Captives: Navigating the tax maze

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Captive Tax Maze

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Insurance, regulation and tax are not the problems facing the discipline of risk management; the problem is risk. Risk is what we seek to better manage by using captives. Tax charges and regulatory compliance are also part of the landscape of risk; an adjunct to the insurance solution captives offer. A properly thought-out and executed strategy with the right tools ensures that the captive generates maximum value to its shareholder.

Introduction

Classroom Spiel and Market Realities

On paper, captives purportedly take business away from the conventional market and write insurance across borders.

 

In practice, demand for capacity in the conventional insurance market continues to grow unabated even with unprecedented growth in the number & type of captives and jurisdictions. Why?

 

The reality is that most captives do not have the critical mass (in terms of capacity, risk appetite and expertise) to ‘compete’ with the conventional market and they generally thrive in cooperation with the conventional markets. It also benefits the conventional market to engage with the captive insurance sector because, by and large, captives ‘improve’ businesses’ risks with more robust risk management. By default, captive retentions represent ‘skin in the game’ which, in turn, aligns interests and drives better risk control. They are also far less promiscuous as risk partners than the largely broker-driven conventional international insurance placements.

 

Another challenge for most captives of international insurance programs when compared to conventional international insurers is the ability to write across borders. Some industry commentators would contend that the EU has done away with most of the barriers relative to cross-border insurance delivery at least across EU/EEA states. Whilst in theory this is true, in practice some EU states continue to erect “speed-bumps” or “sleeping policemen# that hinder the extent of market entry.

“Writing business across borders poses challenges to captives. The EU, for example, may have removed barriers to entry but regulatory and fiscal adherence sometimes present more of a labyrinth than a straight path.” 

Sleeping Policemen        

Writing Across Borders in the EU

Differences in the interpretation of EU directives concerning the conduct of insurance is one of the main nuisances (for example Freedom of Services vs Freedom of Establishment).Some EU host-jurisdictions heavy-handedly push for freedom of establishment when faced with applications from other EU jurisdictions under Freedom of Services directive. Fiscally, and from a supervision perspective, it gives the host country greater control of business being written in its territory and it purportedly improves consumer protection within the host territory. However, (a.) it goes against the spirit of Freedom of Services, (b.) creates a higher cost burden for companies and (c.) is not wholly applicable to captives (or PORCs) since the business is driven and/or is being written for the benefit of the ultimate beneficiary owner/s.

 

Another ‘barrier’ is in application of consumer protection funds or pools and or other parafiscal charges applicable to premiums. Who should be contributing to them and how much? Sometimes the amounts due or mode of payment (i.e. pre-funded parafiscal charges in certain territories and on certain classes of business) make it economically prohibitive for a captive to extend its program to a particular country.

The most basic (and common) barrier for captive participation is that it would not have the necessary local expertise in each of the markets where its ultimate beneficiary owners’ risks are located.

 

These are some of  the ‘sleeping policemen’ that dictate a higher level of cooperation between captives and the conventional international insurance market.

 

 

Tax

Highest Hurdles

Since it might be technically incorrect to talk of barriers to entry within the EU, let us instead call them hurdles. If implementing an EU-wide insurance program is a steeplechase, then the hurdles vary in size …

the higher ones posed by the differences in the application of tax on insurance premiums in the various jurisdictions. While tax should not be the determining factor whether captives should participate in a particular jurisdiction or not, capacity and program design would be influenced by tax considerations. Some jurisdictions attract higher insurance premium tax (such as the United Kingdom (12% – 20%), Germany (19%), Netherlands (21%) and Finland (24%)). Other have complex insurance fiscal and parafiscal systems (such as France at between 7% – 30% or Italy at between 0.5% and 21.25%).

 

Let us consider the following simple example: A European company has a property insurance premium bill of € 20 million in conventional insurance property policies on its sites in Germany and France (€ 10 million), United Kingdom (€ 5 million), and various other EU locations ((€ 5 million). If the risks were to be insured conventionally then, overall, they might attract up to around € 5 million in IPTs and or other parafiscal charges. A captive solution (reliant on the international reinsurance market) marrying lower/ differing priorities with overlying aggregate (loss-ratio based) XoL reinsurance feeding the conventional retrocession market can arguably shift or reduce the fiscal and/or parafiscal liabilities enough to justify capitalising a captive insurance company in a Solvency II jurisdiction with only the first year of tax savings!.

