A ray of hope for boards entertaining making a loan to an associated
company on the Isle of Man is currently being considered by the IPA. The draft regulation proposes to replace the existing provision whereby application for full admissibility of a loan to an associate within the solvency calculation must be made to the supervisor. This will be replaced with specific qualifying criteria. If those criteria are met, then the corresponding loans are deemed fully admissible and the ceiling is removed. Should this proposed change go ahead it will make loans a much more attractive proposition for boards to consider as part of their treasury management discussions.
Clearly there is no straightforward answer, and certainly no one-size-
fits-all solution. Captive boards frequently adopt a blended approach where the assets are managed by way of a mix of the aforementioned
approaches while remaining mindful that the contribution of each component will require constant assessment. Those charged with governance must ensure that the management of the captive’s assets remains at the top of the agenda. In most cases a simple risk analysis will underline the importance of this. Considering the options available— even if they are not executed—is vital, as when markets change, they change quickly. Having a plan B should provide some level of comfort that will help those charged with governance sleep at night.
Stephen Morris is an accountant at Thomas Miller Risk Management (Isle of Man) Limited. He can be contacted at:
stephen.morris@
thomasmiller.com
32 emea captive 2012
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