The Domicile of Choice for Captive Insurance by hua83081

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									            Captives



Isle of Man
The Domicile of Choice for Captive Insurance
Contents
Welcome by Treasury Minister                   1
Isle of Man: A Quality Domicile                2
The Captive Insurance Industry                 3
Advantages of the Isle of Man as a Domicile    4
Corporate Structures for Captive Use           5
Establishment & Incorporation                  6
Regulation                                     7
Taxation                                       8
Accounting & Audit                             9
Finance Sector                                10
AIM Listing                                   11
MIMA and Directory                            12
                                                                                                                                     Captives




                                                Welcome
                                                by Hon Allan Bell MHK, Treasury Minister



                                                The Isle of Man is considered one of the world’s
                                                leading international finance centres. Over the past
                                                few years we have successfully raised our profile
                                                and changed perceptions in order to become a
                                                world class centre for offshore finance.

We are now in our 25th year of unbroken          of having a strong regulatory environment,        Therefore – with the introduction of the
economic growth. Per capita our GDP is           where we continue to adopt a pragmatic,           zero rate of corporate tax, the flexible
113% of the UK and in the last ten years         business-friendly approach to regulation.         and pragmatic approach of the regulator,
annual growth has averaged 7.7%, compared        We were awarded with a triple ‘A’ rating          our strong fiscal environment, excellent
to an EU average of 2.5%. The Island benefits    from Standard & Poor’s and Moody’s in 2004        infrastructure and capacity for growth – the
from a well-established and integrated           and endorsed in 2007 – we also continually        Isle of Man has evolved as a great place to
finance sector which remains the foundation      meet standards laid out by all international      do business.
of the Island’s economy, accounting for 36%      bodies, including OECD, FATF and IMF.             We will continue to seek new opportunities
of total GDP.                                    In April 2006 I introduced a zero rate of         to evolve and stay abreast of the changing
This sector comprises of banking, funds,         corporate tax for all businesses (except banks    global business environment, in order to
insurance and reinsurance. Another 10% of        and local property companies who continue         sustain our competitive edge and dominant
GDP can be attributed to the sector through      to be taxed at 10% of their core income).         position as an international business centre
its links with the professional services         It was introduced to safeguard the Island’s       with a ‘can do’ attitude.
industry, which provides a rapidly expanding     future and ensure that we keep pace with
range and depth of quality business services.    the changing global environment and not
One of the main reasons for our success as       rest on the laurels of our previous success.
a quality domicile for captive and general       Evidence shows that the legislation has
insurance business is our long track record      assisted in boosting all sectors on the Island.




 ‘with the introduction of the zero rate of corporate tax, the flexible and pragmatic
 approach of the regulator, our strong fiscal environment, excellent infrastructure
 and capacity for growth, the Isle of Man has evolved as a great place to do business. ‘
                                                                                                                                                  1
    Isle of Man: A Quality Domicile for Global Captives

    A credible choice                                     Risk-based approach                                Partnership approach
    Nearly 5,000 companies worldwide have                 The Isle of Man operates a risk-based approach     A large part of the Island’s attraction to
    decided to become captive owners, and it              to regulation. Recent changes include              international business is the successful
    is clear that when searching for the right            enhanced solvency requirements to allow            working partnership between Government,
    domicile for such an important company                inter-company loans from a captive to be           the Insurance and Pensions Authority (IPA)
    structure, a jurisdiction must offer a                fully admissible when calculating the captive’s    and the finance industry in general. Isle of Man
    combination of quality professional services,         solvency margin, subject to the approval of        Finance is the Treasury division that assists
    cost-effectiveness and ‘user-friendly’ regulation     the Isle of Man insurance supervisor.              new businesses to establish on the Island,
    if it is to be a credible proposition for the large   The Isle of Man is not part of the EU and is not   together with the industry association the
    scale players in the market.                          encumbered by the stringent EU insurance           Manx Insurance Managers Association (MIMA).
    The Isle of Man has an established                    regulation and is therefore free to set its        Another big plus is that our captive insurance
    international profile as a quality domicile           own captive regulation, to which it takes a        industry is supported by thriving international
    for the global captive industry. Its status has       sensible and pragmatic approach, including         life and pension sectors which present
    been endorsed by many of the UK’s top 100             the setting of highly competitive and              opportunities for ‘cross-fertilisation’ of business
    companies for more than two decades. More             advantageous capital and solvency levels. Isle     within the industry.
    recent arrivals include BAE Systems plc, Millea       of Man legislation provides for the movement
    Holdings, Keller Group and a joint venture            of captives between qualifying jurisdictions.
    between two major high street banks.                  The Isle of Man Government recognises the          Our strengths
    As of December 2007 there were 155                    importance of ‘keeping ahead of the game’          As an experienced centre for captive insurance
    Isle of Man based captives with over £5.1             by continuously sharpening our industry’s          we already have the underlying regulatory
    billion under management and writing gross            competitive edge. The captive sector has           framework in place to handle all types of
    premiums of more than £1.1 billion. Business          moved up several gears over the past twelve        complex insurance structures. Crucially we
    is now generated from all over the world              months with an ambitious new strategy to           also have the necessary actuarial and financial
    and recent legislative changes - designed to          reaffirm the Island’s prime position in this       expertise available here on the Island to
    broaden the range of options open to captive          major market.                                      handle this calibre of work with the ability to
    owners - are further helping to increase                                                                 offer top-ranking international operations a
    the volume of business undertaken by this                                                                secure working environment.
    important sector of the Island’s innovative and                                                          The Island’s ability to react quickly to the
    robust insurance industry.                                                                               captive and reinsurance licensing process is
                                                                                                             also a major factor in attracting high-powered
                                                                                                             global business. A captive licence is ordinarily
                                                                                                             issued by the regulator within 4 weeks of
                                                                                                             receiving the application, but can be less in
                                                                                                             certain circumstances.
                                                                                                             The Isle of Man’s triple ‘A’ sovereign credit
                                                                                                             rating, two decades of continuous economic
                                                                                                             growth, political stability and unique
                                                                                                             geographical situation close to the City of
                                                                                                             London all provide a strong platform to
                                                                                                             compete in this growing area of the
                                                                                                             global market.


