Ian Kilpatrick has been a bastion for Cayman’s insurance industry breaking new ground
in what might have often seemed formidable circumstances. From his captive career
beginnings in 1976, building one of the first specialist captive management companies,
Insurance Management Consultants (Cayman) Ltd., sold later to Johnson & Higgins (now
Marsh Inc.) in 1984, to the founding of the Crusader International Group (now called
Advantage International Management) in 1993, Ian has proved himself as a leader and
innovator in this dynamic and ever expanding industry.
T
aking a step back from the day to day running of
the company in 2006, he currently serves as Vice
Chairman and consultant to the board of directors
of Advantage, and is a director of the Captive Insurance
Companies Association in the US. Mr. Kilpatrick was also the
founding Chairman of the Insurance Managers Association
of Cayman (IMAC) and upon his retirement made a
sizable donation to the IMAC Scholarship Fund. Captive
Insight caught up with Ian to talk about his experiences in
Cayman’s captive industry over the last 40 years.
What have you been up to since your retirement
from the captive business in 2006?
I have been involved in the oversight of activity in our USbased operations of a captive management company with
offices in Charleston, South Carolina; Scottsdale, Arizona;
and Washington DC, although I’d say my primary focus has
been on the development of our life insurance company.
I think it’s fair to say that I have always viewed captive
management as an entrée into life insurance, which is our
primary business. I’ve also been focused on restructuring
Advantage and bringing additional capital into the company
so that it may move forward with plans for future expansion.
Was it a natural transition when you decided to
move operations to the US?
Not really. I opened up in the US in 2001 after a rather
frank discussion with the then head of the Cayman Islands
Monetary Authority (CIMA), who advised me that there was
no room in Cayman for privately owned small businesses in
the financial industry, and that I should start to think about
what I wanted to do. As it happened, that person didn’t retain
his position for very long. That, coupled with the concerns of
the newly released Organisation for Economic Co-operation
and Development’s (OECD) “black list”, I thought it would
be prudent to add another arrow to my quiver.
Would it therefore be correct to say you were
into diversification?
I believed that I needed to expand and that certain types
of captives would increasingly choose to domicile in the
US. This turned out to be true. It was still a big decision
to open in the US mainly because of the huge expense and
the prospect of competing with much larger management
companies, but there were considerable opportunities and
that big commitment turned out very well for us.
What was the rationale for the change of
ownership for the Crusader Group?
It can be challenging for a small independent manager to
compete with the major brokerage houses. To expand today
you need a lot more capital than a small privately owned
group can probably muster. Particularly, we have a life
insurance company and we have a segregated cell company
in Cayman, and in order to insure the risk transfer and risk
distribution, a great deal of capital is required to take the
needed positions on risks. We’re talking much more than a
million dollars – substantial capital is needed to take a line
on particular business. We feel that for us, moving to a ‘risk
taking entity’ is the direction we must move towards. On
the life side, we have the capability to issue what I would
call ‘jumbo life insurance policies’, at one time we had a
reinsurance line of 40 million dollars, but over the years
we’ve scaled back as life reinsurers cut their lines. We can,
however, still issue a 30 million dollar face value per policy,
the majority of which is reinsured by RGA, one of the top
three life reinsuring companies in the US.
But we wanted to take more risk, and when marketing those
mega-risks, we are targeting a very select group, and the
sort of person who wants that type of policy really and truly
needs to see a company with substantial capital. In reality
the capital isn’t all that important because it depends on
the net retention within the life company. The segregated
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