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MARSH CAPTIVE SOLUTIONS

EMEA Domiciles

Denmark

Head of Office Lars Andersen
Senior Team  
Office and Mailing Address Marsh Management Services (Denmark)
Teknikerbyen 25
2830 Virum
Denmark
Telephone (+45) 45-95-95-64
Facsimile (+45) 45-95-95-01

General Information

Location The Kingdom of Denmark is located in Northern Europe. Part of European Union.
Accessibility Nordic hub for airlines with good connections to all major European cities and direct flights to certain destinations in US and Asia. Sophisticated telephone infrastructure.
Applicable Legislation                             Danish Financial Business Act of 2006, as amended in 2007
Number of Captives 13 as of 31-Dec-2013
Regulatory Agency Finanstilsynet (The Danish Financial Supervisory Authority)

 

REGULATORY ISSUES

Acceptable Insurance Subsidiaries          Single Parent, Mutual or Association Captives.
Acceptable Corporate Forms Company limited by shares.
Permitted Business All lines of insurance business is permitted.                                                                  
Direct Insurance Permitted Yes
Reinsurance Permitted Yes
Policy Form and Rate Approval Not required
Local Office Requirement Registered office

 

CAPITALISATION & SOLVENCY REQUIREMENTS

Type of Business Minimum Capital Solvency Margin
Long Term - direct EUR 3,200,000 18% of premium or 26% of claims or minimum capital. New individual solvency calculation as of July 1st 2007.
Other – direct EUR 2,200,000
Reinsurance captive EUR 1,000,000
Reinsurance company EUR 3,000,000
Premium Taxes No local premium tax is imposed. Stamp duty on policies issued.
Inter company Loans Maximum loan of surplus plus 25% of base capital requirement.
Investment Restrictions Technical reserves own account for direct and indirect business must be in admissible assets.
Taxation 25% company tax – no other taxes apply
Reporting Requirements Quarterly electronic reporting for first 3 years of operations to FSA. Half-year and annual reports to FSA. Annual tax returns and annual auditor's report.

 

Dubai

Head of Office Ronny Vellekoop
Senior Team  
Office Address Captive Solutions Group
Marsh Management Services (Dubai) Limited
Dubai International Financial Centre
Level 5, Office 01 B, Precinct Building 2
P.O. Box 506770
Dubai, United Arab Emirates
Mailing Address Captive Solutions Group
Marsh Management Services (Dubai) Limited
P.O. Box 506770
Dubai, United Arab Emirates
Telephone 971 04 508 0403
Facsimile 971 04 327 8686

 

General Information

Domicile Dubai International Financial Centre (DIFC), an onshore financial centre designated as a financial free zone in Dubai.
Location Dubai, one of seven emirates in the United Arab Emirates, is situated on the Persian Gulf. Dubai has a population of approximately 1.5 million people.
Accessibility Flights from major North American and European cities are available to Dubai International Airport, the hub of Emirates Airlines.
Applicable Legislation The legal framework in the DIFC is based on the common law of England & Wales and is independent of the civil and commercial laws in the U.A.E.
Regulatory Agency Dubai Financial Services Authority (DFSA)

 

REGULATORY ISSUES

Acceptable Insurance Subsidiaries          Single parent captives, mutual captives and protected cell companies for Life, non-life and reinsurance.
Acceptable Corporate Forms Company limited by shares and protected cell company.
Permitted Business All classes for which a company has a license.
Direct Insurance Permitted A DIFC-registered captive cannot cover risks in the U.A.E. except by way of reinsurance. This means that insurance arrangements may be necessary for other territories, depending on the laws there.
Reinsurance Permitted Yes, all lines within a reinsurance undertaking. There are no limitations imposed on insurance undertakings as to the quantum of reinsurance that may be accepted.
Policy Form and Rate Approval Not required
Local Office Requirement
Registered office

Resident Senior Executive Officer

Resident Compliance & Money Laundering Reporting Officer

 

CAPITALISATION & SOLVENCY REQUIREMENTS

 
Class 1
Designed for the insurance of risks only from its parent or related companies; and
Requires a minimum capital of US$150,000.
Class 2
Designed for the insurance of risks only from its parent or related companies but may also accept up to 20% of its business from unrelated sources; and
Requires a minimum capital of US$250,000.
Class 3 Is a group captive insurer, and
Requires a minimum capital of US$1,000,000.
Protected Cell Company Requires minimum cellular assets of US$50,000; and
US$50,000 in non-cellular assets.
 