                                                                                                             Add to this the Isle of Man’s highly effective
                                                                                                             and competitive capital and solvency
                                                                                                             requirements and its wide range of captive
     The Isle of Man has been the domicile of choice since the formation of our captive                      options including PCC and ICC legislation
     (National Grid Insurance Company (Isle of Man) Limited) in 1986. Throughout                             mean that the Isle of Man has created an
     this time our business has been through various major demergers, mergers,                               environment for discerning owners of captive
     acquisitions and disposals and the Isle of Man has remained the domicile of choice.                     insurance companies who are ready to
     We have found the professional and regulatory bodies in the Isle of Man to have a                       compete with the very best in the world.
     ‘can do’ approach, whilst maintaining good governance”.
                       Pauline McCracken - Head of Risk and Insurance, National Grid plc.

2
                                                                                                                                                 Captives



The Captive Insurance Industry                                                                      Cell 8
                                                                                        Cell 1                   Cell 7


                                                                                                 Protected
Captives can take many forms and perform                                             a bona Cell Core Such Cell 6
                                                    A captive insurance company isCell 2 fide Company arrangements can be useful in
multiple functions for a parent organisation,       licensed insurance or reinsurance company           structuring global insurance programmes or
and the use of a captive brings many benefits       owned typically by a non insurance company          accessing wholesale reinsurance markets not
                                                                                        Cell 3               Cell 5
including:                                          and which insures and/or reinsures the risk of      otherwise available to the parent company.
                                                                                                 Cell 4
• Lower and more stable cost of risk than risk      its parent or affiliated companies.                 Isle of Man captive licensing permits captives
  transfer alone                                    An Isle of Man captive can offer direct                  to engage in both insurance and reinsurance
• Access to the greater capacity and the lower      insurance in the United Kingdom (for non-                activities within the same company.
  costs of the reinsurance markets                  statutory classes) and on a non-admitted
• Better control over and management buy-in         basis for insurance and reinsurance to many
  to risk management                                other territories globally. The schematic
• Overcoming market limitations (or provide         below outlines a possible structure for an
  cover for “uninsurable” risks)                    Isle of Man captive.
• Reduced dependence on commercial
  insurance                                                                                        Option 1
• Increased flexibility in insurance programme
  design                                                                                           Captive
• Ease of claim settlement
• Ability to create multinational programmes                                                                                 Reinsurance
                                                                       Parent
• Shareholder tax planning opportunities                                                                                       Market
                                                                                                   Option 2
• Opportunity to participate in underwriting
  profit                                                                                Insurer
                                                                                                                Captive
                                                                                       (Fronter)
• Improved negotiating position with the
  insurance and reinsurance markets




                                                                                                              The first Japanese owned reinsurer to set up
  Constitutional status                             However, the United Kingdom is responsible
                                                                                                              business in the Island received its licence to
                                                    for the Isle of Man’s international relations
  The Isle of Man is a self-governing                                                                         operate from the Insurance and Pensions
                                                    and its defence, for which the Island makes
  dependent territory of the British Crown                                                                    Authority (IPA) last year.
                                                    an annual payment. The Isle of Man enjoys
  (a “Crown Dependency”) and Queen                                                                            Tokio Marine Bluebell Re has been established
                                                    a high degree of political stability. Political           by Japan’s Millea Holdings in association with
  Elizabeth II is the Island’s Head of State.       and legislative independence is exercised                 JP Morgan.
  Although geographically part of the British       through the Island’s ancient parliament,                  The Island’s existing regulatory framework
  Isles, the Isle of Man has never been a part of   Tynwald, which is the world’s oldest                      and quality business environment were
  the United Kingdom or the European Union.         legislature in continuous existence.                      deciding factors in securing the company.




                                                                                                                                                               3
    Advantages of the Isle of Man as a Captive Domicile




     “Keller undertook a strategic review to assess our captive requirements. In the review, the
     Isle of Man outscored all other domiciles on factors weighted to our specific needs and as a
     result, we decided to form a captive here.” Jackie Holman, Company Secterary, Keller Group plc




    • Robust, but highly effective insurance legislation             Categories of Licence and Capital/Solvency requirement
    • Flexible and pragmatic regulatory approach
    • Realistic and competitive capital and solvency
                                                                     ISLE OF MAN REQUIREMENTS
      requirements                                                   Capital:
    • Excellent business reputation – endorsed by                    The minimum requirements for paid up share capital depends on the class
      Financial Action Task Force and IMF                            of insurance.

