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Bermuda
Marsh Management Services Bermuda Ltd.
Head of Office: Jill Husbands
Sales Coordinators: Scott Gemmell, Khim Chia
Office Address
Victoria Hall
11 Victoria Street
Hamilton HM11,
Bermuda |
Telephone: (441) 292-4402
Facsimile: (441) 297-9780 |
Mailing Address
Victoria Hall
P.O. Box HM 1826
Hamilton HMHX,
Bermuda
General Information
| Location |
Bermuda consists of a group of small islands located off the Mid-Atlantic coast of the United States approximately 570 miles from North Carolina. The population of Bermuda is approximately 60,000. |
| Accessibility |
The island is easily accessible on frequently scheduled flights from New York, Boston, Atlanta, Newark, Washington and London.
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| Applicable Legislation |
The Companies Act of 1981 and The Insurance Act of 1978 (amended in 1985 and subsequent years) govern the formation of insurance companies. Bermuda Monetary Authority is the regulatory jurisdiction responsible for the supervision of captive operations in Bermuda. |
| Number of Captives |
960 as of 31-Dec-2008 |
| Regulatory Agency |
The Registrar of Companies |
Regulatory Issues
| Acceptable Insurance Subsidiaries |
Single Parent, Group or Association Captives and insurance and reinsurance companies |
Acceptable Corporate Forms |
Stock or Mutual |
| Permitted Business |
All commercial lines, personal lines and unrelated business permitted |
| Direct Insurance Permitted |
All commercial lines except statutory coverages such as Workers' Compensation and Automobile Liability |
| Reinsurance Permitted |
May assume and cede any reinsurance other than from or to non-exempt domestic Bermuda sources |
| Policy Form and Rate Approval |
Not required |
| Local Office Requirement |
Registered office and a resident representative or a minimum of two resident directors
A local quorum must always be maintained if a resident representative is not used
One shareholders' meeting annually anywhere in the world, may be done by proxy |
Capitalization & Solvency Requirements
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Class 1 |
Class 2 |
Class 3 |
Class 4 |
| Type of Company |
Pure single parent captives |
Group or single parent captives |
Any insurance or reinsurance company |
Any insurance or reinsurance company |
Maximum Unrelated 1
Risk Permitted |
0% |
20% |
100% |
100% |
Minimum Capital2
& Surplus |
$120,000 |
$250,000 |
$1,000,000 |
$100,000,000 |
Solvency Margin
Premium Test |
20% of Net Written Premiums for the First $6,000,000
10% of Net Written Premiums in Excess of $6,000,000 |
20% of Net Written Premiums for the First $6,000,000
10% of Net Written Premiums in Excess of $6,000,000 |
20% of Net Written Premiums for the First $6,000,000
15% of Net Written Premiums in Excess of $6,000,000 |
50% of Net Written Premiums
A Maximum Deduction of 25% of Gross Premium for Reinsurance |
| Solvency Margin Loss Reserve Test |
10% of loss reserves |
10% of loss reserves |
15% of loss reserves |
15% of loss reserves |
| Actuarial Opinion3 |
None required |
Required every three years |
Required every year |
Required every year |
1. The term "unrelated" has not been defined for regulatory purposes. Sources indicate however that entities with which the captive parent has an existing non-insurance relationship may not be considered an unrelated risk under the new regulations.
2. All classes require $120,000 of Cash Capitalization, except for Class 4 which is $1 million.
3. Captives whose products and professional liability writings total 30% of gross written premiums are required to obtain certification from a loss reserve specialist.
| 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 purposes. |
| Intercompany Loans |
Funds equal to 25% of the captive's liabilities are available to loan back to the parent. This threshold may be waived up to 100% with regulatory approval of the parent's financial position. The interest on the loan earned by the captive may be subject to 30% federal withholding tax, unless 953D election is taken. |
| Investment Restrictions |
The captive must comply with the Minimum Liquidity Ratio for General Business requirements which states that the value of relevant (liquid) assets of the insurer conducting general business may not be less that 75% of the amount of its relevant liabilities, unless the Bermuda Monetary Authority consents to waive this requirement. Certain assets may be considered "non-relevant" (usually non-liquid) and therefore would not be considered in calculating the liquidity ratio. |
| Taxation |
Bermuda has no income, profit or capital gains tax. Bermuda will enter into an agreement with the captive to levy no new taxes until 2016. |
Reporting Requirements
| Class 1 |
- Audited solvency certificate and declaration of ratios
- Audited financials required annually
- Certified loss reserves not required unless discounting to meet solvency margin, or professional liability premium is greater than 30% of the total gross written premium
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| Class 2 |
- Audited solvency certificate and declaration of ratios
- Statutory financial statements
- Audited financials required annually
- Triennial (or annual if discounting to meet solvency margin or if professional liability premium is greater than 30% of the total net premium)
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| Class 3 |
- Audited solvency certificate and declaration of ratios
- Statutory financial statements
- Audited financials required annually
- Certified loss reserves required annually
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| Class 4 |
- Audited financials required annually
- Certified loss reserves required annually
- Audited solvency certificate and declaration of ratios
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