Premium Taxes – Tax on Direct Premises
There are no premiums or other taxes applied to insurance policies in the U.A.E. For direct writing undertakings, premium taxes apply as per the local requirements in the territories being written into.

Investment Restrictions

There are no investment restrictions. Suitable controls and information systems should be in place to enable a captive insurer to implement an appropriate investment strategy as per the requirements of the DFSA’s risk-based prudential regime.

Taxation
Businesses operating in the U.A.E. are not subject to income or withholding tax. The United Arab Emirates has 46 tax treaties in force.

Marsh offers captive management services in the Middle East from a Dubai hub. Our licensed entity in Dubai is Marsh Management Services (Dubai) Limited.


 

Dublin

Head of Office Ian J. Clancy
Senior Team Jennifer Warde
Brian McDonagh
Office and Mailing Address Marsh Management Services (Dublin) Limited
Registered in Ireland No. 156648
Registered Office:

Floor 4, Marsh House
25-28 Adelaide Road
Dublin 2, IRELAND
Telephone (35-31) 605-3000
Facsimile (35-31) 605-3010

 

General Information

Location Dublin is the capital of the Republic of Ireland, which is a member of the European Union (EU). Dublin is in the same time zone as London.
Accessibility

York, Boston, Chicago, Washington, Atlanta and Los Angeles), London, and most European financial centres (Frankfurt, Paris, Amsterdam, Milan and Stockholm).

Taxation:
Ireland has a standard rate of corporation tax of 12.5% on trading profits.

Non-trading income and profits are subject to a rate of tax of 25%.

Ireland has 44 tax treaties in force.

Applicable Legislation A favourable tax and legislative environment exists for securitisations.

Insurance Regulation:
Dublin licenses both direct writing insurance captives and reinsurance captives. Both Direct writing and reinsurance captives are governed by the European Union Insurance Directives as implemented into Irish law. In addition, direct writing captives must comply with guidelines in respect of minimum capitalisation levels and the mix of premiums written on a direct/assumed reinsurance basis.
Number of Captives Approximately 142 as of 31-Dec-2013
Regulatory Agency The Central Bank of Ireland

 

REGULATORY ISSUES

Acceptable Insurance Subsidiaries Direct writing insurance and reinsurance captives – Single parent.
Acceptable Corporate Forms Company limited by shares.
Permitted Business A direct writing captive can write on an admitted basis into all 27 European Union countries which includes the following countries: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, Sweden, United Kingdom.

Direct Captive – Life and non-life business cannot be transacted in the same company if the company is a direct writer.
Direct Insurance Permitted A direct writing captive can also write on a non-admitted basis into the following countries for non-compulsory lines of risk only: Australia, Peru, Hong Kong, New Zealand, Norway, Singapore, Saudi Arabia, USA (subject to individual state regulations), Canada (subject to individual state regulations).
Reinsurance Permitted Within a Reinsurance Captive, all lines are permitted including life and non-life. Within a direct writing company, limitations are imposed by regulator on the quantum of reinsurance that may be accepted (expressed by way of gross premiums written). Current regulations limit the amount of assumed reinsurance to 50% of total Gross Written Premium, subject to approval from the Central Bank of Ireland.
Local Office Requirement A company that seeks to write third party business is subject to separate regulatory requirements, which dictate that at minimum a General Manager must be employed by the company. The requirement for non-executive

 

CAPITALISATION & SOLVENCY REQUIREMENTS

Capitalisation     
Direct Writing Captive – Euro 2/3 million Minimum Guarantee Fund depending on classes or cover.

Reinsurance Captives – Euro 1 million Minimum Guarantee Fund.