    • Lower costs – “Europe’s most cost effective                    Class 1: Linked Long-Term          GBP500,000

      domicile” – Reactions Magazine                                 Class 2: Long Term (not linked)    GBP500,000

    • AAA sovereign rating from Standard & Poor’s and                Classes 3 to 9: General Business   GBP150,000

      Moody’s                                                        Class 10 & 11: Reinsurance         GBP100,000

    • Unlimited ability to write insurance and reinsurance           Class 12: Related Party Business   GBP50,000
      business from the same captive
                                                                     Solvency Margin:
    • 100% of intercompany loans may be accepted as                  A company is required to maintain a minimum margin of solvency calculated
      admitted assets when calculating solvency margin               as follows:
    • Zero corporate tax rate for insurance companies                Class 1: Linked Long-Term          ¼% of actuarial value of liabilities,
    • Outstanding infrastructure and capacity for growth                                                minimum GBP500,000

    • Extensive range of captive options and                         Class 2: Long Term (not linked)    1% of actuarial value of liabilities,
                                                                                                        minimum GBP500,000
      corporate vehicles
                                                                     Classes 3 to 9: General Business   15% of net premium written,
    • Stability & independence – longest continuous
                                                                                                        minimum GBP150,000
      Parliament in the world with the flexibility to quickly
                                                                     Class 10 & 11: Reinsurance         GBP100,000
      set its own legislation
                                                                     Class 12: Related Party Business   GBP50,000 plus 10% of net premium
    • Convenient location with extensive air links to the                                               written up to GBP2m plus 5% of
      UK and Ireland.                                                                                   net premium written above GBP2m
4
                                                                                                                                             Captives



Isle of Man Corporate Structures for Captive Use

The Isle of Man boasts a wide range of              Incorporated Cell Company                          Limited Liability
corporate solutions for captive insurance from                                                         Partnership Captive
                                                    An Incorporated Cell Company (“ICC”), is
traditional English based law to the latest
                                                    similar in structure to a PCC except that          A limited liability partnership captive is similar
international innovations in segregation of
                                                    each Cell is incorporated as a separate legal      to a pure captive in that it insures the risks of
assets and entities embodied by the concept         entity under Isle of Man Company law. The          its owners. It differs from a pure captive in that
of incorporated cell company legislation. The       Incorporated Cell (‘IC’) will be able to hold      it is incorporated under partnership law as
following are the relevant types of company         assets, sue and be sued in its own name and        opposed to company law.
and features of company law which                   do anything that a conventional Isle of Man
are available to captives in the Isle of Man.       company could do. In an insolvency of an
                                                    ICC or of any of its underlying ICs, the fact      Re-domicilation of Captives
                                                    that its cells have been incorporated with         Isle of Man company law permits the transfer
                                                    separate legal identity may give an advantage,     of domicile of captives in and out of the
                                                    particularly where the IC owns or holds assets     Island where there are reciprocal provisions
Protected Cell Company
                                                    in a jurisdiction not familiar with the concept    in the other jurisdiction. This facility provides
Recent developments in insurance technology         of Cells.                                          the ability to move a captive to the Isle of
have seen the emergence of cell companies                                                              Man without the cost and inconvenience
in various insurance domiciles. The Isle of Man     Rent a Captive                                     of winding up the existing company and
introduced Protected Cell Company legislation                                                          beginning another.
                                                    The Rent a Captive is a contractual concept
in 2004 and will bring Incorporated Cell            which predates PCCs and ICCs but enables           The Companies Act 2006 contains integral
Company onto the Statute Book in 2008.              a third party risk manager to structure and        and simple provisions for transfer of domicile
A Protected Cell Company (“PCC”) is a               administer a company offering captive              to take place while the 1931 Act operates
                                                    insurance services to multiple users generally     in tandem with the Companies (Transfer of
corporate body that can be segregated into
                                                    on a more affordable basis (ie lower capital       Domicile) Act 1998, to facilitate transfers in and
legally distinct portions, known as the “core”
                                                    entry point) than a single captive, but with       out under that legislation.
and underlying “cells”. Each cell has its own
                                                    contractual rather than legal segregation
separate segment of the PCC’s overall share         rights and protections afforded by PCCs
capital, allowing shareholders to maintain          and ICCs.
sole ownership of an entire cell whilst owning
only a small proportion of the PCC as a whole       Mutual or Group Captive                            It can be seen that the Isle of Man offers
(or the capital of the core may be completely                                                          a comprehensive and broader choice of
                                                    A Mutual or Group captive is owned by two
separate from that of the cells); its own rights,   or more non affiliated organisations which         corporate solutions for captives than most
its revenue streams, assets and liabilities are     insures the risks of the owners. The owners of a   other jurisdictions which combined with its
kept separate from all other cells and from         Mutual or Group captive are normally from the      regulatory and infrastructural advantages, help
the core.                                           same industry group .                              position it as the captive domicile of choice.




