Broad Reach Partners

Broad Reach Reinsurance:
Experience | Perspective | Forethought

What Is Broad Reach RE?

Broad Reach RE seeks to merge the traditional insurance marketplace with small captives to create the opportunity for additional profits not previously available.

Often called insurance for insurance companies, reinsurance adds another layer of protection against risk and acts as a force multiplier for your capital. Reinsurance can be a capital-efficient way to deal with severe losses and special kinds of risk.

PATH Act Opens the Way

The PATH Act of 2015, changed the risk and reward equation for captives and reinsurance. It opened the door for increased risk capacity for small insurance companies due to the increased 831(b) exemption—up to $2.3 billion in 2018. The end result is now the captive has the ability to handle more risk without losing its tax-status.

Historically, most small captives have relied on risk pooling vehicles tailored to enterprise risks in order to achieve the required level of unrelated, third party risks. Small captives generally do not possess the surplus or expertise, on an individual basis, to effectively participate in the traditional reinsurance market.

The Broad Reach Reinsurance Value Proposition

Captive Owners: Additional diversification through the addition of high frequency, low-severity lines of business previously unavailable to small captives.

Underwriting Partners: Additional capacity on profitable programs through introduction of mature captives to share risk in a capital-efficient manner.

Captive Managers: For your mature captive, access the opportunity to bolster existing third-party risk without contagion risk from outside captives. Enjoy the potential to increase profitability with flexible reinsurance options.

Participant Qualifications

▪ Mature captives with surplus greater than $1,000,000 or reinsurance pools with pooled premium greater than $10,000,000

▪ Audited financial statements

▪ Ability to post cash collateral equal to 25% of 1st year requested premium

▪ Unimpaired surplus of at least 150% of 1st year requested premium

What Are the Benefits of Broad Reach RE?

  • Bolster and diversify existing reinsurance pooling arrangements
  • Augment third party risk distribution by participating in traditional reinsurance market activities.
  • Diversify risk characteristics by including non-correlated frequency risks alongside high severity risks
  • Potential for additional underwriting profits
  • Stabilize your profits. Claims can fluctuate widely one year to the next, making profit forecasting difficult and capital management challenging. Broad Reach Reinsurance covers sizeable and rare claims can even out your loses and add predictability to the mix.
  • Expand coverage capacity. What you can cover is limited by premium limit regulations and capital requirements. Broad Reach Reinsurance lets you cover risks that would otherwise be financially impossible.
  • Protection from catastrophe. Broad Reach Reinsurance can protect you against truly devastating events that could otherwise destroy your business and your captive.
  • Increase underwriting accuracy. A reinsurer can bring knowledge of risk and underwriting expertise to add capacity and precision to your underwriting process. Broad Reach connects you with our industry knowledge and relationships with A-rated reinsurance companies.
  • Extract your captive from certain types of risks. Offload coverage and associated required reserves for various risks to a reinsurer who may have greater capacity and understanding of the risks.