Guernsey

Head of Office David Riley
Senior Team Derek Maddison
Stephen Casey
Paul Marquand
Office Address St Martins House
Le Bordage
St. Peter Port, Guernsey
GY1 4AU
Channel Islands
Mailing Address P.O. Box 34
St. Peter Port, Guernsey
GY1 4AU
Channel Islands
Telephone (44-1481) 715300
Facsimile (44-1481) 713617

 

General Information

Location Guernsey is a self-governing dependency of the English Crown located in the Channel Islands approximately 70 miles south of England and 30 miles from France. The population is approximately 60,000.
Accessibility

 

Regular daily flights from London and other provincial centers in England together with flights from certain European cities as well as daily fast ferry service from England and France.

Applicable Legislation

 

The Insurance Business (Bailiwick of Guernsey) Law 2002 as amended.
Licensed Insurers’ Corporate Governance Code
Protected Cell Company Legislation was introduced in 1997.

Number of Captives 344 Captives and 445 cells as of 31-Oct-2014
Regulatory Agency Guernsey Financial Services Commission – Insurance Division

 

REGULATORY ISSUES

Acceptable Corporate Forms         Stock and Mutual
Permitted Business No restrictions
Direct Insurance Permitted No restrictions
Reinsurance Permitted No restrictions
Policy Form and Rate Approval No restrictions
Local Office Requirement Registered office
General representative
Money Laundering Reporting Officer

 

CAPITALISATION & SOLVENCY REQUIREMENTS

  Minimum Capital Solvency Margin
General Business
(Property/Casualty)     
£100,000 18% of premiums net of reinsurance for first £5 million; 16% thereafter    
Long-Term Business (Life) £250,000 The higher of £50,000 or 2.5% of the value of the long-term fund consisting of unearned premiums and investment income.
Premium Taxes Premium for U.S. risk may be subject to Federal Excise Tax of 4% on direct policies and 1% on reinsurance policies if captive is viewed as an insurance company for U.S. federal tax purpose.
Intercompany Loans Loans are allowed subject to the agreement of the Guernsey Financial Services Commission.
Investment Restrictions No restrictions.
Assets classed as Approved Assets rank for solvency.
Taxation Captives are taxed at zero percent
Reporting Requirements U.K. GAAP or recognised equivalent (e.g. IFRS or US GAAP)
Audited Financials
Certified Loss Reserves required for long-term business


Isle of Man

Head of Office Derek Patience
Senior Team  
Office Address 1st Floor, Rose House
51-59 Circular Road
Douglas, UK IM1 1RE
Isle of Man
Mailing Address
P.O. Box 305
1st Floor, Rose House
51-59 Circular Road
Douglas, UK IM99 2BB
Isle of Man
Telephone (44-162) 463-0523
Facsimile (44-162) 467-6447

 

General Information

 
Location The Isle of Man is situated in the middle of the Irish Sea, close to both the United Kingdom and Ireland. It has a population of about 75,000 permanent residents and a history of self-government and independence that dates back over 1,000 years.  
Accessibility
The island is connected with the U.K. and Ireland by direct scheduled air and ferry services. The island's telephonic services are digital, and include satellite and video conferencing facilities.
 
Applicable Legislation
The Isle of Man Insurance Act of 2008; Protected Cell Company Act 2004; Incorporated Cell Company Act 2010.
 
Number of Captives 125 as of 31-Dec-2013  
Regulatory Agency Isle of Man Government Insurance and Pensions Authority.  

 

REGULATORY ISSUES

 
 
Acceptable Corporate Subsidiaries 
Single Parent, Mutual or Association Captives; Protected Cell Companies; Incorporated Cell Companies.  
Acceptable Corporate Forms Company limited by shares, partnership.  
Permitted Business All commercial lines, personal lines and unrelated business permitted.  
Direct Insurance Permitted Yes  
Reinsurance Permitted Yes
 
Policy Form and Rate Approval Not required
 
Local Office Requirement Registered office  

 

CAPITALISATION & SOLVENCY REQUIREMENTS

 
 
