IBC European Captives Convention

Tax-news.com

01 February 2000

Latest developments in captive insurance world-wide were highlighted at the IBC European Captives Conference held last week in London.

Robert Christensen, Chairman of the Jersey Offshore Insurance Association, said that the island had pending applications for two 'transformer' special-purpose vehicles which were intended to securitise insurance risk. He compared them to Arrow Re and Lehman Re, both recently established in Bermuda to securitise catastrophe risk.

Rob Moore, a tax partner with PricewaterhouseCoopers, in London talked about the reduced tax advantages of captives, mentioning four particular current developments: the EU's harmful tax practices initiative; the pervasive spread of transfer-pricing rules in the EU; the tax characteristics of protected cell companies; and the imposition of taxes on premiums in some countries. Still, he seemed to think that the tax advantages of captives, while reducing, were still worthwhile if captives are used accurately.

Christopher Johnson, director of Gibraltar-based European Insurance Management Services, also down-played the tax benefits of captives. He said that the continued expansion in the number of captives reflected the use of protected cell companies, spv's and other new variants of the captive. Johnson said that the Edwards report, so dreaded in anticipation, had been unexpectedly positive, even to the extent of being a useful marketing tool for the Channel Islands captive industry.

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