Do you think that there are opportunities to pursue middle market companies in the US more aggressively here in Bermuda?
Husbands: Middle market companies globally, yes. I wouldn’t say let’s just focus on the US middle market. Some of the Latin American clients we’re dealing with have great ideas about what to use a captive for, to help grow their business, not just to retain risk. There’s a lot of opportunity in the middle market, not just in the US, but globally.
Allitt: The focus has been on new potential trading partners and there’s a lot of opportunity in Canada and Latin America. But when you look at the US, which we can’t forget, we continue to have new incorporations from the US. Something like 80 percent of the Fortune 500 companies have captives, but it’s a tiny fraction of the next layer down and that really is an opportunity.
Whether companies meet the criteria for an 831(b) depends on their underwriting, but they shouldn’t be setting it up just because it’s an 831(b) for the tax incentive, they should be doing it for the same reason you would set up any other captive.
Weldon: While there are no plans to create a new licensing class to compete in the middle market space, this business can already be written under our current classification system. However, our regime is constantly under review and can always be modified appropriately.
Doyle: The 831(b) captives are largely US-based. They have been formed in large numbers in the states of Utah, South Carolina and Delaware and I see this onshore trend continuing. This type of business could find a home in Bermuda but I don’t see the Island experiencing huge growth.
Weldon: In some respects, that is not always a true comparison. I’ve seen this story develop over a number of years. When comparing captive numbers, another relevant data point is the volume of premiums written. When you compare captives in other domiciles to those in Bermuda, we may have some significant Bermuda captives that write more premiums that their entire register combined. So it is not just about comparing
42 Bermuda Finance | 2014
“The soft market is a good time for somebody to consider setting up a captive because you can pre- empt the hard market.” Mark Allitt
registrations but also about comparing the amount of underwriting activity that takes place in each domicile.
How do you see Bermuda’s international footprint expanding and what are companies doing to develop it?
Husbands: We’ve always been very successful at working together and putting Bermuda first and then we all become competitors afterwards. Latin American parent companies have found a welcome reception here in Bermuda and many have been impressed by the depth of capabilities and experience.
Doyle: Going back to the delivery of service, for those who have existing facilities there’s nothing more powerful in attracting new business than the word of mouth of recent formations saying: “Yes, I had a great reception in Bermuda with the regulators, managers, attorneys and the bankers when I formed my captive.”
Husbands: One of the prospects that we had is in the transportation industry, and the president said she was going to go back to the transportation association of Colombia, and tell everyone that they should have a captive in Bermuda.
Doyle: One thing I’ve seen is that Bermuda service providers will need to have some fluent Spanish-speaking staff.
Weldon: The work of the Bermuda Business Development Agency (BDA) continues to focus on Latin America. This year Bermuda presented at a
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