Invest Barbados



Barbados Captives: Why Investors Favour this Unique Jurisdiction

 

A Captive is a licensed insurance company that is a wholly-owned subsidiary of a non-insurance entity, established to typically insure the risks of its parent and affiliates. This strategy of self-insurance is a savvy and sophisticated method that manages retained risk in a formal manner. Captive insurance also offers greater control of insurance prices, specialised risks, hard to insure risks, and underwriting profits.


Barbados has been exemplary in its unique captive insurance offering and the world is taking notice.  Currently ranked among the top 10 captive domiciles globally, the jurisdiction was recently recognised as a leader in the offshore ‘captive’ industry and was “highly commended” at the August 2016 US Captive Service Awards in Burlington, Vermont.


There are a number of glowing, unmatched attributes that make Barbados unique, but beyond beautiful beaches and friendly faces, its globally-recognised local talent stands out - educated, experienced men and women possessing deep knowledge and tangible experience in the captive self-insurance industry. These hardworking individuals - accountants, actuaries and lawyers - can staff an office at a fraction of the cost applicable to other competing jurisdictions. Further, these individuals have the same, if not greater, education, experience and knowledge of the captive self-insurance strategy, benefits of tax treaties and overall jurisdictional benefits, as  professionals in competing jurisdictions.


Barbados has also demonstrated the unique harmony between the private and public sectors.  Recently, in planning new legislation, the ‘captive industry’ was consulted by Government, leading to highly relevant company legislation changes (Companies [Amendment] Act 2016-1) and the introduction of incorporated cell company (ICC) legislation in February 2016. The following quote from Minister of International Business, Commerce and Small Business Development, Donville Inniss, illustrates this harmony:


"The Government of Barbados understands the critical importance of its international business sector and the need to introduce new and relevant legislation to underpin its growth …"


This new legislation is aimed at providing businesses with the flexibility to structure specific operations through placement in separate incorporated cells.
ICC legislation allows investors to legally separate assets and liabilities within a number of financial service activities. This is incredibly important, as there can be an unlimited number of incorporated companies (termed cells) – each of which is treated as a separate legal entity.  As such, each cell is considered to be a limited liability company and has its own governance structure, with its own Board and Officers. This structure also allows for each cell to separate its assets, liabilities, shareholder agreements and other legal obligations from other cells within the ICC.  Although each cell is effectively its own legal entity, all cells benefit from the lower costs associated with the shared administration of the ICC as a whole.


As one of the world’s largest captive domiciles, Barbados has been working with international investors since the mid-1960s, and this unique jurisdiction has emerged as the domicile of choice for international, globally-focused investors.


With careful Government supervision, excellence in the workforce and a strong private-public sector partnership, Barbados will continue to be the international financial and wealth management centre of excellence for global entities.

Written by Paul Jenkins, International Investment Advisor, Scotiabank; Source: Barbados International Finance & Business 2017



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