BRITISH VIRGIN ISLANDS
has undoubtedly been a significant factor in the jurisdiction’s unprecedented growth. From a regulatory standpoint, the BVI is extremely well regarded by a number of international bodies.
From a cross-selling perspective, we must consider the other business sectors of the BVI, the client access they provide and who may benefit from a captive.
First, we have the BVI’s biggest and most successful export: the business company incorporation sector. A significant number of businesses around the world include a BVI company in their corporate structure. While it would be naive to think that a sizable proportion of the users of BVI companies would also require a captive, there are certainly some that do.
The key when selling other services is not necessarily to focus on the ultimate end users of a business company. However, we must collectively do our utmost to ensure that related business introducers (law firms, accounting practices and banks among others) are fully aware of our added ability to provide such services in the BVI.
sectors of the financial services industry. Insurance is, clearly, not the only means of cross-selling we have at our disposal. However, it does suitably highlight how we can potentially enhance a client’s perception of the BVI from being a functionary domicile to being a professional business centre.
Captives and re/insurance vehicles
In its simplest form, a captive is a wholly owned legal entity, purposely formed to underwrite the risks associated with its parent and/or its affiliates.
Over time, the captive industry has evolved significantly and, although the term captive is still predominantly used to collectively describe a plethora of insurance and reinsurance vehicles, many are sophisticated structures that bear very little resemblance to the original concept. They can be used to insure anything from an automobile manufacturer’s product recall risks, to a government’s exposure to natural disasters such as hurricanes and earthquakes.
The BVI has been one of the world’s largest captive jurisdictions for a number of years now. The legislative framework compares favourably with that of our longer-established competitors and enables us to offer our clients a wide range of products and structures.
A recently enhanced Insurance Act coupled with close working relationship between the private sector and the regulators
We should also not forget the other financial services sectors. In a turbulent trading environment, captives can offer a useful risk management tool to investment advisors and fund managers. Similarly, captives are often used as estate planning and asset protection mechanisms, providing a useful link to trust structures.
Specialty reinsurance
Another important aspect of complementary services is the provision of reinsurance solutions to the financial services industry. These include the procurement of products specifically designed to protect and reduce significant and aggregate exposures of captives.
As industry specialists, we have developed a wide range of ideas, solutions and innovative policy wordings to provide the most effective possible reinsurance cover for complex financial and professional firms. We do not simply offer ‘off-the-shelf ’ policies (which are generally drafted with the reinsurers’ interests paramount), but we engage with the client to understand its business, culture, concerns and priorities, and then design and negotiate cover accordingly. The fact that we have locally based companies offering expertise in this area is another good example of what the jurisdiction has to offer.
Furthermore, these services are not limited to lines of business such as catastrophe reinsurance. We can, for example, assist a real estate fund manager with expropriation concerns in North Africa with political risk exposure in forming a captive and accessing political risk reinsurers. In fact, by doing so, we can even create secondary benefits to investors, such as asset protection and taxation reductions and deferrals.
CICA | Forty years of captive leadership 111
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