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Introduction to Captives and the Bermuda Domicile

Introduction to Captives and the Bermuda Domicile. Introduction to Captives and the Bermuda Domicile. Moderator: Federico Candiolo , Counsel, ASW Law Ltd Panelist(s): Roger Aliaga -Diaz, PhD, Senior Economist, Vanguard Investment Strategy Group

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Introduction to Captives and the Bermuda Domicile

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  1. Introduction to Captives and the Bermuda Domicile

  2. Introduction to Captives and the Bermuda Domicile Moderator: • Federico Candiolo, Counsel, ASW Law Ltd Panelist(s): • Roger Aliaga-Diaz, PhD, Senior Economist, Vanguard Investment Strategy Group • Gerardo Filorio, Business Administration, Director, Lockton, Mexico • Dr. Marcelo Ramella, Deputy Director, Policy and Research, Policy, Legal Services & Enforcement Department, Bermuda Monetary Authority • Tino van den Heuvel, Partner, Tax Attorney, Hill Smith King & Wood New York

  3. Introduction to Captives and the Bermuda Domicile Marcelo Ramella Deputy Director, Policy and Research Policy, Legal Services & Enforcement Department Bermuda Monetary Authority

  4. Regulatory Overview

  5. BMA - Background The Bermuda Monetary Authority Act 1969 Independent Regulatory Body / Separate from Government Board of Directors Integrated regulator of Bermuda’s Financial Services Sector

  6. BMA’s Main Functions • Under the BMA Act we are: • Issuer of Bermuda’s notes and coins • Manages exchange control transactions • Regulates & Supervises • Insurers • Banks, trust companies, investment businesses, investment funds, fund administrators • Money service businesses • Bermuda Stock Exchange

  7. Regulatory Framework Supervision The way in which the rules are applied Regulation The rules and conditions Legislation The Acts, laws passed by Parliament

  8. The Insurance Code of Conduct • Builds on previous longstanding practice and guidance for governance standards, specifically guidance notes on: • Corporate Governance • Risk Management • Internal Controls • Codifies these existing guidance notes on governance standards such that they are now legally binding. • Captive insurers should be mindful of the proportionality principle in establishing a sound corporate governance, risk management and internal controls framework

  9. Insurer Class Structure • General Business Insurers • Class 1, 2, 3 – Captive Classes • Class 3A, 3B, 4 – Commercial Classes • Long-Term Business Insurers (annuity, life, some accident & health) • Class A, B – Captive Classes • Class C, D, E – Commercial Classes • SPIs (insurer fully funds liabilities through a debt issuance or some other approved financing mechanism)

  10. Minimum Solvency Margins General Business 32

  11. Minimum Solvency Margins Long-Term Business 33

  12. Bermuda’s Captive Regulation • Captive vs. Commercial • Risk-Based Approach • Role of Principal Representative and Insurance Manager • Insurance Manager On-sites • Segregated Accounts Companies (Rent-a-Captives)

  13. Pragmatic Approach to Regulation • Bermuda: The World’s Risk Capital • Creativity and Innovation • Modifying accounting regulations/ Section 56 Directions • Other approvals • Approving “relevant assets” • Admitting assets • Regulations consistent with International Standards but applied appropriately for Bermuda Market.

  14. How BMA interacts with service providers

  15. Captive registrations: by the numbers Full Year 2013 • 91 – New insurers registered (up 72% from 53 in 2012) • 24 – New captives registered (up 100% from 12 in 2012) • YTD April 2014 • 21 – New insurer registrations (up 5% year-on-year) • 4 – New captives registered (flat year-on-year)

  16. International Participation • The BMA contributes to international regulatory developments via active participation in international standard setting bodies, e.g. • International Association of Insurance Supervisors (IAIS) • Financial Stability Board’s Regional Consultative Group for the Americas • National Association of Insurance Commissioners (NAIC) • Leadership positions/membership of key working groups and committees • Bermuda influences, as well as keeps abreast of, global regulatory developments 37

  17. International Developments • Qualified Jurisdictions Status –NAIC • Solvency II Equivalence – European Insurance and Occupational Pensions Authority (EIOPA) • Bermuda’s Anti-Money Laundering Regime –International Monetary Fund (IMF) • TIMELINE FOR ASSESSMENTS • NAIC - 2014 • EIOPA- 2015 • IMF- 2016

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