Is the captive management arm of the MCB Group. MCB risk is fully equipped to provide comprehensive management services to a captive insurance company through the unique combination of insurance substance, the wide range of professional investment and banking services provided by MCB as well as the off shore management and administrative activities of MCT.
As a truly international commercial financial services institution the Maduro & Curiel?s Group can offer true substance in investment, insurance, underwriting, management, brokerage and administration, all under one umbrella.
In carrying out our responsibilities as your Captive Managers, we would view our role as an extension of your own structure, fulfilling the role of management in much the same way as you would expect to find in any other subsidiary. Since a captive insurance company is a form of self insurance which has taken the form of an Underwriter of Insurance risks, it is important that its management provides financial, insurance, reinsurance, claims, administrative, corporate and investment functions that you would normally expect to find in an insurance operation.
OUR SERVICES COMPRISE FOUR MAIN FUNCTIONS
| Insurance & claim management
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Finance & administration
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Corporate services |
Treasury functions |
CURACAO, AS A DOMICILE FOR YOUR CAPTIVE
LOCATION
Curaçao one of the Netherlands Antilles islands ,lies 33 miles north of Venezuela and 42 miles east of Aruba, outside of the usual hurricane belt. It is therefore favorably located at the crossroads of Caribbean trade routes and for investors seeking the U.S., Canadian, European and Latin American markets.
POLITICAL CLIMATE
The Netherlands Antilles and Aruba form part of the Kingdom of the Netherlands. Since January 1, 1986 Aruba has been a separate country within the Kingdom of the Netherlands. Curaçao has been an autonomous part within the Dutch Kingdom since 1954, has it?s own legal system and court cases can be appealed in the Supreme Court of the Netherlands. Curaçao takes care of its own domestic affairs, common interests such as defense and foreign affairs come under the jurisdiction of the Kingdom government. Curaçao is recognized in the international financial community as a politically stable, safe and competitive jurisdiction for Captive insurance companies.
INFRASTRUCTURE
The economy of Curaçao is mainly based on tourism, oil refining and international financial services. It has a vast network of banks, trust and investment companies, lawyers, notaries public, accountants, management companies etc. Telephone, telefax and other communication tools are state of the art. Curaçao is easy to reach by air and regular services are maintained from the U.S. and Europe.
Through the BRK (Belasting Regeling Koninkrijk), the tax arrangement of the Kingdom of the Netherlands a Netherlands Antilles company has access to the extensive tax treaties network of the Netherlands. The Netherlands Antilles and Curaçao in particular have therefore over the years developed into a reputable financial center for the offshore world.
CURRENCY
The local currency is the Netherlands Antillean Guilder (NAF) which is pegged to the US dollar. Since 1973, the exchange rate has remained fixed at Naf. 1,79. to US$ 1.00, evidencing a stable monetary environment.
The rates of other currencies are based on their rate of exchange to the U.S.dollar.
LANGUAGE
The official language is Dutch, however most of Curaçao diverse population of approx. 160.000,00 is quadrillingual speaking Dutch, English and Spanish as well as the native language Papiamento.
LEGAL STATUS
A company engaged in the insurance business in the Netherlands Antilles must have the legal status of either a limited liability company, called Naamloze Vennootschap (N.V.), or a mutual insurance company.
THE CENTRAL BANK (Bank van de Nederlandse Antillen)
The Central Bank is the official supervisor of the Antillean banking system and financial institutions. The Bank was established in 1828 by King William I and is the oldest Central Bank in the Americas.
The Bank's most important objectives are to maintain the external stability of the Netherlands Antillean Guilder and to promote the proper functioning of the financial system in the Netherlands Antilles.
INSURANCE SUPERVISION
The Insurance Supervision Act (National Gazette 1990, no.77) regulates the supervision of the insurance industry in the Netherlands Antilles. Captive Insurance Companies and Reinsurance Companies are regulated by separate decree. Supervision is executed by the Central Bank.