                                                                                                                                                            5
    Establishment & Incorporation

    Forming Your Insurance                              •   Licence Application                            •   Incorporation
    Company                                                 The form is available from your insurance          A set of Memorandum and Articles of
    The Isle of Man Government’s Insurance and              managers or from the IPA website – www.            Association will need to be drawn up
    Pensions Authority (IPA) is the licensing and           gov.im/ipa. The licensing process should           (usually with the assistance of a local
    regulatory body for insurance and reinsurance           take approximately 4 weeks, although               law firm) and an application submitted
    companies incorporated in the Isle of Man.              can be shorter in some instances. Please           to the Isle of Man Financial Supervision
    There are a number of actions which need to             note that the IPA is happy to receive draft        Commission. This will include details of
    be undertaken before the IPA can consider a             documents initially which speeds up the            the Company Secretary and Registered
    licence application.                                    approval process.                                  Office and a request to reserve the
    Prior to the preparation and submission of a        •   Business Plan                                      company name.
    formal business plan and licence application,
                                                            This will incorporate 3 year financial         •   Auditors
    it is highly beneficial for a captive owner
                                                            projections and a narrative detailing the          It will be necessary to appoint a firm
    to visit the Island to meet the IPA and the
    respective professional advisors. The resident          operations of the company.                         of locally based auditors who will audit
    insurance managers and the IPA have a close         •   Directors                                          the business plan prior to submission to
    and mutually respectful working relationship                                                               the IPA.
                                                            The company will need to appoint a
    which is reflected in the latter’s pragmatic and
                                                            local board of directors that is normally      •   Banks
    professional approach to the licensing and
    regulatory process. This is further assisted by         comprised of either 3 or 5 directors with
                                                                                                               Isle of Man bank accounts will need to be
    ongoing meetings with parent companies,                 a majority being Isle of Man resident
                                                                                                               opened to comply with Isle of Man Anti
    the managers and their professional advisors            directors. All directors must complete a
                                                                                                               Money Laundering legislation.
    which provides opportunities for both sides to          Personal Questionnaire in order to establish
    update on regulatory and policy matters and             their suitability and must be approved by
    the company’s future plans.                             the IPA prior to their appointment.




       Company Law in the Isle of Man
        Companies Acts 1931-2004:                        Companies Act 2006:
        based on English company law and                 based on international business law (IBC
        therefore embodying concepts familiar            styled concepts) this modern piece of
        to English legal practitioners. It has been      legislation offers much more flexibility in
        the ‘traditional vehicle’ for Isle of Man        its constitution and operation and is now
        incorporations suitable for both public and      the ‘vehicle of choice’ for incorporation.
        private purposes.                                Conversion from a ‘1931 Act’ company
                                                         is also possible and it is suitable for both
                                                         public and private purposes.




                                                       Our Isle of Man captive allows us to provide our business units with insurance cover that
                                                       would in the market be either unavailable or uneconomic.”
                                                                                    Ken Peck, Head, Group Insurance, Standard Chartered Bank.




6
                                                                                                                                         Captives



Regulation

The Isle of Man enjoys an international          its most recent assessment, the IMF judged         The IPA places great importance on its
reputation as a well regulated and secure        the Island to have a high level of compliance      participation in the activities and discussions
environment within which to do business.         with international standards for the regulation    of applicable international standard setting
The Island has always recognised the need        of, inter alia, insurance, anti-money laundering   organisations. Accordingly, its role and
to adhere to high regulatory standards in        and combating the financing of terrorism.          membership of the International Association
order to continue to attract the high quality                                                       of Insurance Supervisors (“IAIS”) and Offshore
                                                 In order for the Island to continue to prosper,
business that forms the cornerstone of its                                                          Group of Insurance Supervisors (“OGIS”)
                                                 the IPA seeks to ensure its regulatory
insurance market.
                                                 framework continues to provide businesses          remains a key part of its work, as will be to
In doing this the Island adopts an approach                                                         monitor the work of the Financial Action Task
                                                 with freedom to innovate and achieve their
that allows well managed businesses to                                                              Force (“FATF”).
                                                 corporate goals, whilst protecting the interests
flourish within a secure regulatory framework
that recognises the characteristics of the       of relevant stakeholders and taking account
captive market.                                  of developing standards in international
                                                 regulation. It seeks to achieve a suitable
The IPA is the dedicated regulator for the
captive insurance sector and is able to focus    balance of these objectives which is relevant      Conclusion
on the specific needs of the insurance market.   to the needs of insurers on the Island, and        All the aforementioned points demonstrate
The Regulator is approachable and works          enables it to carry out its responsibilities of    the diversity and complexity of the Isle of
closely with MIMA to seek beneficial solutions   maintaining a secure and reputable business        Man’s insurance and pensions sectors. As
to issues faced by the market.                   environment. The process of updating               regulator of these sectors the IPA is committed
The Island’s regulatory framework has been       the legislative and regulatory provisions is       to maintaining high standards of conduct and
scrutinised and endorsed by external agencies    ongoing and in this regard the IPA works           regulation whilst encouraging innovation,
such as the Financial Action Task Force (FATF)   closely with MIMA and various other industry       and ensuring that the Isle of Man remains an
and the International Monetary Fund (IMF). In    groups and individuals.                            environment where business can flourish.


                                                    Corporate Governance                            Compliance and Money
                                                    Annual confirmation of compliance with          Laundering Reporting Officers
                                                    regulatory requirements is necessary.           The appointment of these positions is a
                                                    The directors of an insurer are required to     requirement with which the managers can
                                                    submit a certificate as part of the annual      assist. There is no formal requirement for a
                                                    returns, confirming that the company has        Compliance Officer in the Isle of Man.
                                                    complied with the requirements of the
                                                    Insurance Act.