  Minimum Capital Solvency Margin  
Long Term – General     

Class 1:  £500,000

Class 2:  £150,000

       
Reinsurance - Direct (Restricted) £100,000    
Related Party Business £50,000 plus 10% of net premium up to £2 million; plus 5% of net premium in excess of £2 million for Direct (Restricted) Captive.  
Premium Taxes No local premium tax is imposed.  
Intercompany Loans Maximum loan of 125% of surplus over solvency requirements. Loans up to value of 100% of loan are admissible subject to the approval of the Regulator.  
Investment Restrictions Admissible asset requirement.  
Taxation Captives are liable for tax; the tax rate is zero per cent

IOM has entered into 4 tax treaties and tax information exchange agreements with OECD countries.
 
Reporting Requirements GAAP or IFRS Annual Reporting

Certified Loss Reserves only required for long-term business.
 

 

Liechtenstein

Head of Office Konrad Baumann
Senior Team Konrad Baumann
Alexandra Lüscher
Office and Mailing Address Kirchstrasse 12.
9490 Vaduz
Liechtenstein
Telephone (4144) 285-9342
Facsimile (4144) 285-9343

 

General Information

Location Liechtenstein is located between Switzerland and Austria and is surrounded by the Alps. The official language is German but French and English are also spoken. The population is 37,000 (2013).
Accessibility There are a number of international airports within driving distance: Zurich (1hr 30 min), Basle (2 hrs). The closed international airport is Altenrhein in Switzerland, 30 minutes away.
Applicable Legislation Authorised insurers in Liechtenstein are regulated by the Insurance Supervision Law (VersAG) 1996 and its Implementing Ordinance 1997. This legislation can be found at www.fma-li.li.
Number of Captives 11 as of 31-Dec-2013
Regulatory Agency Financial Market Authority (FMA)

 

REGULATORY ISSUES

Acceptable Insurance Subsidiaries          Pure and Association Captives
Acceptable Corporate Forms Joint stock company or co-operative
Permitted Business A non-life captive insurer can write direct and reinsurance business. A captive reinsurer can write reinsurance business, whether it is life or non-life. Specific requirements apply where third party business is written. Liechtenstein has been a member of the EEA since 1995 and a member of EFTA.
Direct Insurance Permitted All classes of business can be written within Liechtenstein, Switzerland and all 27 EU territories on a Freedom of Services basis.
Reinsurance Permitted All lines of business can be written.
Policy Form and Rate Approval Not required

Local Office Requirement
 
Registered office and at least one member of the management has to be a Liechtenstein resident.

 

CAPITALISATION & SOLVENCY REQUIREMENTS

 
Capitalisation
Direct captive: Minimum capital EUR 2.5Mio (incl. liability EUR 3.7 Mio)
Reinsurance captive: Minimum capital EUR 1.2Mio
Organisation Fund 20% - 50% of capital

Solvency
 
For direct insurance and reinsurance companies, comply with EU regulations.

Premium Taxes
 
None. Any direct insurance and reinsurance companies, comply with EU regulations.
Investment Restrictions No specific restrictions; however the investments must be approved by the Financial Market Authority.
Taxation Flat rate of 12.5%on taxable income. No tax on capital.
The insurance regulator required to build a minimum and maximum equalisation reserve amount to allow captive owners to defer taxes.
Reporting Requirements Financial year to end 31.12. Audited financial statements prepared under normal accounting standards. File a report with the Financial Market Authority (FMA) before April 30, using the official reporting package for insurance companies. File a tax return.

 

Luxembourg

Head of Office Claude Weber
Senior Team Claude Weber
Office Address Marsh Management Services Luxembourg S.à r.l.
74, rue de Merl
Luxembourg, L-2146
Mailing Address P.O. Box 2217
Luxembourg, L-2146
Telephone (352) 49-69-51
Facsimile (352) 49-69-36

 

 

