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Nevis captive insurance company for family offices

calendar 7/24/2020 8:00:00 AM
author Admin System
Captive insurance is a somewhat overlooked option for family offices looking to protect their assets. However, it is almost as old as the concept of a family office.

From the 1920s, companies all over the world created their own insurance companies. Nevertheless, the company that made it famous was a US mining company in the 50s that incorporated their insurance subsidiaries that offered their services exclusively to captive mine operations (hence, the name).

Today, they are located in more than 50 jurisdictions, but, as we said, they are not generally among the options family offices consider first.

Nevertheless, we believe that's a wrong impression. When you're establishing a family office, you need to prioritize long-term, intergenerational, risk management strategies. You're thinking about protecting your wealth for your children, your grandchildren, your greatgrandchildren, and beyond.

And that's not only the case if you're an ultra-high net worth individual establishing a family office in a top destination such as Singapore or Lichtenstein. It's also possible and recommendable to obtain captive insurance for a mid-level Belizean family office. A baby family office that has started to grow and to diversify its assets should consider the possibility, at least in the long-term.

A Nevis captive insurance company is an amazing option for American family offices for asset protection purposes. We work with top tax attorneys and CPAs to offer tailor-made solutions in tax planning and optimization. But insurance is an ideal option because insurance isn't generally considered income. Thus, the company can invest in offshore assets without taxation.

And one of the best options we can offer is the Nevis captive insurance.

Nevis offers incredible captive insurance possibilities, such as:

  • The best prices in the captive insurance markets
  • Local banks and local directors are not required
  • Competitive minimum capital requirements
  • Quick approval timeframe
  • Fantastic tax system
  • Possibility to access Nevis' CBI program
  • Common law system that offers incredibly beneficial legislation for family offices
  • The best trust jurisdiction on the planet

Ask for more information

About Nevis

Nevis is the smaller island from St. Kitts and Nevis, and it offers all the wonders you'd expect from an English-speaking Caribbean island: idyllic beaches, relaxed lifestyle, low taxes, and fantastic offshore services.

The island is one of the pioneers of offshore services as it is generally considered the best trust provider on the planet and a top offshore banking destination.

And, of course, you have beaches within walking distance from pretty much every part of the island, which is almost another requirement for offshore jurisdictions.

On the business side, Nevis is an incredibly stable economy. Its currency, the Eastern Caribbean dollar, is pegged to the American Dollar at a 1 USD: 2.68 ECD rate. Its regulatory environment is incredibly friendly yet solid. It boasts robust AML legislation while allowing for sophisticate offshore services. The island also has the lowest licensing and government fees in the Caribbean.

And among those fantastic services, the island offers terrific captive insurance possibilities for family offices.


Captive insurance in Nevis

Captive insurance is a fantastic asset protection vehicle for family offices. Nevis captive insurances pay no taxes in Nevis, pay small government and licensing fees, and have only a few requirements, such as a resident manager or registered agent, to comply with a minimum physical presence.

In simple terms, what are the main benefits of establishing a captive insurance company in Nevis?

  • It is a cost-saving structure if the family office is paying too much with commercial insurers and gives you access to low-cost reinsurance.
  • You can insure all risks within the scope of your risk management needs.
  • Risks that commercial insurers won't insure can be insured.
  • Depending on the tax laws of the family office business domicile, some premiums may get tax-favored treatment.
  • You'll obtain an efficient administration of your claims.
  • You can create a well-defined underwriting approach of the captive.
  • You can control the ways premiums are invested.
  • You can retain underwriting profit as dividends paid to the captive owner.
  • Control investments and premiums until paid out as losses or dividends.
  • Flexibility as it allows for cost-conscious risk transfer.
  • Good degree of insulation from the swings of the insurance market cycles.

Now, what does a captive insurance company specifically do?  Simple. It's an insurance company where the owners and the customers are pretty much the same. It is used to write all or a part of the risks of a company and its beneficiaries. They usually are subsidiary companies of the parent company and also can be used to write third-party risks.

Let's use a basic example. A $2 million premium spent for a portfolio of 20 properties valued at $500k each won't cover the overall exposure. Thus, the captive will purchase reinsurance protection to cover the risk. The reinsurance increases the captive's, and, therefore, its parent company, underwriting capacity.