LICENSING
International insurance activities cannot be carried out from the Netherlands Antilles without a license granted by the Central Bank. Such licenses can be obtained upon completion of a formal application to the Bank supplemented by financial and technical insurance information, including a business plan and other pertinent financial information.
MANAGEMENT
The management of the captive may consist of natural or legal persons domiciled in the Netherlands Antilles and must include at least one Managing Director of proven ability and experience in insurance. Management in the Netherlands Antilles must be able to demonstrate that it has substance.
CAPITAL REQUIREMENTS
There is no minimum capitalization for a captive; the amount of initial capital will rather be determined by the operations as detailed in the business plan and the minimum solvency margin prescribed by the Central Bank.
COST OF OPERATION
Generally speaking, the following may be used as a rule of thumb (subject to changes):
Cost of incorporation:
-notary fee, stamp duty, license, registration, Chamber of Commerce US $ 5.400 to US $ 8.600
Cost of operation:
-supervision, audit etc. US $ 4.500 to US $ 7.300
-management services US $ 3.500 to US $ 50.000
Taxation PM
TAXATION
Captives and professional Reinsurers domiciled in the Netherlands Antilles which are engaged exclusively in international insurances can obtain a "tax ruling" from the Inspector of Taxes. Tax on "non treaty related" income is maximum US$ 1.340 irrespective of the actual profits. Tax on treaty related income will be taxed in accordance with the existing treaty provisions of which especially the treaties with the Netherlands make Curaçao a very attractive location.
CAPTIVE INSURANCE
The Concept
A captive insurance company is typically defined as a wholly owned subsidiary of a non-insurance related group of companies established with the prime purpose of insuring the group's risks. There are two main types of captives: single parent or group, the latter typically owned by a number of companies with similar exposures. Captives can be used to provide coverage either directly or as reinsurance of a fronting insurer.
Rationale of a Captive
Traditional insurance is not always the most economical method of financing a group's risks. When the risk profile is favorable or when losses can be calculated or forecasted in advance, risk retention or self insurance may be more advantageous.
Captives can be very beneficial; the most important advantages being :
savings in insurance premiums spent underwriting profit retained within the group interest on premiums retained in the group cheaper overhead than those hidden in market premiums direct access to the more flexible reinsurance markets focus on risk management tax considerations Prerequisites for captive formation A captive is a risk financing instrument, however, which can only be used when the following requirements can be fulfilled :
- sufficient spread of risk
- sufficient premium volume
- favorable claims records (or at least calculable)
A captive will also need capitalization and will incur management expenses.
FEASIBILITY STUDY
The establishment of a captive insurance company requires careful consideration and the decision should only be taken after an in-depth feasibility study, which should preferably consider at least 3 main elements
1. Insurance Considerations
It should be remembered at all times that captive insurance is regarded as one of the more sophisticated forms of risk financing but basically it remains self insurance.
Before deciding on the establishment of a captive a profound analysis of the group's risks, claims record, risk management and risk bearing capacity should be made.
A typical feasibility study will at least comment on:
- the current insurance program
- claims statistics over a period as long as possible
- risk bearing capacity of the group related to turnover, profit and liquidity
- alternative risk financing systems
- reinsurance protection for the captive
- claims forecasting on basis of mathematical models
2. Domicile
In the feasibility study a comparison will be made between the various captive locations. At least it should also be considered to establish the captive in the home country of the group, but very often local requirements of supervision by authorities, fiscal aspects and lack of professional management, direct the captive to a specialized captive domicile.
3. Management Services
Professional management of the captive is of the utmost importance and the (future) captive owner should satisfy himself that he is acquiring the best services available that provide not only the required insurance substance and administrative organization but also a good working relationship with the relevant supervision- and other authorities.
It goes without saying that we are fully equipped and will be more than pleased to assist you with your "captive" feasibility study.
Once it is determined that for your company a Captive is a suitable risk financing vehicle we are confident that Curaçao is an excellent domicile for you to do business with .
Please do not hesitate and contact us at risk@mcb-bank.com We will be proud to serve you.
