From Coal to Steel 🏗️ of yesteryear, now 🌿 Cannabis, Ξ Crypto Ξ and Cyber show how Captives evolved over the last 60years through to the present.
From Coal to Steel 🏗️ of yesteryear, now 🌿 Cannabis, Ξ Crypto Ξ, and Cyber show how Captives evolved through to the present.
📚 Held Captive (2004) by Catherine R. Duffy https://amzn.to/3Fgellj
🌐 Bermuda Captive Network https://www.bermudacaptivenetwork.com
Bermuda Monetary Authority www.bma.bm
Business Insurance https://www.businessinsurance.com
▶️ Captive Glossary https://www.captive.com/captives-101/glossary
About the Guest:
Son of Fred Reiss, Jonathan Reiss is the Managing Director at Strategic Risk Solutions (SRS), a full-service insurance management business with operations in North America, Europe, Bermuda, Cayman and Barbados. SRS has been managing insurance companies for over 25 years and currently manages in excess of 600 insurance entities that collectively write $7 billion in annual premiums. SRS is expanding its Insurance-Linked Securities (ILS) practice, including Fund Administration.
About the Show
Podcast Host: Life & Leadership: A Conscious Journey with Dr. Michelle St Jane
A podcast for Global and Re-Emerging Leadership creating community/tribe, a circle of influence, transcendency of compassionate leadership in the world and wider universe. A unique destination for learning about Leadership + Conscious Stewardship + Legacy.
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Intro: You're listening to Life and Leadership: A Conscious Journey. The podcast that shares wisdom and strength. Join your host, Dr. Michelle St Jane's weekly conversation on how to have a positive impact for people, planet, and the wider world. If you want to live a life of intention, to be proactive with your time and bring your vision for the future to live one today at a time, you’re in the right place at the right time. Let's get started.
Dr. Michelle St Jane: [00:00:38] I appreciate and value that Fred Reiss chose Bermuda as his domicile of choice to set up the foundation for Bermuda insurance and re-insurance industry that flourishes today. The Bermuda captive sector continues to record exponential growth over the last 60 decades. His legacy is continued in the industry by his son and daughter.
Let’s explore captives in life and leadership.
Dr. Michelle St Jane: [00:01:05] We all face the velocity of change across the global risk landscape. Prudent risk management demands, diligent, planning, control, and financing. The traditional insurance market plays an important role. Yet over the centuries, past history shows us that there are times that commercial insurance coverage has been unavailable, lacked capacity and flexibility or worse been provided with severe terms and conditions. For the regulated sectors this raises the risk of not being able to conduct business.
Dr. Michelle St Jane: [00:01:35] The need for an alternative risk transfer vehicle, that's flexible enough to take control of the overall cost of the risk, the peaks and manages volatility for the parent being both versatile and fit for many purposes. The Bermuda captive is serving a purpose and accommodating.
Dr. Michelle St Jane: [00:02:00] Way shower Fred Reiss was the grandfather of the captive industry. Being intentional and intelligent Reiss built on the idea of designing structures of self-insurance. It was all started by the American steel companies who could manage their own risks through a dedicated subsidiary. Reiss realized that the concept needed to evolve.
Dr. Michelle St Jane: [00:02:22] It needed flexibility and an innovative jurisdiction. So, Reiss, pursued the concept in Bermuda. Launching the first captive in the 1962. By the 1990s, the captive insurance industry had become global demonstrating the benefits the use of captives can provide to companies. The advantage of the captive option is that the control of insurance provided remains in the hands of the captive owner.
Dr. Michelle St Jane: [00:02:48] This proves a major benefit in times when insurance cover can range from being non-existent. Or when there is the emergence of newer risks that need new resiliency. The evolving captive market evidences the evolution, transformation, and expansion of options available. For example, a cell captive, and there has been a boom, it has another name rent-a-captive, or sponsor captive and can be used for securitizing risk.
Dr. Michelle St Jane: [00:03:19] A group captive is a risk transfer, alternative to traditional insurance. Across all risks and industries new areas ranging from cannabis, crypto, to cyber risk exposure in the kept of arena.