General Information

Location Luxembourg is a land-locked north-western European country of approximately 1,000 square miles in the Euro zone. The population of Luxembourg is approximately 520,000 people. Luxembourg is a fully diversified financial centre in the heart of the EU. It has a highly skilled multi-lingual workforce (Luxembourg, French, German, English, and many other EU and non-EU languages.)
Accessibility Frequent flights from all major European cities are available, as well as convenient road and railway connections.
Applicable Legislation The legal amended framework was initially defined by the law of December 6, 1991 for the insurance industry and amended by the laws of December 8, 1994 and December 5, 2007 for the reinsurance industry as well as by various Grand Ducal regulations.
Number of Captives Number of Captives 224 reinsurance and 10 direct as at 10/2014
Regulatory Agency Insurance Regulator – Commissariat aux Assurances

 

REGULATORY ISSUES

Acceptable Insurance Subsidiaries Pure and Association Captives
Acceptable Corporate Forms 1 Public Company Limited by shares, 2 Corporate Partnership Limited by shares, 3 Mutual Insurance Association, 4 Cooperative Society, 5 Cooperative Society Organised as a Public Limited Company, 6 European Company, 7 Société en Commandite par Actions (SCA or SECA).
Permitted Business Life and nonlife on an insurance and reinsurance basis. Direct writers have to be discussed on a case by case basis with the Commissariat aux Assurances.
Direct Insurance Permitted Yes, but must comply with European Union (EU) Directives relating to direct insurance and reinsurance companies.
Able to write business in all 27 EU countries under the freedom of services directive, plus the three EEA countries.
Reinsurance Permitted Related parent risk and unrelated risk
Policy Form and Rate Approval Not required
Local Office Requirement Not required

 

CAPITALISATION & SOLVENCY REQUIREMENTS

Capitalisation     
Minimum capital is Euro 1,225 million or its equivalent in other currency for a reinsurance captive; otherwise, 3.6 million minimum for a reinsurance company.
Minimum capital is Euro 2.5 million or Euro 3.7 million for a direct writing captive depending on the classes of business written.
Solvency
- As a general rule of thumb, the higher of 18% or 16% of gross premiums or 26% or 23% of gross claims charges (average over 3 years), depending on the volume must be matched by free reserves (paid-up share capital and retained profits, etc.). An uplift of 50% is applied to premiums and claims for liability classes. This solvency requirement may be reduced depending on the level of risk ceded to reinsurers (subject to a maximum reduction of 50%).
-The solvency II regulation will apply from January 2016, reinsurance companies already have to be prepared and in line with this new regulation:
a) Pillar I : Quantitative requirements
b) Pillar II : Qualitative requirements
c) Pillar III : not implemented yet: Disclosures

Remark: The Luxembourg Equalisation Reserve is eligible to capital and considered as quasi-equity to cover the SCR (Solvency Capital Requirement) and MCR (Minimum Capital Requirement) calculations.
Premium Taxes
On Direct Insurance, 4% Except Fire (additional 6% imposed for Fire Brigade Tax)
On Reinsurance, 0%
Intercompany Loans
Inter-company loans are allowed. For solvency purposes the regulator will require an acceptable investment spread, will look at each case on its merits, and will take into account the mix of the captive programme and will expect the loan to be reimbursed at short notice.
Investment Restrictions
No specific restrictions, but the assets representing technical reserves must take into account the type of business carried out by the reinsurance company in order to ensure the appropriate level of security, yield and liquidity of the company's investments. For direct insurance companies, more specific rules apply.
Taxation



Reinsurance companies are required to create a catastrophe loss reserve (Equalisation Reserve : ER) that goes beyond the normal provisions made for outstanding claims and existing risks. This reserve, due to its own deductibility, acts as a tax deferral mechanism until such time as the maximum allowable amount has exceeded the ER ceiling and income has to be recognised and taxed at the latest at the date of liquidation.

To determine the ER ceiling, an actuarial risk calculation for each line of business written will be required to arrive at the maximum allowable amount. In any event, an overall maximum reserving ceiling of 17.5 times the net average overall premiums earned over the last 5 years will be imposed.

In addition, once the equalisation reserve has reached 30 percent of its maximum ceiling, the part of the financial income that exceeds 100 per cent of the normal yield on government bonds (the yield to be taken into account will be published by the Insurance Regulator) will be subject to Luxembourg income tax.

