A new captive management company has been born out of the reorganisation of General Motors' Bermuda-based captive insurance company.

General International Ltd. (GIL) will no longer be managed by its own staff. Instead it will be run by Granite Management Ltd., a new consultancy and captive management company.

GIL will terminate the employment of five employees today - but three of them will start work at Granite tomorrow, meaning two people lose their jobs.

Phil Heaney, GIL's chief operating officer, will tomorrow become a director and chief operating officer of Granite. Brian Quinn will likewise transfer from GIL to Granite as a director and chief underwiting officer. One of the other existing GIL staff members has been rehired by Granite.

Walter Ralph, who works out of Ohio, is Granite's third director and a human resources consultant. The three men will each own a third of the new company.

Granite will be based in the same offices, in the Chartis Building, that have been home to GIL.

The Granite directors have plans to seek clients beyond GM, selling their expertise in reinsuring International Employee Benefit (IEB) programmes via a captive. At first they plan to operate as a consultancy and then expand into captive management.

General Motors Corp., the world's second-largest automaker, went into Chapter 11 reorganisation in the US in July last year. It has re-emerged as General Motors Company. GM's motivation for the change at GIL is reduction of headcount, but it wants to maintain its Bermuda captive which has provided good value to the corporation since it was founded in 1981.

Mr. Heaney, who has been GIL since 1988, said the Bermuda captive - which provides insurance to the parent corporation - had saved GM around $50 million last year.

"GM appreciates the value of the Bermuda location," Mr. Heaney said. "There are no thoughts at the moment of relocating."

A significant part of what the captive does is to provide GM with an IEB programme, which in itself saves GM about $30 million annually.

Mr. Heaney and Mr. Quinn have worked together for more than a decade, while Mr. Ralph is a 40-year retired veteran of GM. Their experience of the IEB captive programme, which serves GM in 40 countries, is proving attractive.

Potential clients - Fortune 500 companies - have already been in touch with Granite's principals. And Granite hopes other captive management companies will also be interested in its IEB capabilities.

"This is not just hypothetical - we have actually done it and the savings are real," Mr. Quinn said.

In its promotional material, Granite says Mr. Heaney and Mr. Quinn have "designed 'made-to-measure' employer and employee paid programmes in over 40 countries globally and put in place 'insured via captive' solutions in countries where these are not typical or thought to be achievable". The company said global annual premium savings of 35 percent had been achieved.

Mr. Heaney's vision for Granite's future entails picking up some household-name clients. "In five years, I would hope that Granite will have half a dozen captives under management and we could have a staff of between five and ten people," he said.

"The more we grow, the more big names we will be able to get in. But we will need the actual captive management work in order to increase the staff numbers."