A background in insurance company management has helped Françoise Carli in numerous ways since she transferred to the buyer side of the insurance transaction, perhaps most in the area of captive management.

“For me, the captive is an insurance company and because I have managed an insurance company before, I know how to manage the top line, the bottom line, the future and the past.”

And she had quite a management task when she joined Sanofi-Aventis Groupe as vp, insurance in 2006.

The Paris-based pharmaceutical company had, as a result of previous acquisitions, active and inactive captives in numerous domiciles.

One of Ms. Carli's major tasks was to close inactive insurance and reinsurance captives in Bermuda, Canada, the Cayman Islands, France, Ireland, Luxembourg and the United States.

She also merged six active captives into one, Carraig Insurance Ltd. in Dublin, which is an integral part of the company's risk management and insurance program.

Ms. Carli is CEO of Carraig, which is one of the largest captives in Dublin and handles some of Sanofi-Aventis' most complex and important exposures, including trade credit and product liability risks. The captive is managed by Aon Insurance Managers (Dublin) Ltd.

“The captive is a fantastic system,” she said. It can take on the risks of a traditional insurer, but it is not run to make a profit. Its function is purely to serve the parent company and to ensure that risks are being priced correctly, she said.

A large proportion of Sanofi-Aventis' claims flow through the captive, giving Ms. Carli a firm grasp on the risks faced by Sanofi-Aventis and access to every one of the company's claims. “I see all sorts on my radar screen,” she said.

“In the captive, I need to take care of my past and my present and forecast the future,” said Ms. Carli.

While information on the premium volume underwritten by Carraig is not publicly available, the captive is believed to be one of the three largest in Europe.

Ms. Carli said Dublin was chosen as the domicile for Carraig for several major reasons: The fact that it is within the European Union means that Carraig benefits from E.U. rules on the freedom of services; Dublin falls within the Eurozone—the group of countries that use the Euro currency, also Sanofi-Aventis' reporting currency; and Dublin has a major and well-established captive insurance market.

The upcoming European Union risk-based capital regulatory regime, Solvency II, will apply to large captives and so, under Ms. Carli's leadership, Carraig has taken part in the fourth and fifth quantitative impact studies run by European regulators to assess companies' readiness for the rules, which will come into force on Jan. 1, 2013.

For Carraig, said Ms. Carli, adapting to Solvency II should not be a problem.

“Solvency II is only an issue if you don't know what you are doing,” she said. “We have a choice of what we put into the captive and what we don't. If you know what you are putting in, then Solvency II is not an issue. We manage the captive exactly as it if were an insurance company,” she said.

Carraig took part in QIS4 and QIS5 to help the insurance team work out how much capital to allocate to certain lines, said Ms. Carli. The reserving for the captive is checked every quarter, she said.

As a result of taking part in the quantitative impact studies, Ms. Carli and her team decided to try to diversify the business that was underwritten in the captive and ultimately included trade credit coverage in the captive.

Solvency II will serve as a “safety belt” for Carraig, she said, and the captive will be fully compliant.

Another of Ms. Carli's major achievements with Carraig was enabling the captive to become fully compliant with the Sarbanes-Oxley Act.

The 2002 U.S. law instituted various accounting and corporate governance procedures.

This process, she said, was a “fantastic opportunity for us to really define our strategy” for the captive.

“It's how you use things,” she said. Regulatory edicts, such as Sarbanes-Oxley and Solvency II, can either be viewed as a constraint or as a tool to help a business make strategic decisions, she said.

Sanofi-Aventis, which is listed on the New York and Paris stock exchanges, is fully compliant with Sarbanes-Oxley, but the size and complexity of Carraig means it also is subject to full, annual Sarbanes-Oxley audits.

Ms. Carli and her team, therefore, were tasked with organizing, documenting and controlling the flow of tasks between Carraig and its parent.

This process, Ms. Carli said, was instrumental in the transformation of Carraig from a captive vehicle to a “real” insurance company.

Carraig is structured so that risk can be ceded to insurers and reinsurers, and there is no hierarchy between the two forms of risk transfer. A panel of international insurers and reinsurers participate on Carraig's coverage.