Luxembourg insurance and reinsurance companies are considered as normal fully taxable corporations according to Luxembourg tax law.

Taxable income derives from the accounting profit established under generally accepted accounting principles adjusted for tax purposes. Such adjustments are those applied in any developed tax regime.

Luxembourg reinsurance companies are subject to the following taxes

Recurrent annual taxes

1) Net worth tax on paid up capital: - 0.5%

2) On profits:
-- Corporate Income Tax - 22.47%
-- Municipal business tax - 6.75%. These taxes are applied on profit after the application of the equalisation reserve allocations.
-- Total 29.22%

3) Depending on the size and structure of the balance sheet, a minimum tax that varies between EUR 1605 and EUR 21400 applies.

4) Luxembourg has double taxation treaties with the United States, most European countries and numerous other countries.

5) Taxable basis for each tax needs to be adjusted according to the relevant tax law

6) Direct writing captives are also subject to the combined tax rate on profits. No equalisation reserve applicable except for credit risks.

7) VAT : 17%

Reporting Requirements


Audited Financials
Annual reporting of the reinsurance company to the Regulator
(Commisariat Aux Assurances)
Separate report for the auditor to the Regulator
Regulator relies on audit report, but actuarial computations required for Life Business
Quarterly returns for direct writers

 

MALTA

Head of Office Will Thomas-Ferrand
Senior Team Stephen Portelli
Office Address Floor 1
Strand Towers, 36 The Strand
Sliema, SLM 1022, Malta
Mailing Address Marsh Management Services Malta Limited
Floor 1
Strand Towers, 36 The Strand
Sliema, SLM 07, Malta
Telephone (356) (0) 2342-3000
Facsimile (356) (0) 2342-3333

 

General Information

Location The Maltese Islands are situated in the Mediterranean Sea, about 100 km from Sicily and 290 km from North Africa. They consist of Malta (390 sq km) Gozo (65 sq km) and Comino (2.5 sq km). The population is around 400,000 and is homogeneous with its own identity and language. The official languages are Maltese and English with most of the people also fluent in Italian. Malta is a member of the European Union.
Accessibility Regular daily flights from all European cities as well as ferry service from Italy and North Africa.
Applicable Legislation

Insurance Regulation:


Insurance Business Act 1998.
Protected Cell Company: Legislation introduced in 2004.
Incorporated Cell Company: Legislation introduced in 2010/2011
Malta licenses both direct writing insurance captives and reinsurance captives.
Direct writing captives are governed by the European Union Insurance Directives as implemented into the Maltese Law.
Malta also has in place Migration and Amalgamation Legislation

Taxation:

Malta has a standard tax rate of 35%. However, if a company underwrites risks situated outside Malta, it is able to operate the foreign income account and non-resident shareholders may benefit from the refund of tax on distributions from this account, thus reducing the tax rate to 5%.
Malta has Double Tax Treaties with numerous countries.
Number of Captives 34 as of year-end 2014
Regulatory Agency Malta Financial Services Authority

 

REGULATORY ISSUES

Reinsurance Special Purpose Vehicles Malta’s Reinsurance Special Purposes Vehicles (RSPV) legislation came into effect on December 27, 2013. The legislation defines an RSPV as “an undertaking, other than an existing insurance or reinsurance undertaking, which assumes risks from a ceding undertaking and which fully funds its exposure to such risks through the proceeds of a debt issuance or any other financing mechanism where the repayment right of the providers of such debt or financing mechanism are subordinated to the reinsurance obligations of such a vehicle.”