 

But to do that one needs to have more than just a tax compliance calculator in hand. To navigate this tax labyrinth, one requires the combined insurance and tax compliance acumen and mindset.

“Give unto Caesar ….”

I am a strong advocate of utilising captives as a “risk ownership and a management” tool and have been known to be critical of ultimate beneficiary owners whose primary focus is fiscal arbitrage. I have in fact, in the past, labelled such strategies as myopic and short-lived because of the dynamic nature of fiscal legislation.

 

I continue to stand by this. We may view taxes as evil, but my view would continue to be that they are a necessary evil which is outweighed by the benefit they then provide in terms of the common good.

However, if some fiscal advantage accrues adjunct to other core benefits of a captive insurance solution then ultimate beneficiary owners would be well justified in reaping it, especially if it serves to build capacity and a more resilient risk-carrying captive. The ice-berg effect suggests that this would also ultimately be to the economic benefit of the host territories and not just the ultimate beneficiary owners.

To reap these benefits, one needs to have access to the necessary tools to measure the financial and fiscal impacts of different premium scenarios in the respective jurisdictions.

 

TMF Group’s Tax Calculator

There are various firms that provide international fiscal advice and/or localised treatment for insurance entities including captives. Besides the big 4 accounting firms, SOVOS (formerly Fiscal Reps) and TMF Group come to mind. I am sure there are also others operating within this niche.

 

 

The bigger fiscal players have carved out a niche specifically by building and maintaining a global data-base of fiscal and para-fiscal charges. This is not a simple task bearing in mind that tax or other parafiscal charges vary per country (or regionally within certain countries) and per class of business. Additionally, the method and timing of filing and payment may vary (e.g. tied to the insurance period, or upon receipt of premium or even subject to pre-payments). All of this makes forecasting and modelling more challenging for insurance companies, intermediaries or captives without the proper tools to provide accurate, detailed and current information in this respect.

 

 

TMF Group has developed an easy-to-use global insurance tax rate database and calculator which is available to its clients. Captive stakeholders modelling multi-national programmes can forecast tax liabilities on an array of insurance program scenarios when planning, say, their 3-year strategy and roadmap. Continuous updating of the tool guarantees stakeholders have access to the latest information at all times. This makes it a powerful tool for the risk management community.

Conclusion

One of the most famous quotes close to my heart is Henry Ford’s, “If I had asked people what they wanted, they would have said faster horses.” Instead, he created cars.

 

However, there are two caveats to this great adage: Cars are only as good (or safe) as their drivers. They are also unsafe if used for a purpose for which they are not fit. This applies not only to cars but to all tools. The proverb says, “a bad workman blames his tools.” Some tools are useless (or dangerous) in the hands of people who either do not know how to properly use them or do not know what they can achieve with them.  They can, in fact, achieve the opposite by creating a “Jumanji” of regulatory challenges that an insurance company can ill-afford to encounter.

 

In the discipline of risk management, neither insurance nor tax are the problems. The problem is risk. And that is what we seek to better manage through the use of a captives. Tax charges are also part of the landscape of risk, adjunct to the insurance solution a captive  offers. In turn,  tax liabilities need to be well managed to ensure that the captive generates maximum value to its shareholder.  Access to such a tax modelling tool not only helps unravel the tax maze and avoid fiscal non-compliance but also turns risk into opportunity.

James Portelli | 7th Janaury 2021

 

James is a Chartered Insurance Risk Manager holding a senior executive role in an international insurance undertaking, non-executive directorships and Risk Chair on a portfolio of insurance companies operating in or from Malta by virtue of the EU Freedom of Service Directive. James is also a member of the Cutts-Watson Consulting panel and lectures in insurance programmes at the University of Malta. Views expressed are personal and may not be deemed to constitute advice:

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James Portelli

Consultant

A seasoned chartered insurance risk manager with 3 decades of insurance and reinsurance experience in conventional and captive sectors across Europe and the Middle East.
James has been involved in financial services, initially in banking, since 1986 and joining insurance in 1990. 
 
