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Bermuda Captive—ISSN 1748-751X Cover image


Ian Macdonald Smith B


ermuda continues to take positive strides to maintain its position at the very forefront of global captive development. The Island has faced increasingly tough opposition from rising stars such as Cayman and the British Virgin Island in recent years, as a number of jurisdictions look to carve out a competitive niche within the captive


landscape. In the face of such competition Bermuda has in recent months taken two differing, but complementary, steps to secure and further enhance its leading position.


The first of these was the signing of a raft of tax information exchange agreements (TIEAs)


with various countries, perhaps the most significant being an agreement with Canada. The deal now places Bermuda on an equal footing in terms of tax treatment with Canada’s previous domicile of choice, Barbados, which had hitherto been able to corner the market in Canadian interest. The TIEA has already reaped benefits for Bermuda, with a number of larger Canadian captives opting for the Island’s shores. Lured by the enviable depth of captive expertise, many had been preparing for the move in anticipation of the ratification of the agreement, doing so shortly afterwards.


There is an expectation that more will follow, drawn to the Island’s sizable captive sector,


with the industry gearing up for redomestications and new captive start-ups. The attractions of Bermuda to Canadian parents are outlined in A youthful partnership while in Playing the long game we address a Canadian captive case study.


The second step that Bermuda has undertaken further to enhance its position is a move to institute captive differentiation under Solvency II equivalency. Many in the industry had worried that Bermuda’s decision to opt for Solvency II equivalency would be damaging to its captive industry, placing a significant regulatory burden on the sector that was largely inappropriate for its risk profile. The Bermuda Monetary Authority (BMA) has, however, taken steps to differentiate captives from the wider remit of Solvency II, carving out captives from the full force of the European regime.


Thanks to the Island’s insurance classification system, the BMA has been able to differentiate its captive and commercial sectors and it is hoped that the regulator will be able to convince Europe that such an approach is both appropriate and sufficient to the captive risk profile. The issue of the carve-out and its implications for Bermuda captives is explored in Finally, differentiation.


A class apart


editorial


bermuda captive 2012 03


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