FERMA launching a robust defense of captives.
Malcolm points out that what we now need is for other risk management and captive owners associations to align themselves with the stance taken by FERMA.
View the 
in article and responses.
Kudos to FERMA for launching a robust defense of the captive as a valid risk-financing tool. The paper articulates the reasons for the participation of a captive in corporate risks and how the captive model is different to commercial carriers.
However, the review is too EU centric as it refers only to EU captive domiciles. What is missing is a defense of the challenges faced by a EU headquartered multinational with an offshore captive (of which there are many). Here Solvency 2 is not in place (albeit risk based regulation exists) and this is where most of the OECD’s scrutiny seems to be focused. The key, to me, is to demonstrate the captive follows proper operational and governance standards and that the captive was established for sound risk management reasons. Not a new idea but there needs to be a clear documentation trail to evidence and offshore captive boards should satisfy themselves this is occurring.
One statement I thought a little puzzling: there is an implication that “risk managers will need to be able to show to their senior management there is a continuing added value in owning a captive” is a negative consequence of the BEPS initiative. On the contrary, it is a positive and should be happening regardless.
What we now need is for other risk management and captive owners associations to align themselves with the stance taken by FERMA.
Read the FERMA published statement on the following link. http://www.ferma.eu/blog/tag/oecd/
9 September 2016 – Malcolm Cutts-Watson