A chartered insurance risk manager, James is a Fellow of the Chartered Insurance Institute and a Fellow of the UK Institute of Risk Management and also holds an MSc in Risk Management from Glasgow Caledonian University. 
 
He started his insurance career with Middlesea Insurance plc (now part of the Grupo Mapfre conglomerate) in Malta later worked in London, Central Europe , the Middle East (Bahrain, UAE and Qatar) and East Africa with a career spanning commercial and industrial insurance underwriting, distribution, outward reinsurance, broking, risk management, captive management, consulting and training.
 
He is now an non-executive director on a portfolio of insurance companies in Malta operating across Europe by virtue of the EU Freedom of Services Directive, is also active in one company in an executive capacity and lectures insurance part-time at the University of Malta. 

James Portelli

Consultant

A seasoned chartered insurance risk manager with 3 decades of insurance and reinsurance experience in conventional and captive sectors across Europe and the Middle East

James has been involved in financial services, initially in banking, since 1986 and joining insurance in 1990. 
 
A chartered insurance risk manager, James is a Fellow of the Chartered Insurance Institute and a Fellow of the UK Institute of Risk Management and also holds an MSc in Risk Management from Glasgow Caledonian University. 
 
He started his insurance career with Middlesea Insurance plc (now part of the Grupo Mapfre conglomerate) in Malta later worked in London, Central Europe , the Middle East (Bahrain, UAE and Qatar) and East Africa with a career spanning commercial and industrial insurance underwriting, distribution, outward reinsurance, broking, risk management, captive management, consulting and training.
 
He is now an non-executive director on a portfolio of insurance companies in Malta operating across Europe by virtue of the EU Freedom of Services Directive, is also active in one company in an executive capacity and lectures insurance part-time at the University of Malta. 

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Captive Managers

- Stakeholders -

We do not seek to assume or duplicate responsibilities and activities performed by a Captive Manager. Rather, we look to bring added value to client service and/or assist the Captive Manager’s management of their own business. We bring extensive experience of running a captive management business including strengthening a value proposition, winning business, innovative thinking and developing staff.

Examples of CWC services for Captive Managers:

  • Act as a Non Executive Director of clients under management.
  • Assist in responding to RFP’s.
  • Review internal processes and procedures.
  • Facilitate internal workshops or away days to set strategy, establish plans or solve a particular problem.
  • Assist in staff training and education.
  • Assist in development and delivery of marketing and sales plans.
  • Act as challenger or ‘Devil’s Advocate’ to test strategy.
  • Undertake client and employee surveys.
  • Provide market intelligence.
  • Advise on complex or unusual issues or situations that captive managers may not have encountered before.
  • Assist in identifying, and recruitment of, suitable candidates for vacant or newly created senior positions.

Conor Jennings

Consultant

Conor Jennings FCII, FIRM, TEP is an insurance and risk management professional of many years’ experience.

He has lived and worked in Ireland, UK, Hong Kong and Singapore, Guernsey, BVI and more recently in the Cayman Islands.

During this time Conor has managed and directed captive insurance companies for clients ranging from small, family-held businesses to US Fortune 500 companies encompassing a whole host of industries.


Having, most recently, spent over a decade in the Caribbean managing mainly North and South American captive insurance clients Conor leverages his deep global knowledge and skills set to provide creative risk financing solutions to clients from all over the world.

Conor Jennings

Consultant

Conor Jennings FCII, FIRM, TEP is an insurance and risk management professional of many years’ experience.

He has lived and worked in Ireland, UK, Hong Kong and Singapore, Guernsey, BVI and more recently in the Cayman Islands

During this time Conor has managed and directed captive insurance companies for clients ranging from small, family-held businesses to US Fortune 500 companies encompassing a whole host of industries.

Having, most recently, spent over a decade in the Caribbean managing mainly North and South American captive insurance clients Conor leverages his deep global knowledge and skills set to provide creative risk financing solutions to clients from all over the world.

