What goes wrong inside a group captive?
Governance, not underwriting
Queen's objection to group captives is not actuarial. It is that a group captive is a company with several owners who did not choose each other, and the thing that breaks is the board. He is talking from the inside: he was general counsel to one, and describes board meetings he could not get through because the shareholders were arguing.
The structure he describes was a handful of assisted living facilities spread across the country, none of them individually large enough to support a captive of its own. Pooling them was the right idea, and he says so.
The problem came from the same place as the solution. One owner had the conviction to assemble the group, and the confidence that made that possible was the confidence that made the board unworkable once second and third tier shareholders had a say.
Key takeaways
Queen's complaint about group captives is governance, not underwriting or pricing.
The failure he describes came from the shareholder structure, where owners who did not choose each other had to agree at board level.
He would have used a risk retention group instead, because it settles the control question the group captive left open.
His own conclusion is structural rather than personal. Looking back, he says it should have been a risk retention group, where the majority shareholder's position is clear and the governance question does not have to be relitigated at every meeting. It is a useful reframing of the choice: a group captive asks a set of unrelated owners to agree, and if the arrangement cannot survive that, the underwriting never gets a chance to matter.
From the conversation
Matt Queen
Captive Insurance Attorney and MGA Executive, Author of Modern Captive Insurance
“I have never met a nastier bag of cats than group captives.”
Transcript
Read the full transcript 5 turns
Matt QueenI have never met a nastier bag of cats than group captives. Now, it depends on how they were governed. You may be doing a great job with them. The problem I had with
Matt Queenmine was we had a handful of assisted living facilities spread across the US. None of them were large enough to do their own captive
Host. And then one
Matt Queenguy really wanted to put everything together into a captive because he thought to be better for everyone, which was correct. But it was also the arrogance it took to pull that off was also the arrogance that just created so many problems in the board of directors and looking back on it, that really
Matt Queenshould have been a risk retention group. And then we could have just told him to shut up. We're going to make you rich as the majority shareholder. But because of him trying to govern things, it just became all the second and third tier shareholders just got into it all the time. And it's just every board meeting. I'd be sitting there because I was general counsel. I was sitting there going through the claims and then they would have another argument. And I'd be sitting there going through the claims and they'd have another argument. I couldn't even get through my entire spiel before they started screaming at each other. I was entertaining, but it was actually
The views expressed are those of the featured guest, drawn from a recorded conversation, and reflect their own professional experience. Nothing on this page is insurance, tax, legal, or investment advice. Consult your own advisors about your specific situation.
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