It is expected that this legislation will support the continued trend for Malta to target itself as the onshore domicile for insurance linked securities and catastrophe bond issuance which will be fully compliant with the Solvency II Directive and can provide maximum benefit for capital relief under Solvency II.
Acceptable Insurance Subsidiaries Pure and Associated captives and Insurance Companies.
Reinsurance captives – single parent or Association parent.
Acceptable Corporate Forms Company limited by shares.
Permitted Business Direct captive – Life and non-life business must be transacted in separate companies.
Reinsurance captive – All classes of life and non-life business
Direct Insurance Permitted A direct writing captive can write on an admitted basis throughout the European Union.
Reinsurance Permitted All lines - within a Reinsurance Captive.
Within a direct writing company, limitations are imposed by regulators on the quantum of reinsurance that may be accepted.
Policy Form and Rate Approval Direct writing Captive.
Rating approval necessary for Life Captive, subject to Actuarial sign off.
Local Office Requirement Registered office
Licensed Insurance Manager

 

CAPITALISATION & SOLVENCY REQUIREMENTS
INSURANCE ACT

Capitalisation     
Direct Writing Captive - Euro 2/3 million minimum paid-in capital (cash or equivalents only) depending on classes or cover.
Reinsurance Captives - Euro 3m Minimum paid-in capital.
Solvency The precise solvency margin required is calculated in accordance with regulations. As a general rule of thumb 36% of gross premium income must be matched by free reserves (paid-up share capital and retained profits). This percentage may be reduced depending on the level of risk ceded to reinsurers (subject to a maximum reduction of 50%).
Premium Taxes No local premium tax is imposed. Premium for U.S. risk may be subject to Federal Excise Tax of 4% on direct policies and 1% on reinsurance policies if captive is viewed as an insurance company for U.S. federal tax purpose.
Intercompany Loans Loans are allowed with the approval of the MFSA. However, a limited amount would apply to the Solvency calculation.
Investment Restrictions No specific restrictions, but the assets representing technical reserves must take into account the type of business carried out by the company in order to ensure the appropriate level of security, yield and liquidity of the company's investments.
Reporting Requirements Quarterly returns, together with Audited Financials.
Certified Loss Reserves required for long-term business.

 

SWEDEN

Head of Office Karl-Ove Andersson
Senior Team Karl-Ove Andersson
Office and Mailing Address Marsh AB
Klara Norra Kyrkogata 29
SE-111 22 Stockholm Sweden
Telephone (+46) 8 412 4257
Facsimile (+46) 8 412 4340

 

General Information

Location Sweden is part of Scandinavia and is one of the largest countries in Europe at approximately 174 thousand square miles in size. It has a population of around 9 million (2011).
Accessibility Frequent flights from all major European cities are available, as well as direct flights from all major U.S. cities to the airports in Stockholm-Arlanda, Gothenburg, and Malmo-Sturup.
Applicable Legislation Insurance Business Law 1982: 790
Regulation of Insurance Business 1982: 790
Insurance Contract Law 1927: 77
Number of Captives 48 as of year-end 2013
Regulatory Agency Finansinspektionen - Swedish Financial Supervisory Authority (FSA)

 

REGULATORY ISSUES

Acceptable Insurance Subsidiaries Most common form of ownership structure is a Single Parent. Captives with more than one owner are accepted and need no special permission.
Acceptable Corporate Forms Most common form is a limited company. Other legally accepted form is a mutual.
Permitted Business A captive can write non-life on a direct or reinsurance basis. No restrictions of portion between direct and reinsurance. Life insurance can be written on reinsurance base in a non-life captive. Swedish legislation does not differ between a captive and a traditional insurer.
Direct Insurance Permitted Yes
Reinsurance Permitted Related parent risks and unrelated risks.
Policy Form and Rate Approval Not required.
Local Office Requirement Swedish FSA must be able to perform its supervision over the captive. Administration can be conducted partly from outside Sweden. The specific structure should be presented to and approved by FSA on a case-to-case basis.

 

CAPITALISATION & SOLVENCY REQUIREMENTS

Capitalisation     
According to EU rules
Solvency According to EU rules
Premium Taxes Premium taxes apply as per local regulations where the risk is located
Investment Restrictions Technical reserves net of reinsurance according to special regulations. Re-loan of capital (including equity) in excess of technical reserves to parent group allowed without any special approval.
Equalisation Reserver A non-life captive can utilise an equalisation reserve (safety reserve). Allocations are set off based upon the risk profile in the captive. Methods of calculating maximum allocations are fairly non-complicated.
Taxation Corporate Tax 22%, applicable on profits after allocation to Equalisation Reserve.
No capital tax
No stamp duty
Reporting Requirements Quarterly and annual reports to the FSA. Annual tax returns. Annual auditors report.
Registration and Incorporation Costs Marsh implementation fee: EUR 15,000
FSA fee: EUR 30,000
Company Registre: EUR 1,000