Come for a walk down memory lane. To me, it was the late 1990s and I had the privilege to chair and lead a Bermuda insurance Institute committee.
Dr. Michelle St Jane: [00:03:43] This sub-committee, was tasked with coming up with ways to recognize and celebrate market leaders and lifetime achievers.
Fred Reiss was the first inaugural recipient of the lifetime achiever award post humorously. Fred's son Jonathan Reiss, daughter Nicolette Reiss and widow Debbie, received the award on Fred's behalf at the industry dinner, held at the Hamilton Princess in Bermuda.
Dr. Michelle St Jane: [00:04:12] Re-launched in 2016, the Fred Reiss lifetime achievement award selects professionals who've made an outstanding impact and valuable contribution to the captive insurance industry.
Recipients have been Jill Husbands, Michael Burns, Brian Hall, Jeremy Cox, and Catherine R. Duffy.
Dr. Michelle St Jane: [00:04:38] I wonder if Fred Reiss would be pleased to know that Butler's Lacy school has a Master of Science in risk and insurance, a program that provides the best of both insurance worlds. They have specialized courses in property, casualty, employee benefits and the operation of a captive insurance entity. The only student run captive in the world that started off in Bermuda. All of this is paired with foundational business courses that you would usually find in an MBA program.
Dr. Michelle St Jane: [00:05:06] Captives demonstrably show Bermuda continues its resilience and innovation to me, capacity, and expansion in times of novel risks.
Fred’s son, Jonathan Reiss, shares his memories of his father’s insight and contributions to the sector.
The industry nearly did not land here in Bermuda. It could've very easily gone somewhere else.
Dr. Michelle St Jane: [00:05:29] Boy, what a difference it makes, because when you look at companies like ACE going into underwriting, satellites, and rockets, which is amazing. We wouldn't have this technology and the internet of the stars coming up without that kind of underwriting.
Jonathan Reiss: [00:05:45] Absolutely right. A lot of credit needs to go to, there was very innovative people at Lloyd's of London who, without them, Fred probably wouldn't have been successful.
Jonathan Reiss: [00:05:52] There were people in Bermuda who helped him in a way that wasn't available elsewhere. I do want to make one other little historical point. Cause I think people always enjoy this, but the turning of my father was credited with coining, the term captive, and a lot of people in the industry, I'm excluding people who've worked in the captive industry. All their lives. Don't know where that term came from, and it came from the big US steel companies.
Their factories would shut down if they didn't have enough coal. They relied on the delivery of coal. Sometimes there was blockages to the delivery of coal and these big companies would get frustrated that it would cost a lot of money if their factories had to shut down.
Jonathan Reiss: [00:06:27] They ended up doing vertical integration. They ended up buying their own coal. Didn't have to rely on other people to deliver their coal and the mines that each steel company owned were called captives. That's where the term captive comes from in the insurance industry. So, it was basically from coal mines owned by steal companies.
Dr. Michelle St Jane: [00:06:43] How interesting. I did not know that. My next question was, how did the term come about?
Jonathan Reiss: [00:06:48] That's a great question. I was good at accounting. I was fortunate enough to get a job at one of the big four county firm or big six back then. I thought, “well, I'll get my CPA. And then at least I'll get to put food on the table because I'll have a CPA.”
Jonathan Reiss: [00:07:03] It was a smart move in hindsight. I never thought I'd stay in the accounting profession, but I did. I was very lucky because I young professional entering the workforce, a Bermudian.
Frankly, a white Bermudian back in the early nineties entering the workforce, it was a hard not to do well because there was a lot of doors being opened and the international business sector was booming.
Jonathan Reiss: [00:07:22] I stayed at E&Y, the accounting firm, and I ended up becoming a partner. I did okay for myself. It all started with just trying to figure out what professional designation so that I could get grounded.
I do actually recommend an accounting degree. A lot of people say, “well, I don't want to do that.” But actually, getting a professional accounting qualification, like a CPA it doesn't mean you're stuck being an accountant.
It's a great grounding. You can achieve that by the time in your mid-twenties, you can go on in any direction. You can form your own business, do whatever you want. And it's a great training ground.