Niall Lucas

Consultant

Niall has spent most of his professional career in the captive insurance industry. Holds the ACII, FPC & Chartered Insurer along with various accounting, marketing & computer vocations.

Niall has spent most of his professional career in the captive insurance industry.

He started in Guernsey in 1996, where he provided underwriting support the UK Post Office captive.

During his career, Niall has advised captive stakeholders on underwriting, strategic, operational and governance matters across a broad range of industries and jurisdictions.

He has lead difficult consulting projects requiring innovative thinking, high quality communication skills and perseverance.

Niall has exceptional marketing and up to date IT knowledge with highly developed research and analytical skills. He qualified as a Chartered Insurer and Financial Planner. These attributes together with his vast captive experience allows Niall to fulfil his role as Chief Operating Officer of CWC.

Niall joined CWC in 2015 to support Malcolm in the development of the company. In 2016 he was promoted to COO and continues to support CWC as it holds its place as the global Captive Consultants of choice.

Niall Lucas

Chief Operating Officer

Niall has spent most of his professional career in the captive insurance industry. Holds the ACII, FPC & Chartered Insurer along with various accounting, marketing & computer vocations.

He started in Guernsey in 1996, where he provided underwriting support the UK Post Office captive.

During his career, Niall has advised captive stakeholders on underwriting, strategic, operational and governance matters across a broad range of industries and jurisdictions.

He has lead difficult consulting projects requiring innovative thinking, high quality communication skills and perseverance.

Niall has exceptional marketing & up to date IT knowledge with highly developed research and analytical skills.  He qualified as a Chartered Insurer and Financial Planner. These attributes together with his vast captive experience allows Niall to fulfil his role as Chief Operating Officer of CWC.

Niall joined CWC in 2015 to support Malcolm in the development of the company. In 2016 he was promoted to COO and continues to support CWC as it holds its position in the industry as the global Captive Consultants of choice.

Paul Wakefield

Consultant

Longstanding experience in on & offshore environments most recently as a Non Executive Director with a London market insurance Company. Experienced in feasibility studies, regulatory matters and the set up of insurance subsidiaries for global multi national corporations.

Paul delivers his own in-depth market knowledge of, and insight into, the captive insurance world.

Paul brings longstanding experience of working in both onshore and offshore environments, most recently as a Non Executive Director with a London market insurance company.

He is also currently a Non Executive Director of a number of Guernsey based insurance companies. He provides CWC clients with further valuable knowledge and a proven track record of strategic and operational consulting.

Paul has undertaken numerous feasibility studies and set up insurance subsidiaries for multi- national corporations across the globe.

As part of the work with captives he has overseen portfolio transfers, novations, redomiciliation of captives, Protected Cell Company formation and the design and implementation of multi-year multi-line reinsurance programmes. He also has undertaken various consultancy work on the regulatory side of insurance.

Paul is an Associate of the Chartered Insurance Institute. He is registered and approved as a Director with the UK Prudential Regulatory Authority and the Guernsey Financial Services Commission.

Paul Wakefield

Consultant

Longstanding experience in on & offshore environments most recently as a Non Executive Director with a London market insurance Company. Experienced in feasibility studies, regulatory matters and the set up of insurance subsidiaries for global multi national corporations.

Paul delivers his own in-depth market knowledge of, and insight into, the captive insurance world.

Paul brings longstanding experience of working in both onshore and offshore environments, most recently as a Non Executive Director with a London market insurance company.

He is also currently a Non Executive Director of a number of Guernsey based insurance companies. He provides CWC clients with further valuable knowledge and a proven track record of strategic and operational consulting.

Paul has undertaken numerous feasibility studies and set up insurance subsidiaries for multi- national corporations across the globe.

As part of the work with captives he has overseen portfolio transfers, novations, redomiciliation of captives, Protected Cell Company formation and the design and implementation of multi-year multi-line reinsurance programmes. He also has undertaken various consultancy work on the regulatory side of insurance.

Paul is an Associate of the Chartered Insurance Institute. He is registered and approved as a Director with the UK Prudential Regulatory Authority and the Guernsey Financial Services Commission.