PLCs, private companies, and such are the main users of captive insurances. Still, it's a good option for high net worth individuals and family offices as they may have property assets such as real estate, cars, yachts, sculptures, among others that require insurance protection.

Moreover, structuring your captive to be owned by a Nevis trust provides rock-solid protection and intergenerational wealth planning.

The island has aimed at establishing an attractive captive insurance regime for small family offices, offering low fees, attractive tax terms, and minimum requirements.

For example, the regular license fee is $3,000 for the year of registration, and then a renewal fee of also $3,000 for each year. Nevertheless, a small captive insurance company pays an initial licensing fee of $800, and then a renewal fee of $800 per year.

What's the difference between them? Simple. A small captive insurance company has annual net written premiums or direct written premiums of less than $1.5 million.

There are three main types of captive insurance company:

  1. Pure: it insures the risk of its parent, affiliated, and controlled companies. Its minimum unimpaired capital is $225k if it's a regular captive insurance company, and $20k if it's a small company.
  2. Association: it insures the risk of member organizations and their affiliated company. Its minimum unimpaired capital is $300k if regular, and $25k if small.
  3. Group: it insures the risk of its parent, owners, and unaffiliated persons, but the risks of unaffiliated cannot be more than 1/3rd. Its minimum unimpaired capital is $400k if regular, and $30k if small.

Requirements and process to establish a captive insurance company

These are the main regulatory features to consider:

  • All insurers must have a registered agent or an insurance manager. An insurance manager may be a non-resident but must also appoint a registered agent.
  • Cash, debt titles, precious metals, letters of credit, equities, premiums and reinsurance receivables, loans, and mutual funds are considered allowable assets. Nevertheless, an insurer can hold different assets, with prior authorization of the Registrar of International Insurance.
  • Insurers that hold a general, long-term, or reinsurance license must submit annual audited accounts. Insurers that hold captive, allied reinsurance, or allied insurance license must submit financial statements and tax returns in the format accepted by the authority in their country of origin. The Registrar may ask for audited financial records.
  • Insurance managers and registered agents cannot be shareholders, directors, officers, or employees of insurers for which they're providing management or registered agent services.

What are the requirements you must comply with when applying for a captive insurance license in Nevis?

  • Two directors or managers;
  • Certified copy of the organizational documents;
  • Statement of president and secretary showing its sound financial condition;
  • Description of activities including three-year business plan;
  • Due diligence information of all beneficial owners, directors, and shareholders
  • Evidence of:
  • Comparable liquidity to the risks to be undertaken
  • Adequate expertise of the managers
  • Overall reliability of the operational plan
  • Loss prevention programs
  • Minimum unimpaired capital

Now, what about the general costs of keeping a captive insurance company in Nevis?

They vary depending on the size of the captive company, but the annual costs of lawyers, accountants, actuaries, claim handlers, and managers are about $50k, and the general set up costs, including feasibility study is around $25k.

Contact our experts

Who are we, and what can we do for you?

In Mundo, we are committed to your freedom.

One of our main goals is eliminating the perception that the concept of a family office is available only for the ultra-rich. That's not the case, and the affordability of a captive insurance company in Nevis proves it.

Nevis is one of the best jurisdictions we can offer. We work hand in hand with NTL, which has born 25 years ago, providing trust and passport services in Nevis.

And we work with one of the top financial service providers in Nevis to offer only the best of the best for you.

Captive insurance is an incredibly sophisticated asset protection and risk management vehicle, which means it needs to be in the right hands.

For a competitive price, we offer an all-encompassing package that includes:

  • Incorporating and licensing a captive insurance company.
  • Tax advise and filling all pertinent tax declarations for foreign-based captives.
  • Assessment of your business insurance needs.
  • Insurance policy design and preparation.
  • Claims administration.
  • Reinsurance participation.
  • Management of the captive insurance company.
  • Complete accounting services.
  • Annual audits.
  • Assistance with bank and investment account establishments. 
  • US federal income tax return preparation and filing for your captive insurance company.

A captive insurance company is one of the best risk diversification strategies for a family office, and creating one in Nevis makes it even better.

What are you waiting for? Contact us right now and establish a captive insurance company in Nevis!

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