Captive Insurance

A Captive Insurance Company has the ability to gain access to the reinsurance market. The Captive can decide how much of the low-level claims it wishes to retain within its own operation and buy reinsurance coverage only above this level.
The Captive owner can choose the types of risk and the levels of risk that are to be retained within the Captive. It is important that prudent approaches to risk and adequate premium cover are provided for at this point, and that any reinsurance policy dovetails adequately into the portion that is self insured.
Having a Captive enables the Insured Company to provide a mechanism for medium-term funding using premium payments which are tax deductible by the Insured
Premiums are tax deductible as expenses by the owner of the captive..
Captives play an important role for multinationals by enabling them to have much greater control of their international finance and risk strategies.
Reinsurance cover is usually cheaper than normal retail insurance cover.
Reserves accumulated by the captive can be kept off the owners' balance sheet to provide for future performance aberrations. Useful for listed companies.

Responsibilities

As a bona fide insurance company, it is imperative that risks are adequately covered. Factors influencing inadequate cover are:

Domestic Versus Offshore Captives

Domestic captives located in the country of origin of the Parent are usually subject to additional legislation, high capitalisation requirements, high taxation and the onerous data requirements of the authorities. In South Africa it is necessary to insure risk through a bona fide South African insurance company. Insurance Companies such as RMB Structured Insurance Ltd, a subsidiary of Rand Merchant Bank specialise in providing tailored insurance products designed for specific users.
Captives located offshore are reasonably free of legislative restraints and have low levels of taxation. Reserves can be built up quickly, and for South African owners, there is the added advantage of holding these reserves in a hard currency. Management time is cut down due to simpler administrative requirements, both at formation and on a day-to-day basis.
The Capital requirements for a Mauritian Captive Insurance Company are USD 100 000. It is possible to further reduce these capital requirements by a cell in a protected cell captive insurance company. Our subsidiary company, Frontfin Insurance Limited PCC has cells available for selected clients.
Finally, because Mauritius is blessed with a large well qualified workforce, administration is performed faster, better and at a lower price than that of jurisdictions closer to Europe.