Graham Powell

Consultant

Graham has spent four decades working in the insurance industry. He has a wealth of experience in all aspects of an insurer’s life cycle including feasibility, formation, management, revalidation and de-risking. In recent years Graham has specialized more on regulatory and compliance work for commercial insurers.

Based in Guernsey, Graham brings his unique skill set to CWC working centrally with the team as it responds to the diverse and ever-changing needs of its clients.

As a result of so many years at the “coal face” Graham has a unique insight into every aspect of insurance management. This wealth of experience is now channeled into helping CWC’s clients realise the full potential of their insurers.
This in-depth knowledge came into its own when CWC was commissioned to carry out a strategic review of the Guernsey insurance sector by the States of Guernsey. Graham acted as the project manager for this major piece of work.

Outside of CWC, Graham acts as an independent non-executive director on a number of Guernsey (re)insurers for groups operating in a wide range of industries. The owners of these entities range from private individuals to constituents of the FTSE 100 and Nasdaq.

Graham is a Chartered Insurance Practitioner and a Fellow of the Chartered Insurance Institute by examination. He is registered and approved as a Director with the Guernsey Financial Services Commission.

Graham Powell

Consultant

Graham has spent four decades working in the insurance industry. He has a wealth of experience in all aspects of an insurer’s life cycle including feasibility, formation, management, revalidation and de-risking. In recent years Graham has specialized more on regulatory and compliance work for commercial insurers.

Based in Guernsey, Graham brings his unique skill set to CWC working centrally with the team as it responds to the diverse and ever-changing needs of its clients.

As a result of so many years at the “coal face” Graham has a unique insight into every aspect of insurance management. This wealth of experience is now channeled into helping CWC’s clients realise the full potential of their insurers.

This in-depth knowledge came into its own when CWC was commissioned to carry out a strategic review of the Guernsey insurance sector by the States of Guernsey. Graham acted as the project manager for this major piece of work.   

Outside of CWC, Graham acts as an independent non-executive director on a number of Guernsey (re)insurers for groups operating in a wide range of industries. The owners of these entities range from private individuals to constituents of the FTSE 100 and Nasdaq.

Graham is a Chartered Insurance Practitioner and a Fellow of the Chartered Insurance Institute by examination. He is registered and approved as a Director with the Guernsey Financial Services Commission.

Ashley Paxton FCA

Project Consultant

Guernsey based chartered accountant with c30 years’ experience spent in practice.

Recently retired as partner and head of Advisory for KPMG in the Channel Islands.

Guernsey based chartered accountant with c30 years’ experience spent in practice.

Unique blend of operational and client experience split between audit and advisory latterly focused on providing transactional support across the insurance, funds, fiduciary and banking sectors as well as local government.

Led a number of high profile and innovative engagements for the States of Guernsey including:

2017 – States bond issue commissioned by the Scrutiny Management Committee
2017 – Guernsey housing market review
2016 – Strategic review of the Guernsey fiduciary industry
2015 – Financial mitigation for milk distributors
2015 – International Capital Flows (funds sector)
Various other confidential engagements

Qualifications
Fellow of the Institute of Chartered Accountants in England and Wales
BSc (Hons) Economics, University of Warwick

Ashley Paxton FCA​

Project Consultant

Guernsey based chartered accountant with c30 years’ experience spent in practice.

Recently retired as partner and head of Advisory for KPMG in the Channel Islands.

Guernsey based chartered accountant with c30 years’ experience spent in practice.

Unique blend of operational and client experience split between audit and advisory latterly focused on providing transactional support across the insurance, funds, fiduciary and banking sectors as well as local government.

Led a number of high profile and innovative engagements for the States of Guernsey including:

2017 – States bond issue commissioned by the Scrutiny Management Committee
2017 – Guernsey housing market review
2016 – Strategic review of the Guernsey fiduciary industry
2015 – Financial mitigation for milk distributors
2015 – International Capital Flows (funds sector)
Various other confidential engagements

Qualifications
Fellow of the Institute of Chartered Accountants in England and Wales
BSc (Hons) Economics, University of Warwick

Dom Wheatley

Consultant

A seasoned captive practitioner and consultant, finance industry experience with over 25 years  world class knowledge.

