There is an evolution happening in the group captive space—an area that has already experienced significant shifts due to the success of group captive insurance and the entry of private equity firms investing in the captive market pushing growth. For Joseph Davina, senior vice president and head of Group Captives for AXA XL, solving for the client’s specific needs took on a new dimension. Joe and his team devised a way to utilize a group captive approach to structure a solution for one client. That single structure earned the AXA XL team Captive Review Award’s “Best Group Captive Manager of the Year” Award and introduced a new way for captives to respond to risk.
We recently spoke with Joe about the award and what led to this recognition.
What was the solution that your team worked on to earn this award?
Joe: We were approached by a fast-food chain that wanted their franchisees to be part of a member-owned group captive. This is somewhat different from the typical captive for this type of franchise business, which is usually an agency captive owned by the parent company. There are pros and cons to both approaches. If the parent owns the captive, the risk management oversight, dividend potential, and return on investment go to the captive owner, which isn’t necessarily an incentive for the franchisees. Conversely, in an agency captive scenario, the franchisees benefit from the parent company's capital funding the captive if needed.
Many franchisees are smaller, often family-run operations with fewer employees and less exposure than a typical group captive member. Their workers’ compensation payrolls tend to be lower. However, the producers of these franchisees—and sometimes the parent company—want to address primary casualty, umbrella casualty, property insurance requirements, and other industry-specific insurance needs.
The solution we developed included the primary casualty within the captive, but also involved lines outside of the captive, such as property and umbrella casualty above the primary casualty limits. This meant working across multiple teams internally—initially setting up the primary casualty within the captive while simultaneously working on property and umbrella casualty coverages to meet the client’s comprehensive insurance needs. Collaborating closely with our umbrella team was crucial, as this is often a challenging aspect for group captives. Achieving this was a significant win for both AXA XL and our clients.
What made this somewhat easier was that this industry—fast food—is fairly uniform. While property insurance for fast-food restaurants historically poses challenges, given that their properties are not ideal risks, we worked with our property team on E&S (excess and surplus) paper to write this risk. One key step was partnering with the captive intermediary and producers overseeing the franchisees and captive, guiding them to apply for a Risk Purchasing Group (RPG).
Originally, this deal was intended for only a handful of franchisees, but the potential for more to join would significantly increase servicing demands. Establishing the RPG was critical to managing that aspect. Essentially, it’s a hybrid program within a group captive. The team provides target pricing per franchisee, and because they filed the RPG for general liability, HNOA (Hired and Non-Owned Auto), and property, we issue only one policy. A simple endorsement on the policy certificate suffices, greatly reducing servicing efforts.
That’s revolutionary…
Joe: It’s rare in the group captive world to see one carrier providing property, umbrella casualty, and the captive itself. The clients wanted a cohesive solution from a single carrier, which is unusual in the group captive space. This approach created a hybrid program where we also offered ancillary lines typically seen in middle-market BOP policies for smaller insureds.
The clients wanted a cohesive solution from a single carrier, which is unusual in the group captive space. This approach created a hybrid program where we also offered ancillary lines typically seen in middle-market BOP policies for smaller insureds.
What conditions prompted this approach?
Joe: There’s significant growth in the captive space as intermediaries seek to find nuanced solutions for a broader range of clients. Traditionally, group captives focused on a standard primary casualty market—predictable from an actuarial and underwriting perspective. Finding solutions in that space is relatively straightforward.
Today, many intermediaries are driven by either private equity ownership or aim to grow their portfolios, fueled by the expanding captive market. The challenge is developing solutions that support growth while remaining feasible in terms of structure and pricing. Adding other product coverages—such as cyber or professional liability—can be complex because these lines are less predictable. Building a sustainable captive from a loss-sharing and structural standpoint becomes a key challenge.
It sounds like your team is focused on creating customized solutions for clients.
Joe: Yes, and we’re also working on forward-looking innovations. For example, we’re currently exploring a potential captive tailored for design professionals like architects and engineers. We can handle casualty coverage readily, but now we’re focusing on diversifying into different lines. We’re in discussions with the group and hope to have something in place by early 2026.
What are you most optimistic about for the future?
Joe: I believe the future lies in addressing clients’ total insurance needs across multiple product lines. Carriers that can offer comprehensive, integrated solutions will have a competitive advantage. It will require a strong combination of actuarial pricing across various products and industries, as well as close coordination with captive intermediaries and managers to ensure solutions are sustainable and compliant with domiciliary requirements.
There are several innovative programs already in the industry that have been successful over recent years. Solving clients’ unique nuances makes a significant difference for carriers operating in this space. The effort and collaboration across AXA XL to develop these solutions have been instrumental to our success. Ultimately, it’s about benefiting the customer, which remains the core reason we pursue these innovative approaches.