                                                                                                                                                      7
    Taxation

    The key principles of fiscal sovereignty,           Taxation for Companies                            Indirect Taxation
    economic stability and adherence to
                                                        •   A standard rate of 0% income tax was          The Isle of Man enjoys a unique and long-
    international standards remain fundamental
                                                            introduced for most companies on              standing relationship with the UK (and
    to the Government’s consideration of any
                                                            6 April 2006 (except banking and local        consequently with the EU) by virtue of the
    taxation initiative. The Isle of Man has three
                                                            property companies which are taxed at 10%).   negotiated inter-government Customs &
    forms of taxation:
                                                        •   Computation of profits – all trading          Excise Agreement. However, it does not
    •   Direct taxation: income tax is the only
                                                            companies liable to income tax can            bind the Island to adopt all indirect taxation
        direct tax, there being no capital gains tax,
                                                            deduct expenses that have been wholly         initiatives emanating from the UK or beyond.
        stamp duty or inheritance tax;
                                                            and exclusively incurred in generating        Significantly the Isle of Man has chosen
    •   Indirect taxation: there is an inter-               their income. Capital allowances are also     not to introduce taxes such as insurance
        governmental negotiated Customs and                 available; with a 100% first year allowance   premium tax, landfill tax, aggregates levy
        Excise Agreement with the UK which                  or a 25% writing down allowance in
                                                                                                          etc., nor is it currently seeking to extend the
        provides for the same Customs, Excise and           each year. Losses can be offset against
                                                                                                          scope of its indirect taxation. Several areas of
        VAT rates to be applied but with some               subsequent trading profits or, if the
        notable exceptions;                                                                               flexibility exist to benefit both Isle of Man VAT
                                                            company is a member of a group, can be
                                                                                                          registered businesses and/or Island residents.
    •   National Insurance Contributions (NIC):             offset against profits arising elsewhere in
                                                                                                          For a business to profit from the full range of
        there is a reciprocal arrangement with the          qualifying companies within the group.
                                                                                                          benefits the Island has to offer, it needs to be
        UK whereby it adopts, with one or two           •   From 6 April 2007 companies will be
                                                                                                          VAT registered in the Isle of Man.
        exceptions, the same level of NIC as the UK.        required to make a return and pay any
        Income tax was introduced into the Isle of          income tax due 12 months after the end
        Man in 1918 and is based on an income tax           of the company’s accounting period.           Whilst the unique position of the Island
        year commencing 6th April. It works on the                                                        provides an ability to settle disputes locally,
        basic principle of residence in that a person                                                     business customers retain the right of access
        resident for income tax purposes is liable                                                        to the fully independent UK VAT Tribunals
        on worldwide income, calculated in line                                                           (which sit in the Island to hear appeals) and,
        with generally accepted tax principles.                                                           if necessary, can call on EU VAT Directives and
                                                                                                          decisions of the UK and EU courts systems.




         SEGRO chose the Isle of Man as a captive domicile because of the Isle of Man’s pragmatic approach to regulations. Our captive has been in
         existence for over 20 years and during this time, the captive has not only provided financial benefits but has also enabled SEGRO to
         structure its insurance programme in a more flexible manner.”                       John Probert, Group Company Secretary, SEGRO plc




8
                                                                                                                                           Captives



Accounting and Audit

Accounting Requirements                            Accounts are prepared in accordance with            Auditors Responsibilities
                                                   the Isle of Man Companies Acts 1931-2004,
All regulated captive insurance companies in                                                           under the Insurance Act and
                                                   Generally Accepted Accounting Principles
the Isle of Man are required to have an annual
                                                   (‘GAAP’) and the Association of British Insurers’   Regulations 1986
audit in accordance with the Insurance Act
                                                   Statement of Recommended Practice.                  As part of the application process prospective
and Regulations 1986.
                                                   The format of these accounts is currently           licence-holders are expected to receive
A copy of these audited accounts must              prescribed under Regulation 7 Schedule 3 of         confirmation from their auditors that they
be filed with the Insurance and Pensions           the Insurance Act and Regulations 1986.             have accepted or are prepared to accept
Authority (IPA) within 21 days of the date of                                                          appointment; that they carry Professional
                                                   The Isle of Man is an international financial
the meeting at which they were approved by                                                             Indemnity Insurance for not less than £10m;
                                                   centre and captive insurance companies are
the Board of Directors, or in any event no later                                                       and that they consider the information
                                                   typically subsidiaries of global operations,
than 6 months after the close of the year to                                                           provided in the Business Plan to have
                                                   flexibility in the choice of GAAP is therefore
which they relate.                                                                                     been properly prepared on the basis of the
                                                   important and the Isle of Man allows this
                                                   choice. In most cases the preferred GAAP is         assumptions made by the Directors of the
                                                   either United Kingdom Accounting Standards          Company.
                                                   or International Financial Reporting Standards,     As part of the ongoing licensing requirements
                                                   although other acceptable GAAP can be used          there is a need for an annual audit. In addition
                                                   if approval is received from the IPA.               to this an annual auditor’s report is given
                                                                                                       within the Supplementary Information.
                                                                                                       The Supplementary Information includes
                                                                                                       analyses of business written, claims run off, net
                                                                                                       retention, reinsurance arrangements, letters of
                                                                                                       credit and calculation of solvency margin.




