Bermuda Captive Owners Association


Playing the long game


Ace Hardware Corporation’s William Montanez outlines the benefits of long-term captive investment and why Bermuda remains his company’s domicile of choice.


I


n 1924, a handful of Chicago hardware shop owners founded Ace Stores, Inc. The business model was simple: buy in bulk at the lowest price possible and in turn, compete with larger retailers while retaining respectable profits.


Eighty-eight years later, Ace Hardware Corporation is a global cooperative with more than 4,600 stores in 70 countries. But while the business has evolved, expanded and become a household name, it continues to take a conservative approach to profit and loss.


Ace Hardware established its captive in Bermuda in 1995 and has since made the Island its captive home. We asked Ace Hardware’s director of risk management and a director and president of the Bermuda Captive Owners Association (BCOA), William Montanez, what Bermuda has to offer captive owners over rival domiciles, and how writing risk through its captive has benefited the company as a whole.


Bermuda’s edge “Back in 1995, what impressed the captive initiators about Bermuda


were the reasonable capital requirements, the infrastructure and the proximity of service providers,” said Montanez. “The main reason that they opted for Bermuda, though—the tipping point, if you like—was the low tax structure and the loan-back provisions available to the parent company. We’ve never actually had to use that provision, but at the time it was a hot topic and something no US domicile offered.”


Domestic domiciles have come a long way since then but for Montanez, Bermuda hasn’t lost its charm.


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