflict with our ability to serve you. The one thing I will mention, um, is that, um, for example, so we, we had a competition for captive management. We also had a competition for insurance brokerage services. Um, if we were, um, fortunate enough to win captive
management, it would not be a situation where Cristina could call up the captive management people and say hey give me all that information about Arkansas because we want to pitch the brokerage. We have internal ethical walls, and we would not be able to share that information. Um, the only inform the information about the Arkansas account, if you will, would be provided to people on a need to know basis and only people who are involved in managing the account. But there's no internal system of sharing information, uh, with
Senator Bart Hester
Unverified
1:50:46
people who don't need to know about it. Senator Hester. Um, so speaking on Arkansas, you guys got 400 captives. Are any of those within the state of Arkansas currently, one of them, yeah, and you may, you may or may not, you're able to share who that is. I'm not able to share that totally get that. Um, I appreciate that you, you clearly done some research about Arkansas and what's what's going on here. Uh, do you got, does your, does your company have
Christina Meyer
Unverified
1:51:17
strong climate change or DEI policies. Uh,
Senator Bart Hester
Unverified
1:51:25
from an insurance perspective? No, not insurance at all because my kind of my point is, uh, Everybody that we're gonna interview with is capable and, you know, I just want to know about you. Like, uh, does, does your, does WTW have? Strong positions
Speaker 149
1:51:41
on climate change or DEI I think corporately, we have invested in
DEI and we have models about climate change and we can run those for our clients, um, but I don't think we have a corporate position that's come out about either one of those things. I think Ed and I probably have personal, um, thoughts on each of those topics, but I don't think our, uh, corporately we've come out
Speaker 152
1:52:05
with a formal position. And, and we do, and we do there there are clients who will retain us to do um climate modeling. So to the extent that our client, our clients believe
that that um they are affected by, um, supposed climate change, uh. From a from a from a water supply standpoint from a average temperature standpoint or any other number of things you could think of. Uh, we do have models that will help them project or predict what those impacts might be on their business. Thank you. Thank you, Senator Representative Brooks. Thank you,
Representative Keith Brooks
Unverified
1:52:41
Mr. Chair, over here. Kind of behind the chair as well. Uh, thank you guys for being here. Appreciate your time and, and all your preparation. I
want to go back to, uh, follow-up of, um, thank you. Follow up of what, uh, Chair Eaves said just a minute ago relative to your local presence. So, uh, you, you don't have anyone specifically, neither one of you are local, they're like, is there anyone specific on the ground in Arkansas that would be working with this. Oh, that's
Speaker 152
1:53:09
not planned at this time. There's no, there's no reason that could not happen in the future, but, uh, right now the, the staff that we've proposed for this are people who are not living in Arkansas. And where
Speaker 160
1:53:21
are those staff at? Oh, One of them lives in Virginia. I think one of them lives in Vermont. I think actually um one of them lives in Connecticut. And
Representative Keith Brooks
Unverified
1:53:32
looking at, uh, obviously, we've been doing this for about 18 months now. So looking at some of the challenges that we have from your perspective, what are some of the challenges that, that the state has for this to be
Speaker 153
1:53:46
a successful implementation. Well, we talked about the sweeping of funds. Right, that, that's probably one
Speaker 149
1:53:52
of the biggest challenges is most states will sweep back the funds that they put in insurance to set up whether they're self insurance or their claims and then if there's excess, it goes back. So that's really the biggest challenge that we see with, with states. Um, we did similar modeling for the District of Columbia, um, they're unique because they can get federal money whenever they want and Connecticut's different because they wait every. not Connectic cases. I mean, Nevada is different because they
wait every 2 years to sweep back the funds. So it, we need to get the legislation you guys involved to set up rules and regulations that those funds can be held in the captive. And what I'd add to
Speaker 163
1:54:34
that is my own experience in working in, uh, the city of New York where so
Speaker 152
1:54:39
at at the time, uh, there was an expectation that there were going to be many people who are going to develop, um, latent illnesses from the cleanup effort at the World Trade Center, which actually turned out to be the case.
And FEMA, um, was interested in giving money to the city of New York to deal with those claims, um, but what happened was the city was also FEMA expressed a very grave concern that the city would take this money and pave my street with it or something like that, and they, they were they were quite insistent that the city buy an insurance policy and what happened was the value of the insurance part policy and the commercial market was going to be Con considerably less than a billion dollars because insurance companies were going
to want to take a profit on that transaction even though it was very clear they weren't going to provide any risk transfer and that was how the idea of a captive owned by the city was born. I think in some very, in, in some sense that's kind of how the cap, the idea for a captive here was born. The idea that, that the, the, the underwriting profit should be kept here as much as possible. And so the the the city created the captive and in fact special legislation was needed to create that possibility.
And when that was created, the, the what it mostly accomplished was putting the money in and putting the money in a company that had a policy attached to the money that governed exactly what types of conditions could govern spending the money and um, The money couldn't be spent on anything else, and the insurance department of the state of New York effectively acted as a bodyguard to protect the money from going anywhere else.
All right, members, any other questions? Seeing them, thank you very much for coming down.
Speaker 180
1:56:33
Thank you for your presentation. Thank you for your time. Thank you.
We'll be in touch. Thank you. Thank you. Remember that's all we have, uh, now. So this meeting will be adjourned.
Agenda
A. Call to Order
B. Presentations of Captive Manager Proposals
C. Other Business
D. Adjournment
Documents
Speakers
Representative Les D. Eaves Chair
Unverified
Todd Denton
Unverified
Speaker 6
Senator Bart Hester
Unverified
Speaker 11
Speaker 13
Speaker 17
Speaker 19
Speaker 15
Representative Jack Ladyman
Unverified
Representative Keith Brooks
Unverified
Speaker 23
Speaker 36
Senator Justin Boyd
Unverified
Speaker 69
Representative Jeff Wardlaw
Unverified
Senator Jonathan Dismang
Unverified
Speaker 82
Speaker 9
Barry White
Unverified
Speaker 96
Speaker 101
Speaker 105
Speaker 102
Speaker 120
Senator Ben Gilmore
Unverified
Christina Meyer
Unverified
Speaker 149
Speaker 152
Speaker 156
Speaker 161
Speaker 167
Speaker 160
Speaker 153
Speaker 163
Speaker 180