Exiting Chief Executive of Guernsey Finance, the promotional agency for Guernsey’s finance industry.

His role included business development and the promotion of Guernsey’s finance industry in the Island’s target markets including Europe, the US and the emerging markets, technical research to support promotional activities and liaison with industry associations and government.

Previously Chief Marketing Officer of the Willis Global Captive Practice and Managing Director of its Guernsey business. Over 25 years of finance experience in London and, for the past 19 years in Guernsey.

A member of the Institute of Directors and serve as a non-executive director on a number of local boards. A fellow of the Chartered Insurance Institute and holds an M.B.A from Warwick University.

Dom Wheatley

Consultant

A seasoned captive practitioner and consultant, finance industry experience with over 25 years  world class knowledge.

Exiting Chief Executive of Guernsey Finance, the promotional agency for Guernsey’s finance industry.

His role included business development and the promotion of Guernsey’s finance industry in the Island’s target markets including Europe, the US and the emerging markets, technical research to support promotional activities and liaison with industry associations and government.

Previously Chief Marketing Officer of the Willis Global Captive Practice and Managing Director of its Guernsey business. Over 25 years of finance experience in London and, for the past 19 years in Guernsey.

A member of the Institute of Directors and serve as a non-executive director on a number of local boards. A fellow of the Chartered Insurance Institute and holds an M.B.A from Warwick University.

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Captive Managers

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We do not seek to assume or duplicate responsibilities and activities performed by a Captive Manager. Rather, we look to bring added value to client service and/or assist the Captive Manager’s management of their own business. We bring extensive experience of running a captive management business including strengthening a value proposition, winning business, innovative thinking and developing staff.

Examples of CWC services for Captive Managers:

  • Act as a Non Executive Director of clients under management.
  • Assist in responding to RFP’s.
  • Review internal processes and procedures.
  • Facilitate internal workshops or away days to set strategy, establish plans or solve a particular problem.
  • Assist in staff training and education.
  • Assist in development and delivery of marketing and sales plans.
  • Act as challenger or ‘Devil’s Advocate’ to test strategy.
  • Undertake client and employee surveys.
  • Provide market intelligence.
  • Advise on complex or unusual issues or situations that captive managers may not have encountered before.
  • Assist in identifying, and recruitment of, suitable candidates for vacant or newly created senior positions.

Our CWC Products designed for Captive Managers:

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Captive Owners

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If you are considering captive insurance for the first time or need quality independent advice on change management, CWC can assist you ensuring the captive insurance vehicle is right for your organisation.

Examples of CWC services for Captive Owners:

  • Strategic review. Is your captive business plan still relevant and delivering real value?Creation of a strategic road map to optimise the captive’s effectiveness and meet key drivers.
  • Domicile review. Could your captive objectives be better achieved in another location?
  • Exit strategies. If your captive has run its course, what is the best means to exit the business?
  • Health check. Are you comfortable your captive is operating efficiently and in line with industry best practice?
  • Bespoke consulting to respond to particular issues your captive faces.

CWC Products for Captive Owners:

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To continue to offer, or to create, a compelling and competitive captive offering, domicile authorities need to understand the global captive marketplace, changing stakeholder demands and threats or opportunities for the business. It can be a challenge for these bodies to be able to access independent, insightful advice upon which to base their strategic planning and resource allocation.

Examples of CWC services for Industry Engagement:

  • Advising regulators on pragmatic implementation of regulatory change.
  • Recommend to promotional agencies how to enhance their domicile proposition and advance their strategic thinking.
  • Assist governmental bodies on the needs of the captive industry to facilitate the delivery of enabling legislation to allow the local captive business to flourish.
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If you are looking to create, enhance or take to market your captive proposition we can advise you on the best way to proceed. CWC is wholly independently owned and not associated with another broking or insurance company, giving it complete independence and flexibility. This allows us to work with you to deliver to the captive market a best in class offering that benefits from our combined accumulated knowledge and wisdom.