                                                                                                                                                           9
     Finance Sector

     The Isle of Man promotes itself under the          that Government must budget for a surplus             a world-class telecoms solution, with two
     banner of “Freedom to Flourish”. This is no        in respect of its annual revenue spending.            separate high capacity self-healing fibre optic
     empty promise: the close working relationship      Whilst meeting this requirement Government            rings with considerable capacity; advanced
     between the finance sector and Government,         has continued to invest in developing and             mobile technology, being the first country
     who are attuned to the changing needs of           updating the Island’s infrastructure, for             in Europe to introduce a 3G service, and the
     business and able to respond flexibly and          economic as well as social benefit.                   first in the world to adopt 3.5G; near 100%
     responsively to new business opportunities,                                                              broadband available across the island; and a
     has given a strong impetus to the                  The Isle of Man is also one of the few                highly IT-literate workforce, with over 90%
     development of the Isle of Man as a premier        international financial centres where                 of school leavers holding a recognised
     financial centre.                                  Government’s appetite for economic growth             IT qualification.
                                                        is matched by a physical space and availability
     The Isle of Man has built an enviable              of labour resources needed to sustain it. The         The island has a robust banking platform,
     reputation as a leading centre for the twenty-     Island’s population density is around one             a thriving fiduciary community, growing
     first century, based on a combination of           half that of the UK’s, and around one fifth           funds arena and registers for shipping, super
     political stability, low taxation, and a firmly    of the Channel Islands. Although there is a           yachts and private aircraft – all of which
     established framework of appropriate               work permit regime, around 85% of permits             are complemented by a strong body of
     regulation. There is no national debt, low         are granted within seven days. The ability to         professional legal and accounting advisers
     levels of unemployment, and the Island’s GDP       bring in labour from outside is a key factor in       offering a deep understanding of international
     is amongst the highest in Europe.                                                                        personal and corporate business and the
                                                        constraining wage pressures. It is also critical in
                                                                                                              ability to advise on complex financial
                                                        enabling employers to recruit key personnel.
     The Isle of Man cooperates fully in the fight                                                            structures.
                                                        It is no wonder that in quality of life surveys,
     against international financial crime, and its
                                                        the Isle of Man ranks as one of the highest
     defences against money laundering comply                                                                 The Island is not resting on its laurels, and
                                                        jurisdictions in the world.
     with the highest global standards.                                                                       constantly seeks to re-engineer and extend its
                                                                                                              proposition. A good example is the Island’s
                                                        The Isle of Man has developed into one of
     The introduction of the zero/ten tax regime                                                              Space business, which has developed strongly
                                                        the world’s largest offshore life assurance
     in April 2006 has given fresh impetus to the                                                             since the new millennium. The Island is now
                                                        jurisdictions. The Island’s combination of
     Island’s proposition. With the abolition of                                                              home to active subsidiaries of the world’s
     the exempt company regime, which remains           highly skilled staff, innovative product design       leading space and satellite companies. The
     a feature of many offshore centres, the            and strong but appropriate regulation has led         Isle of Man has also been very successful in
     Isle of Man has removed the ‘ring fencing’         to strong sustained growth in the market. The         relation to London’s AIM market, and now has
     between international and domestic business        Island is home to international life assurance        a commanding role in terms of international
     and in doing so has met its international          arms of many of the world’s leading financial         companies – particularly in the Indian and
     commitments in this area.                          services groups. In addition to product               Asian region – listing on this exchange.
                                                        innovation, policyholder security is a key
     The outcome of these various initiatives has       aspect of the Island’s offering, with statutory       Looking forward, although there may be
     been more than twenty five consecutive             policyholder protection in place.                     short term squalls in global markets, the Isle
     years of growth. An important element of the                                                             of Man offers a compelling financial services
     Island’s fiscal strength is the long established   From an IT infrastructure perspective, the            proposition and is well placed to thrive in the
     and self imposed legislative requirement           Island’s proposition is compelling. It offers         new economic age.




10
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AIM Listing

Jurisdiction of choice for                       The Benefits                                        For companies incorporated under the Isle
                                                                                                     of Man Companies Act 1931, provided the
international business                           The benefits of using an Isle of Man company
                                                                                                     offer of shares is to, inter alia, professional
transactions                                     to access London’s capital markets include:
                                                                                                     investors, there are no detailed prospectus
As tax advisers and corporate strategists the    •   the Island’s first-class reputation as a well   requirements with which to comply. For
world over are becoming aware of the Isle of         regulated international financial centre        companies incorporated under the Isle of
Man’s unique combination of zero rate tax, a     •   Moody’s and Standard & Poor’s Triple A          Man Companies Act 2006, simplified offering
very flexible corporate entity and the highest       accreditation;                                  document requirements apply, but they are
levels of compliance and service – there is      •   the Island’s favourable tax regime: a zero      not prescriptive and the directors need only
little to stop the Isle of Man from becoming         per cent tax rate for companies and no          ensure that any offering document contains
the jurisdiction of choice for international         capital gains tax, inheritance tax, stamp       all material information relating to the offer or
business.                                            duty or SDRT;                                   invitation:
Isle of Man companies have built up an           •   the ability to list an Isle of Man company      (i) that the intended recipients would
impressive track record for successfully             without the need for prior regulatory               reasonably expect to be included in order
raising funds via London’s capital markets           approval (on the basis that the Isle of Man         to enable them to make an informed
with a majority of such companies targeting          company is a closed-ended investment                decision as to whether or not to accept the
institutional investors (rather than the             company);                                           offer or make the application referred to in
general public).                                                                                         the offering document; and
                                                 •   the Island being within the same time zone
                                                     as London and within an hour’s flying time;     (ii) of which the directors or proposed
                                                                                                          directors were aware at the time of issue
                                                 • the similarity of the Island’s company
                                                                                                          of the offering document, or of which
                                                   law with English company law: as such,
                                                                                                          they would have been aware had they
                                                   investment banks, institutional investors
                                                                                                          made such enquiries as would have been
                                                   and their advisers are comfortable dealing
                                                                                                          reasonable in all the circumstances,
                                                   with Isle of Man companies (in the
                                                   instances where the Island’s company law          and such information must be set out fairly
                                                   does differ from English company law, it          and accurately.
                                                   is usually possible to tailor a company’s
                                                   articles of association to give the company
                                                   a more “English” feel and, thus, meet
                                                   the expectations of institutional and
                                                   sophisticated investors);
                                                 •   shares in Isle of Man companies are capable
                                                     of being held in dematerialised form
                                                     through CREST without the need to put in
                                                     place complex depositary arrangements;
                                                 •   an Isle of Man company can have shares
                                                     denominated, and can prepare accounts, in
                                                     any currency; and
                                                 •   professional advisers on the Island
                                                     (lawyers, accountants and bankers) are
                                                     knowledgeable about, and experienced
                                                     in servicing the needs of, sophisticated
                                                     international business entities.