Jonathan Reiss: [00:07:53] My father passed away in 1993. That was the year I graduated from university and started work. I was too young. I never had a chance to really talk to him in depth about the insurance industry.
Jonathan Reiss: [00:08:06] I would love to have a chance to do that, but I wasn't knowledgeable enough about the industry when my father died. So, I didn't always get his views.
I do know for me, it was a hard to describe, but, you know, because I was young, I'm inferring some things from what I've learned, but Bermuda was a strange place for me when my father arrived.
Jonathan Reiss: [00:08:23] I think the best way I can describe it; it was a little bit like a Southern American town. There was a lot of racism and I think a lot of close-mindedness a relatively small group of powerful families control the economy. Some of them were really nice people, but some of them with the opposite were really horrible.
Jonathan Reiss: [00:08:37] People gives kind of stereotypical Southern American sort of town. The pain of that behavior from that era still haunts us today.
My father wasn't actually particularly welcomed into the community by quite a lot of the more closed-minded types. But clearly there were people that welcomed him, like Arnold Francis, who was a terrific lawyer. He was one of my father's great friends and Arnold's son Donny is a very good friend of mine, actually. Arnold's daughters too. And Bermudian family that welcomed my father and Arnold was basically his Bermuda lawyer. Maybe, you knew Arnold assuming you cross paths with him in the legal world.
Dr. Michelle St Jane: [00:09:09] An amazing family, powerful family.
Jonathan Reiss: [00:09:17] I thought he had some great friends, but there was quite a lot of people in the community turned their back on them. They didn't like a flashy sort of American, but I don't think he ever bothered him.
Jonathan Reiss: [00:09:25] He traveled so much. He was so intent on achieving big things. He was just focused on what he was achieving. Some of the smaller minded people in Bermuda didn't really bother him too much. I think it was somewhat oblivious to them. It's one of the things I always find interesting.
Jonathan Reiss: [00:09:39] In Bermuda today, there is some concern about expatriates on the island. There's always going to be tension. I like to remind many of my Bermudian friends that it was really sort of world-class business people that arrived in Bermuda in the late eighties and nineties. Not just my father, people like Brian Dupperault, Brian O'Hara, Michael Butt, and people like that, that they brought a tremendous change in the business culture on the island.
Jonathan Reiss: [00:10:01] And it was very much for the better. I'm not saying that it was still wasn't enough opportunity. There was still institutional racism and all that stuff, but they greatly improved the business environment and made it more inclusive. It's taken time to get better, but there were world-class leaders who moved to the island and made the place better.
Jonathan Reiss: [00:10:15] I like to think of my father as one of the first ones. There was many other.
Dr. Michelle St Jane: [00:10:19] The Bermuda insurance Institute recognized Fred as the first lifetime achiever. I have to say very determined because I knew the history. I could see that without the captive, we couldn't have opened up the other higher layers like the big steel companies. We were not going to be able to do business without having alternative ways of managing risks.
Jonathan Reiss: [00:10:47] Well, first I should thank you for being the committee chair that nominated my father for that award. My father was given that award. It was back when the awards for quite a number of years were held at a big gala dinner.
Jonathan Reiss: [00:10:57] My father had the great honor, thanks to you and others on the committee, being the first ever lifetime achievement awardee. I was there with my sister to my stepmother, Debbie to posthumously accept the award. And Brian Dupperault was the first recipient of the insurance person of the year market leader.
Jonathan Reiss: [00:11:15] Brian was there, and I met him for the first time. I ended up working for Brian at Hamilton Insurance group many years later. That was wonderful.
Even better after I received the award that night, I gave a very short speech then I met my wife that night.
Dr. Michelle St Jane: [00:11:35] I started teaching at the Bermuda Insurance Institute in the late nineties. Plus, I took on doing committee work and that was how I ended up on the committee that was looking at the creation of the lifetime achiever and market leader awards. Of course, I knew the history of how your dad started the captive industry.
Dr. Michelle St Jane [00:11:51] I think institutional history cannot be lost here and recognizing him post humorously had to be done. Number one. Right now, because we need to remember where we came from and the contributions he makes on the global stage, how we go forward. It's a legacy that we could capture.