Examples of CWC services for Service Providers:

We maintain close links with captive industry globally and so are able to guide you through market dynamics, culture & accepted practice, trends and emerging developments. Our extensive network of contacts ensures honest feedback and access to key influencers and decision makers in the domiciles.

We can contribute to your marketing and sales planning and facilitate product launches, or simply be a sounding board for your ideas.

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If you are looking to create, enhance or take to market your captive proposition we can advise you on the best way to proceed. CWC is wholly independently owned and not associated with another broking or insurance company, giving it complete independence and flexibility. This allows us to work with you to deliver to the captive market a best in class offering that benefits from our combined accumulated knowledge and wisdom.

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If you are looking to create, enhance or take to market your captive proposition we can advise you on the best way to proceed. CWC is wholly independently owned and not associated with another broking or insurance company, giving it complete independence and flexibility. This allows us to work with you to deliver to the captive market a best in class offering that benefits from our combined accumulated knowledge and wisdom.

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If you are looking to create, enhance or take to market your captive proposition we can advise you on the best way to proceed. CWC is wholly independently owned and not associated with another broking or insurance company, giving it complete independence and flexibility. This allows us to work with you to deliver to the captive market a best in class offering that benefits from our combined accumulated knowledge and wisdom.

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Insurers & Reinsurers

- Partners -

The market typically interacts with a captive in the following ways:

  • Underwriting the risk of the insured and then reinsuring all or part of the risk to the captive (“fronting”).
  • Acting as a reinsurer of the captive to accept excess risk above the captive’s risk bearing appetite. The captive may have assumed risk on a direct basis from the insured or via a fronting arrangement.


In all situations (re)insurance industry stakeholders should interact with the captive on the same terms as they would with any other market participant yet recognising the unique characteristics of the captive arrangement.

Examples of CWC services for Insurers & Reinsurers:

  • Conduct In-house workshops to ensure full understanding of the captive model, the roles and relationship of all parties in a captive arrangement and flow of funds and documentation.
  • Advise on captive participation; programme design, operational processes and procedures, collateral, and reporting requirements.
  • Inform of the needs of the captive industry in respect of fronting services and reinsurance protection.
  • Advise on developments and trends in the captive industry such as governance and regulatory changes and explain the impact on the captive and on your involvement.
  • Act as your in-house captive centre of excellence, either remotely or participate in discussions with the insured and their advisers.
  • Introduce you to key captive stakeholders and influencers.
  • Assist and participate in marketing activities.

Domicile Regulators, Governments &
Promotional Agencies

- Partners -

To continue to offer, or to create, a compelling and competitive captive offering, domicile authorities need to understand the global captive marketplace, changing stakeholder demands and threats or opportunities for the business. It can be a challenge for these bodies to be able to access independent, insightful advice upon which to base their strategic planning and resource allocation.

Examples of CWC services for Domicile Regulators & Promotional Agencies:

  • Advising regulators on pragmatic implementation of regulatory change.
  • Recommend to promotional agencies how to enhance their domicile proposition and advance their strategic thinking.
  • Assist governmental bodies on the needs of the captive industry to facilitate the delivery of enabling legislation to allow the local captive business to flourish.

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- Human Capital -

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As part of our commitment to develop the talent in the captive industry, we host various educational events. Recent examples include the 2015 UK Insurance Act and management of assets in a Solvency II world.

We also run an Advanced Captive Training programme as we have identified there is little structured educational resource in the industry beyond introductory courses.

Our consultants are frequent speakers at industry events covering technical topics as well as offering their outlook on the current and future captive landscape.

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Examples of CWC services for our Commitment to Education:

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We offer an objective and confidential service to talent wishing to assess their career opportunities. We can draw upon many years of experience and offer detached advice on your career path and learning development
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- Human Capital -

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The Board, and individual Board Members, face a growing array of stakeholders’ scrutiny whilst directing a captive or SME insurer. Increasingly, they are looking to external independent counsel to ensure, and provide evidence, that they are a high performing and soundly governed caucus.