                                                     ‘there is little to stop the Isle of Man from becoming
                                                     the jurisdiction of choice for international business.’

                                                                                                                                                         11
     Manx Insurance Managers Association

     The Manx Insurance Managers Association (MIMA) is an organisation dedicated to the
     progression and development of captive insurance on the Isle of Man.
     Its growing membership supports and advances a set of guiding principles from which
     each member company can benefit.
     In particular, the Association’s continual dialogue and support from Government
     ensures that the Island’s unique offshore jurisdiction and quality of financial services is
     not only maintained but also enhanced.

     Mission statement:             The following six guiding principles help         The Isle of Man captive insurance industry
                                    us measure the appropriateness of our             contributes to the Island’s financial services
     ‘To promote and develop        commitment:                                       sector in many ways including:
     the Isle of Man as a quality   •   Represent each member’s interests             • 155 insurers with many owned by
                                                                                        blue-chip companies.
     domicile for captive and       •   Promote and develop the industry on a
                                        sound and prudent basis                       •   £5.1 billion+ of funds managed.
     general insurance business.’
                                    •   Create a better understanding of the          •   £1.1 billion+ in annual premiums.
                                        industry by the public                        •   100+ people directly employed and many
                                    •   Consult on issues that affect the industry        more involved in supporting the industry.
                                        with the Isle of Man Government
                                    •   Work together with other local associations
                                        that have similar objectives.
                                    •   Ensure the industry remains highly
                                        competitive.




12
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MIMA Directory of Members

Aon Insurance Managers (Isle of Man) Limited                                       Marsh Management Services Isle of Man Ltd
3rd Floor, St George’s Court, Upper Church Street, Douglas, Isle of Man IM1 1QE    P.O. Box 305, Rose House, 51-59 Circular Road, Douglas, Isle of Man IM1 1RE
t: +44 (0) 1624 692449, e: mike.henthorn@aon.co.uk, w: www.aon.com                 t: +44 (0) 1624 630523, f: +44 (0) 1624 625313
Castletown Insurance Services Limited                                              e: derek.patience@marsh.com, w: www.marsh.com
Compton House, Parliament Square, Castletown, Isle of Man IM9 1LA
t: +44 (0) 1624 827710, f: +44 (0) 1624 823674
                                                                                   Royal Insurance Service Company (IOM) Limited
e: rdrinkwater@castletowninsurance.com, w: www.castletowninsurance.com             Jubilee Buildings, 1 Victoria Street, Douglas, Isle of Man IM1 2LR
                                                                                   t: +44 (0) 1624 645900, f: +44 (0) 1624 663864
CGI Group                                                                          e: david.stacey@uk.royalsun.com
6 Goldie Terrace, Upper Church Street, Douglas, Isle of Man IM1 1EB
t: +44 (0) 1624 662264, f: +44 (0) 1624 611925                                     Thomas Miller Risk Management (IOM) Limited
e: igerrard@cgiol.com, w: www.cgiol.com                                            16/17 Mount Havelock, Douglas, Isle of Man IM1 2QG
DSG international Insurance Services Limited                                       t: +44 (0) 1624 645200, f: +44 (0) 1624 645201
10 Finch Road, Douglas, Isle of Man IM1 2PT                                        e: iain.simpson@thomasmiller.com, w: www.thomasmiller.com
t: +44 (0) 1624 620333, f: +44 (0) 1624 627980, e: dorothy.winrow@dsgiisl.co.im
                                                                                   West Insurance Management Limited
Isle of Man Insurance Management Limited                                           PO Box 16, Analyst House, 20/26 Peel Road, Douglas, Isle of Man IM99 1AP
IOMA House, Hope Street, Douglas, Isle of Man IM1 1AP                              t: +44 (0) 1624 652002, f: +44 (0) 1624 652003
t: +44 (0)1624 681200, f: +44 (0)1624 681390,
                                                                                   e: isobel.foster@westiom.com, w: www.westiom.com
e: colinb@ioma.co.im/isabelh@ioma.co.im, w: www.iomim.co.im
LCL Services (IOM) Limited                                                         Willis Management (Isle of Man) Limited
2nd Floor, St. George’s Court, Upper Church St, Douglas, Isle of Man IM1 1EE       Tower House, Loch Promenade, Douglas, Isle of Man IM1 2LZ
t: + 44 1624 683 683, f: + 44 1624 683 684,                                        t: +44 (0) 1624 696127, f: +44 (0) 1624 661586
e: jeffrey.more@lcl.co.im, w: www.lcl.co.im                                        e: kellyag@willis.com, w: www.willis.com




Associate                                   BlackRock (Isle of Man) Limited
                                            Belgravia House, 34/44 Circular Road
                                                                                   Dougherty Quinn Ltd
                                                                                   The Chambers, 5 Mount Pleasant
                                                                                                                               London & Capital Asset
                                                                                                                               Management Limited