Dr. Michelle St Jane: [00:12:13] I remember you're giving the speech, but it's so lovely to hear that you also met your lovely wife.
Jonathan Reiss: [00:12:17] That night was March 21st. It was my dad's birthday. My wife's Britt and I, we believe in faith. I mean, everyone's faith is a deeply personal thing, so we don't need to go off into tangents as to my faith.
Jonathan Reiss: [00:12:29] Let's just say, I personally do believe there are powerful forces that make things happen. We humans don't always understand them or know what they are, but I believe in things like that.
It's not why I married my wife. I fell head over heels in love with her anyway, but it's just one of those things that my wife and I both believe on a personal level.
Jonathan Reiss: [00:12:47] There was some financial challenges around the mid-eighties, there was a liability crisis. He had the vision to not just do captives, but he also wanted to set up the fronting operations, which made sense. And ultimately other people did it too. Like mutual risk management did that and they had their own challenges and stuff.
Jonathan Reiss: [00:13:03] My father had some of the captive pools that were a good idea, ended up being too much anti-selection. Some of them performed very badly for unfortunate reasons. There was some trial and error, and there was frankly, a lot of money lost as well as at the end of the day, they made money.
Jonathan Reiss: [00:13:19] At the end of the day he created an industry and a movement. You're a lawyer, I'm an accountant. It's the accountants and lawyers that came along and built on the captive industry that we were there to support and all the other innovation that's come. It was the big reinsurers and now insurance linked securities and everything else.
Jonathan Reiss: [00:13:35] It's all built on the same foundation of expertise that the captive industry gave birth to. that's his legacy and that's a safe legacy.
Outro: Dr. Michelle St Jane is a conscious steward as meaningful leadership in the world and the wider cosmos. Tune in every Thursday for real talk around life, leadership, and your conscious journey. Be ready to create and cultivate your dreams and wholehearted desires. Your support is valued. Please follow, subscribe, leave a review and a rating. More importantly, share with your connections.
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Managing Director, Strategic Risk Solutions
Managing Director at Strategic Risk Solutions (SRS), a full-service insurance management business with operations in North America, Europe, Bermuda, Cayman and Barbados. SRS has been managing insurance companies for over 25 years and currently manages in excess of 600 insurance entities that collectively write $7 billion in annual premiums.
SRS is expanding its Insurance Linked Securities (ILS) practice, including Fund Administration, and this is an area of particular focus.
Joined SRS from Hamilton Insurance Group, a specialty insurance underwriter, where Jonathan was a member of the founding management team and Group Chief Financial Officer. Prior to leaving Hamilton, held the position of President, Strategic Partnerships which included responsibility for building out Hamilton's ILS platforms as well as managing third party syndicate businesses at Lloyd's. Served as a Board member of Attune, Hamilton's digital MGA joint venture with AIG and Two Sigma. Also responsible for sponsoring and overseeing the development of Hamilton's Diversity and Inclusion strategy.
Prior to Hamilton, was the Leader of EY’s Insurance practice in Bermuda (as well as Bahamas and Cayman), and had been with EY, in Bermuda and New York, for 19 years (1993-2012) and had been a Partner for 12 years (2000-2012).
While at EY, focused on serving organizations subject to US and UK listing requirements. This included providing assistance with IPOs and other capital raising activities. In addition, advised insurance companies with respect to internal controls and regulatory best practices, including compliance with Sarbanes-Oxley as well as Solvency II.
A Chartered Professional Accountant and a member of the Institute of Chartered Professional Accountants of Bermuda. Earned a Certified Public Accountant designation in 1995 and is a current member of the American Institute of Certified Public Accountants (AICPA). Also earned a Chartered Property & Casualty Underwriter (CPCU) designation in 1998.
A member of the Bermuda Government's Insurance Advisory Committee (IAC). The IAC is a statutory committee that meets monthly with the Bermuda Monetary Authority to provide guidance to the Bermuda Ministry of Finance regarding insurance industry matters.
A member of the Board of Trustees of the Bermuda Institute of Ocean Sciences (BIOS) and have been a trustee at BIOS for over 10 years. Also a member of the Board of Trustees of Saltus Grammar School, the largest independent school in Bermuda with over 800 students.