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Examples of CWC services for our Commitment to Board Development:

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Our Products:

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Tomas Welsh

Developmet Coach

Thomas

Thomas Welsh

Development Coach

Thomas

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Non-Executive Directorship

- Employment of Talent -

To continue to offer, or to create, a compelling and competitive captive offering, domicile authorities need to understand the global captive marketplace, changing stakeholder demands and threats or opportunities for the business. It can be a challenge for these bodies to be able to access independent, insightful advice upon which to base their strategic planning and resource allocation.

Examples of CWC Consultant held Non-Executive Directorships:

  • Advising regulators on pragmatic implementation of regulatory change.
  • Recommend to promotional agencies how to enhance their domicile proposition and advance their strategic thinking.
  • Assist governmental bodies on the needs of the captive industry to facilitate the delivery of enabling legislation to allow the local captive business to flourish.

Short Term Consignment

- Employment of Talent -

To continue to offer, or to create, a compelling and competitive captive offering, domicile authorities need to understand the global captive marketplace, changing stakeholder demands and threats or opportunities for the business. It can be a challenge for these bodies to be able to access independent, insightful advice upon which to base their strategic planning and resource allocation.

Examples of CWC services for Short Term Consignment:

  • Advising regulators on pragmatic implementation of regulatory change.
  • Recommend to promotional agencies how to enhance their domicile proposition and advance their strategic thinking.
  • Assist governmental bodies on the needs of the captive industry to facilitate the delivery of enabling legislation to allow the local captive business to flourish.
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Malcolm Cutts-Watson

Founder & Managing Director

A seasoned captive practitioner and consultant, Malcolm has gathered vast experience over 4 decades working in different domiciles and advising companies and regulatory bodies across the world.

Malcolm Cutts-Watson has spent most of his professional career in the captive insurance industry.

He started in Bermuda in 1982, was in the vanguard of the development of Vermont captive business and then worked in Guernsey. During his career, Malcolm has advised captive stakeholders on strategic, operational and governance matters across a broad range of industries and jurisdictions . He also advises governmental and regulatory bodies on legislative and regulatory change.

He has served, and continues to serve, as a director on a variety of captive insurers and is an approved person in many captive domiciles. He qualified as an accountant in 1982.

Malcolm was a member of the Captive Review Power 50 and in 2015 received the industry’s outstanding contribution by an individual award.

In 2017 he became an inaugural inductee into the Captive Hall of Fame which recognises the most influential figures in the captive industry over the past 50 years.

He has acted as industry partner to AIRMIC’s Captive Special Interest Group. He is a regular contributor to industry debate and is a passionate advocate for the raising of standards in the captive industry.

Malcolm founded CWC in 2015 to allow organisations access to the accumulated knowledge, insight and solutions that he, and the rest of the CWC team of captive insurance experts, have gathered over their lifetimes.

Malcolm Cutts-Watson

Founder & Managing Director

Malcolm_Square_shaped_white_backdrop

A seasoned captive practitioner and consultant, Malcolm has gathered vast experience over 4 decades working in different domiciles and advising companies and regulatory bodies across the world.

Malcolm Cutts-Watson has spent most of his professional career in the captive insurance industry.

He started in Bermuda in 1982, was in the vanguard of the development of Vermont captive business and then worked in Guernsey. During his career, Malcolm has advised captive stakeholders on strategic, operational and governance matters across a broad range of industries and jurisdictions . He also advises governmental and regulatory bodies on legislative and regulatory change.

He has served, and continues to serve, as a director as a director on a variety of captive insurers and is an approved person in many captive domiciles. He qualified as an accountant in 1982.

Malcolm was a member of the Captive Review Power 50 and in 2015 received the industry’s outstanding contribution by an individual award.

In 2017 he became an inaugural inductee into the Captive Hall of Fame which recognises the most influential figures in the captive industry over the past 50 years.

He has acted as industry partner to AIRMIC’s Captive Special Interest Group. He is a regular contributor to industry debate and is a passionate advocate for the raising of standards in the captive industry.

Malcolm founded CWC in 2015 to allow organisations access to the accumulated knowledge, insight and solutions that he, and the rest of the CWC team of captive insurance experts, have gathered over their lifetimes.