Members                                     Douglas, Isle of Man IM1 1QW
                                            t: +44 (0) 1624 662255
                                            f: +44 (0) 1624 662850
                                                                                   Douglas, Isle of ManIM1 2PU
                                                                                   t: +44 (0) 1624 626999
                                                                                   f: +44 (0) 1624 626111
                                                                                                                               4 Triton Square, Regent’s Place, London
                                                                                                                               United Kingdom NW1 3HG
                                                                                                                               t: + 44 207 396 3200
Anglo Irish Bank                            e: david.nixon@blackrock.com           e: paul@dq.im                               f: + 44 207 396 3201
Jubilee Buildings, Victoria Street          w: www.blackrock.co.uk                 w: www.dq.im                                e: william.dalziel@londonandcapital.com
Douglas, Isle of Man IM1 2SH                                                                                                   w: www.londonandcapital.com
t: +44 (0) 1624 698000                      Bradford & Bingley International       Ernst & Young
f: +44 (0) 1624 698001                      30 Ridgeway Street, Douglas            Rose House, 51-59 Circular Road             PricewaterhouseCoopers
e: robhaddow@angloirishbank.co.im           Isle of Man IM1 1TA                    Douglas, Isle of Man IM1 1EQ                Sixty Circular Road,
w: www.angloirishbank.co.im                 t: +44 (0) 1624 695000                 t: +44 (0) 1624 691800                      Douglas, Isle of Man IM1 1SA
                                            f: +44 (0) 1624 695001                 f: +44 (0) 1624 691801                      t: +44 (0) 1624 689689
Bank of Ireland (I.O.M.) Limited            e: enquiries@bbi.co.im                 e: alloydjones@im.ey.com                    f: +44 (0) 1624 689690
PO Box 246, Christian Road                  w: www.bbi.co.im                       w: www.ey.com/im                            w: www.pwc,com/im
Douglas, Isle of Man IM99 1XF
t: +44 (0) 1624 644384                      Cains Advocates Limited                Horwath Clark Whitehill Audit LLC           Simcocks
f: +44 (0) 1624 644298                      15-19 Athol Street                     6th Floor, Victory House, Prospect Hill     Ridgeway House, Ridgeway Street
e: simon.jones@boioffshore.com              Douglas, Isle of Man IM1 1LB           Douglas, Isle of Man IM1 1EQ                Douglas, Isle of Man IM99 1PY
w: www.boioffshore.com                      t: +44 (0) 1624 638300                 t: +44 (0) 1624 627335                      t: +44 (0) 1624 690300
                                            f: +44 (0) 1624 638333                 f: +44 (0) 1624 677225                      f: +44 (0) 1624 690333
Bank of Scotland International              e: law@cains.com                       e: mail@horwath.co.im
Evergreen House, 43 Circular Road           w: www.cains.com                       w: www.horwath.co.im                        Standard Bank Isle of Man Limited
Douglas, Isle of Man IM99 1AT                                                                                                  Standard Bank House, One Circular Road
t: +44 (0) 1624 644011                      Deloitte & Touche                      KPMG                                        Douglas, Isle of Man IM1 1SB
f: +44 (0) 1624 644074                      P.O. Box 250, Grosvenor House          Heritage Court, 41 Athol Street             t: +44 (0) 1624 643674
e: colinpeters@bankofscotlandint.com        66/67 Athol Street, Douglas,           Douglas, Isle of Man IM99 1HN               f: +44 (0) 1624 643805
w: www.bankofscotlandinternational.com      Isle of Man                            t: +44 (0) 1624 681000                      e: james.stokoe@standardbank.com
                                            t: +44 (0) 1624 672332                 f: +44 (0) 1624 681098                      w: www.sboff.com
Barclays Wealth Intermediaries &            f: +44 (0) 1624 661751                 w: www.kpmg.co.im
Corporates                                                                                                                     The Royal Bank of Scotland
1st Floor, Queen Victoria House, Victoria   Dickinson Cruickshank                  Lloyds TSB Offshore                          International Limited
Street                                      33 Athol Street, Douglas               Victory House, Prospect Hill                P.O. Box 151, Royal Bank House
Douglas, Isle of Man IM99 1DF               Isle of Man IM1 1LB                    Douglas, Isle of Man IM1 1EQ                2 Victoria Street, Douglas, Isle of Man
t: +44 (0) 1624 681930                      t: +44 (0) 1624 647647                 t: +44 (0) 1624 638283                      t: +44 (0) 1624 646461
f: +44 (0) 1624 681999                      f: +44 (0) 1624 620992                 f: +44 (0) 1624 626033                      f: +44 (0) 1624 646606
e: colin.freeman@barclays.com               e: mail@dc.co.im                       e: fongj@lloydstsb-offshore.com             e: dianeshimmin@rbsint.com
w: www.barclayswealth.com                   w: www.dc.co.im                        w: www.lloydstsb-offshore.com               w: www.rbsint.com
                      Captives




                                                              Produced by Isle of Man Finance in association with Mainstream Financial Media & PR. 01624 678001. Cover photograph courtesy John Phipp. Photographs pages 1&6 courtesy Ray Davies.
There is little to stop the Isle of Man from becoming
    the domicile of choice for captive insurance.




Isle of Man Finance
2nd Floor
Illiam Dhone House
2 Circular Road
Douglas
Isle of Man IM1 1PG

Tel: +44 (0)1624 687597
E-mail: enquiries@isleofmanfinance.gov.im    www.gov.im/ipa
Website: www.isleofmanfinance.gov.im        www.mima.org.im

								
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