 

SWITZERLAND

Head of Office Konrad Baumann
Senior Team Konrad Baumann
Alexandra Lüscher
Office and Mailing Address Tessinerplatz 5
PO Box 8002
Zurich Switzerland
Telephone (4144) 285-9342
Facsimile (4144) 285-9343

 

General Information

Location Switzerland is a landlocked country situated in west central Europe. It has several neighbours – Austria, France, Germany, Italy and Liechtenstein and is an important crossroad for continental and intercontinental traffic. Switzerland has an area of approximately 41,300 square kilometers (15,900 square miles) and has a population of more than 8 million.
Accessibility Frequent flights from all major European cities are available, as well as convenient road and railway connections.
Applicable Legislation Federal Law on the supervision of the Financial Market Authority (FINMA) of 22 June 2007 (FINMAG). Authorised insurers in Switzerland are regulated by the Insurance Supervision Act (17 December 2004 and Insurance Supervision Ordinance of 9 November 2005).
Number of Captives 34 as of year-end 2013
Regulatory Agency Financial Market Authority (FINMA)

 

REGULATORY ISSUES

Acceptable Insurance Subsidiaries Pure and Association Captives
Acceptable Corporate Forms Joint stock company or co-operative
Permitted Business All commercial lines, personal lines and unrelated business.
Direct Insurance Permitted Yes, but cannot write business in the E.U. Therefore, for the purpose of this document, we limit it to reinsurance.
Reinsurance Permitted Related parent risk. No Swiss risks accepted if option for favourable tax status.
Policy Form and Rate Approval Not required
Registered office
Local Office Requirement Minimum of three directors, majority of directors needs to be resident in Switzerland and citizens of an EU country.

 

CAPITALISATION & SOLVENCY REQUIREMENTS

Capitalisation     
Minimum capital CHF 3Mio, Organization Fund 20% – 50% of capital with a minimum of CHF 0.3Mio
Solvency Risk based approach (RBC) or Swiss Solvency Test (SST)
Premium Taxes There are neither insurance nor VAT on reinsurance premium
Investment Restrictions No specific restrictions; however the investments should be in line with solvency margin rules and security, liquidity and profitability criteria. The tax rates and the basis of computation vary from canton to canton. Captives should discuss their reserving policy with their canton so as to define the minimum taxable profit. Via the reserving rules, increase of the equalisation reserve, the profit will be adjusted to the adequate amount. Zurich is here taken as an example, but other cantons would normally be similar. For Zurich the following applies. No strict limits to reserving as long as a sufficient profit is shown. A profit amounting to the average Swiss bond yield plus 2% as return on equity is expected. For 2014 1.00% + 2%. For the first two years of operation no profit has to be shown and any surplus can be used to increase the equalisation reserve. The minimum profit will also be the basis for computing the federal tax.
Taxation Federal tax on Profit: A flat tax of 8.5% is applicable on the profit after tax. Tax on Capital: None. The Zurich Cantonal/Municipal taxes: Tax on Profit: The tax rate is progressive, varying between 4 and 10% based on income after tax. This base tax is then multiplied with the tax factor "Steuerfuss," for Zurich 2014 amounting to 2.29. As an Administrative company only 15% of the profit will be taxed meaning 1.37% - 3.44% on profit after tax. Tax on Capital: Base tax 0.015% on taxable equity for Administrative companies, "Steuerfuss" applies, meaning 0.034% on taxable equity. If desired higher amounts can be paid.
Reporting Requirements Financial year to end 31.12. No special accounting rules for insurance or reinsurance companies apply. Audited financial statements prepared under normal accounting standards. File a report with the Financial Market Authority (FINMA) before June 30, using the official reporting package for reinsurance companies. File a tax return.
Registration and Incorporation Costs