KPMG
Bermuda continues to blaze an impressive trail across the captive landscape. Here, Mark Allitt and Jason Carne of KPMG outline the Island’s continuing efforts to position itself at the forefront of captive jurisdictions.
manager, advisory and Jason Carne, partner, insurance at KPMG address some of the recent initiatives Bermuda has taken in the captive space and how this has affected the pipeline of new business.
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How significant has the captive carve-out under Solvency II equivalence been for Bermuda?
Jason Carne - It is important in terms of both existing and potential new captives. There are no changes to their existing capital requirements. In terms of regulated reporting there will be some incremental changes that will be required, but nothing too onerous for captives to comply with. Generally, the initiative will maintain the status quo for those companies already here. And from a cost perspective, the money they pay for services should remain unchanged.
For European captives or those that have significant operations in Europe and are looking to cede business into a captive in Bermuda, it could be beneficial to be Solvency II equivalent as there is not a requirement for collateral to be posted. The cost of that collateral can be quite burdensome, so for some captives it might be cheaper to actually opt in to Solvency II in a jurisdiction such as Bermuda. Equivalence could prove an important differentiator for the Island.
Mark Allitt - Bermuda has had a lot of press coverage regarding its Solvency II strategy. This coverage has been good for the jurisdiction. Bermuda is viewed with envious eyes by the competition and the Island continues to trail-blaze from a regulatory perspective. The outcome looks likely to be positive and I think a number of other jurisdictions will ultimately follow Bermuda down the path of equivalence.
Carne - The market is somewhat unique here. We have a large and sophisticated commercial re/insurance market and that was the catalyst for the whole initiative, but then of course you have the world’s largest captive market as well. The efforts of the regulator have been fantastic in getting us to a position where we can be considered for the dual approach.
What further measures can the regulator take to strengthen the Island’s position internationally?
Carne - They have done a first class job in getting the jurisdiction into the position it is today. The growth in expertise and staffing that we have
olvency II equivalence with a carve-out for captives. A raft of global tax information exchange agreements (TIEAs). Bermuda has taken considerable steps to maintain its leading position as the captive domicile of choice. Mark Allitt, senior
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