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Jordan: a bridge between continents


Jordan has been forging ahead as a captive destination on the crossroads of Europe and Asia. Firas Abd-Alhadi outlines the case for the state as an emerging captive hub.


multifaceted capital-based growth has gained ground in the form of infrastructure, energy, real estate, natural resource development, urban development and industrial projects. The need to optimise capital usage in the MENA region necessitates considering non-traditional tools for risk management—with captive insurance increasingly considered an option. Indeed, businesses across the region are becoming more receptive to the cost-effective form of risk management that captive insurance can provide—a much-needed risk management tool in today’s restless economic climate, and particularly considering the MENA region’s necessary emphasis on inward investment.


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The region would benefit from its own captive insurance industry, which would spare the growing number of mega-projects the inevitability of resorting to overseas captives and exporting funds needed to enhance national and regional growth. Peculiarly, this exportation is happening while the region has the legal and regulatory environment, tax exemptions and reasonable capital requirements necessary to domicile a prosperous captive industry.


Recognising the rising demand for MENA-domiciled captives and


the availability of a nationally and regionally conducive insurance environment, Jordan is rapidly evolving to become a regional captive centre. Firstly, there is a steadily growing insurance sector in the Kingdom, which experienced an 11.9 percent increase in gross written premiums for the first half of 2010, compared with the same period in 2009. Projections suggest that the widening range of insurable activities in Jordan will further stimulate this growth. This growth will also build


isk management has long been an indispensible factor in industrialisation, economic growth and international trade. And the need for risk management is becoming increasingly eminent in the Middle East North Africa (MENA) region, as


upon strong results in 2009, a year in which medical insurance premiums grew by 26 percent and takaful premiums grew by 36 percent compared to 2008 levels. Also, the various mega-projects currently underway or in the pipeline—in energy, water, infrastructure, construction, tourism and transportation—bear witness to the validity of these expectations.


The domicile’s strengths, which include low restrictions on the free movement of capital and the level of capital required to establish a captive, have been further aided by modern legislation regulating the work of captive companies, including provisions pertaining to capital and solvency requirements that are guided by a risk-based approach appropriate to the specific nature and scope of captive business.


Three classes of exempt captive companies can be registered in Jordan:


• Single-parent captives, which can write only the risks of their parent and/or its affiliates


• Association captives, which are jointly owned by entities with similar businesses or activities, and can write only those risks emanating from their work


• Diversified captives that are either owned by a single parent or jointly owned, and can write not only the risk of their parent(s) and/or affiliates, but also other entities’ risks up to no more than 20 percent of the captive’s net premiums.


The minimum capital requirements for these three classes are:


JOD100,000 (€104,000), JOD500,000 (€520,000) and JOD700,000 (€728,000) respectively. Upon meeting all requirements, it takes around 35 days to issue a captive licence.


2009 also saw the issuance of Instructions of Licensing and Regulating the Business of Captive Manager. Other related legislations are regularly


32 emea captive 2011


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