Benefits captives provide positive results for multinational firms

SAN DIEGO — A significant majority of global companies that use captives or multinational pools to cover employee benefits risks achieve positive financial results via the arrangements, according to a study by Willis Tower Watson P.L.C.

And using captives to provide coverage for benefits risks can add to the risk management advantages of using a captive, speakers during a session of the Captive Insurance Companies Association International Conference in San Diego said Monday.

Kathleen Waslov, Boston-based senior vice president with Willis Towers Watson, said the firm’s recent survey of 200 global companies using captives or international pools to cover benefits risks showed that 72% of the companies had “positive results.” According to the survey, released this month, the average profitability of the programs was 8% of premium.

The trend to cover benefits in captives – which can include life, accident, disability, medical and some retirement plans – has extended to many industries and brands, including The Coca-Cola Co., Dow Chemical Co., Nestle S.A. and Sony Corp., she said.

Stockholm-based Assa Abloy A.B., which manufactures automated doors and locks and employs 47,000 workers worldwide, including 9,400 in the United States, is considering covering employee benefits via a captive, said Fredrik Finnman, group risk and insurance manager. Mr. Finnman provided an at-a-glance look at the company’s risk model, which include captive coverage for most of its risks including its most expensive: product liability and business interruption.

“We see the lower costs, improved governance, and improved risk management … these provide motivations,” he said.

“The time is right (for employee benefits),” he said, noting the risk management and human resources department are discussing the possibility.