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12 September 2013
The recent insurance industry briefing, co-sponsored by the Bahamas Financial Services Board and the Insurance Commission of the Bahamas, on the regulatory regime for captives has highlighted a renewed interest in the Bahamas as a jurisdiction of choice for captive companies. In this regard, the Bahamas enjoys the following advantages:
Captive companies are registered as restricted external insurers under the External Insurance Act. Captive companies may be incorporated as standalone captives under either the Companies Act or the International Business Companies Act. They may also be formed as cell accounts in a segregated accounts company structure under the Segregated Account Companies Act.
The External Insurance Act also provides for the licensing of companies incorporated outside the Bahamas which are licensed to undertake insurance business in their home country and have undertaken business in that country for a period satisfactory to the commission and pursuant to regulations under a regime comparable to the Bahamas.
In order to obtain a licence in the Bahamas, applicants must meet the following prerequisites:
A restricted external insurer's licence (single parent captive) may be issued where that company has capital as approved by the commission. It will require the following minimum capital:
Insurers must maintain a minimum positive net worth (assets in excess of liabilities). General insurers are required to maintain assets in excess of liabilities.
Net premium income
Minimum net worth
Up to $5 million
20% of net premium income
Over $5 million
$1 million plus 10% of net premium in excess of $5 million
Life insurers are required to maintain assets in excess of liabilities (including actuarially determined claims reserves) of $200,000.
Allowable investments for solvency calculation includes:
Irrevocable letters of credit drawn or confirmed by a bank licensed in the Bahamas are also allowable for the solvency calculation.
Fees are payable to the commission as follows:
Application requirements are as follows:
Ongoing miniumum reporting requirements are as follows:
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