Trusts made easy

18-10-2019

Trusts made easy

Robert Quinn, vice president in the insurance collateral solutions team, Wilmington Trust

Reinsurance trust agreements have gradually grown in usage by the industry over the past two decades, which is also the length of time that Robert Quinn, vice president in the insurance collateral solutions team at Wilmington Trust, has been working in this sector. He sat down with Intelligent Insurer to discuss how the sector has changed in that time and how he turns challenges into opportunities.

Congratulations on completing 20 years. How did this all start?
I had just finished an MBA programme and had done an internship at (what was then) the Bank of New York. I accepted a full-time job on the corporate trust sales team and observed that the reinsurance trust service was under-served from a sales standpoint. Given the Bermuda travel, I jumped on it.

"I tell everyone else that I have never been part of a team like ours. It is more like a family."

What are some of the challenges you have faced over the years?
For me this goes one of two ways. If it is a client-oriented issue, I call that an opportunity; if it is an internal issue, I call that a challenge. To be clear, almost every difficulty we face is an internal challenge. If a client identifies an issue, we seek an internal solution. Our primary purpose is to shield the client from any difficulty regarding their experience with us as trustee. If a client identifies a difficulty, we have an opportunity to make it right. We face the challenge of addressing their problem so that their workload does not increase.

Can you give some examples?
One of the biggest challenges that clients face is around the initial client on-boarding process. The banks must perform a “know your customer” (KYC) process to avoid doing business with potential bad actors. The issue for the client is that (particularly since 9/11 and the financial crisis) the amount of information banks are requesting is growing and growing.

At Wilmington Trust, we ask only for the information required and nothing more. As banks, we are subject to the same requirements as other banks, but some of our competitors seemingly ask for more than is actually required. Our clients really appreciate our simplified and streamlined on-boarding process. In fact, our process is so streamlined that the time between our getting the required documents and the client having an account number to insert into the trust agreement has never been more than two days.

Another issue occurs around the legal review of the reinsurance trust agreement (RTA). Most banks have competent attorneys reviewing the proposed trust agreements. However, each “beneficiary” (the cedant) has a trust agreement they prefer and many “grantors” (the reinsurers) also have versions of the RTA they prefer. This can cause delays. First, how quickly can the internal legal team get back to the client? Second, the internal counsel may not necessarily specialise in RTAs and make more comments than needed. This represents an opportunity for us to find an internal solution (we cannot ask everyone to use our RTA).

Our solution is first to hire an attorney that does specialise in RTAs. This means that there is much less legal to-and-fro as our team understands not only the RTA but also the business behind the RTA. Second, to avoid log jams during busy times, we also have outside counsel that also specialises in RTAs on retainer. While this will never solve all delays due to language negotiations, it certainly speeds things up to the point where our customers routinely thank us for our quick turnaround times.

How long has your team been together? What makes them different?
The core of our team has been together from the beginning we are all celebrating 20 years! When I talk to my mother, I take all of the credit for having built three reinsurance trust teams. I tell everyone else that I have never been part of a team like ours. It is more like a family.

I think we sit apart as a team because each of us continues to try and further our knowledge of the industry. Many trust administrators do their job and do it well. Our team, however, makes a concerted effort to understand the industry. We are constantly at conferences, constantly taking classes, and constantly reading all the industry updates and tutorials online.

How has this search for knowledge benefited you?
A while back we were asked to be trustee on a deal that no other trustee wanted because of the language requirement in the trust agreement. Having just sat through a seminar on the subject, we understood what the regulator the one who had issued the language requirement was trying to achieve legally. We also knew it was a requirement. Further, we knew the risk involved was (and is) minimal. We took it to our in-house counsel (who was also familiar with the language) and secured approval to move forward in under an hour.

Do you see any big changes coming for trustees?
Things are constantly changing, in particular, RTA wordings. Everyone involved has an interest in furthering their own protections (yes, including the trustee). That means language variations happen often. But if you are set up for change, thanks to having experienced staff, experienced attorneys, and knowledge of the business driving the transaction, these are not big problems. And again, shielding the grantor and the beneficiary as much as possible is critical to success.

As far as industry changes go, those don’t affect the trustee much. The transaction is the transaction. Whether it is for use on an insurance-linked security, industry loss warrant, catastrophe bond, retro deal, reinsurance contract or sidecar, they all often require use of a trust. But for now, the trusts are all very similar.


Robert Quinn is vice president in the insurance collateral solutions team at Wilmington Trust. He can be contacted at: rgquinn@wilmingtontrust.com

Wilmington Trust is a registered service mark. Wilmington Trust Corporation is a wholly owned subsidiary of M&T Bank Corporation. Wilmington Trust Company, operating in Delaware only, Wilmington Trust, N.A., M&T Bank and certain other affiliates, provide various fiduciary and non-fiduciary services, including trustee, custodial, agency, investment management and other services. International corporate and institutional services are offered through Wilmington Trust Corporation’s international affiliates. Loans, credit cards, retail and business deposits, and other business and personal banking services and products are offered by M&T Bank, member FDIC.

Wilmington Trust, Insurance, Reinsurance, ILS, Catastrophe, RTA wordings, Robert Quinn, North America

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