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South Africa
Marsh Vikela Ltd.
Head of Office: Volker von Widdern
Office Address
The Marsh Centre
88 Grayston Drive
Sandton, Johannesburg
South Africa |
Telephone:
+27 (0) 11 506-5000
Facsimile:
+27 (0) 11 506-5401 |
Mailing Address
Private Bag X14
Benmore
2010
Republic of South Africa
General Information
| Location |
South Africa is located on the southern tip of Africa. It is bordered by the Atlantic Ocean on the west, the Indian Ocean on the south and east. Along its northern border, from west to east, lie Namibia, Botswana, and Zimbabwe, and to the northeast are Mozambique and Swaziland. Almost all of South Africa's 472,000 square miles (1.2 million sq. km.) lie below the Tropic of Capricorn. |
| Accessibility |
Direct flights are available to South Africa from many major cities around the world including Brussels, Dublin, Frankfurt, Hong Kong, Istanbul, London, Los Angeles and New York. |
| Applicable Legislation |
The Short Term Insurance Act, 1998 (Act 53 of 1998), Long Term Insurance Act 1998. The Financial Advisory and Intermediary Services Act, 2002 (Act 37 of 2002) |
| Number of Captives |
22, as advised by the regulatory authority January 2008 |
| Regulatory Issues |
Minimum capital requirements changing to risk based. No dispensation for Captives. Requires resident management and executive Board members. |
| Regulatory Agency |
The Financial Services Board |
Regulatory Issues
| Acceptable Insurance Subsidiaries |
Pure and Associated Captives ("Cell Captives"), Rent-a-Captive Vehicles |
| Acceptable Corporate Forms |
Limited Insurance company |
| Permitted Business |
All commercial lines permitted, personal lines
usually limited to the holding company, its subsidiaries and associated companies and entities with which joint venture arrangements have been entered into. |
| Direct Insurance Permitted |
All lines permitted, subject to conditions of registration, usually limited to entering policies on a cell captive basis to the parent and associated companies and entities with which joint venture arrangements have been entered into. |
| Reinsurance Permitted |
Yes, all lines if capacity is available. |
| Policy Form and Rate Approval |
None required |
| Local Office Requirement |
Registered Office, minimum of four directors. The Chief Executive Officer and Public Officer to be resident in SA required. At least one non-executive independent director to be appointed. Audit Committee must be established. |
Capitalization & Solvency Requirements
Type of Company |
Registered short term insurer (captive) or cell captive insurer |
Capital |
ZAR 6 Million minimum: The actual amount of capital will however be dictated by the kinds and volume of business to be conducted as set out in the 5 year projections that are submitted with the application. |
Solvency Margin
Premium Test |
The precise solvency margin required is calculated in accordance with regulations. As a general rule of thumb 25% of the net premium income for direct writers needs to be matched by reserves (paid up share capital and retained profits).
Moving to "Financial Condition Reporting" in 2010 – risk based capital requirement – similar to EU Solvency II |
Solvency Margin Loss Reserve Test |
Contingency margin of 10% on net written premium required, IBNR reserves set at 7% or calculated and solvency requirement exists for additional reserves to be held as from 2009 financial year.
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Actuarial Opinion |
Necessary for IBNR deviations from 7%.
"Financial Condition Reporting" will require independent actuarial testimony. |
Premium Taxes |
No local premium tax is imposed, although normal VAT input and output taxes apply to premiums, claims,
reinsurance and expenses. VAT rate is 14%.
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Intercompany Loans |
Permitted, approval is however required. There is a 5% spreading limitation for the insurer to issue inter-company loans. Loans in support of solvency are required to be subordinated. |
Investment Restrictions |
The investments should be in line with solvency margin rules and security, liquidity and profitability criteria. There is an admissible asset requirement in terms of the Act. |
Taxation |
Normal tax rates of 28% apply. Tax returns need to be filed with the authorities. |
Reporting Requirements |
Audited annual financial statements in accordance with IFRS requirements
Regulatory reporting to the Financial Services Board This takes place quarterly and a detailed audited annual report is required (STAR return) |
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