Lowtax | Offshore Business Review - Insurance Companies

Lowtax | Offshore Business Review - Insurance Companies: "An offshore insurance company, usually referred to as a 'captive' insurance company, is usually a subsidiary of a large company or group of companies, and its purpose is to offer insurance within the parent company or group, thus saving external costs and generating profits in a low-tax jurisdiction. The fiscal benefits are not necessarily the driving factor, but they can be significant. Direct access to reinsurance is another important advantage of a captive.

Some high-tax countries have legislated to prevent excessive shifting of income to captives, but usually without seriously reducing fiscal benefits. Apart from offering tax savings, it is usually also true that an International Offshore Financial Centre (IOFC) offers a less regulated and bureaucratic supervisory insurance regime than the home country of the parent company. The captive may for instance be able to employ its capital more effectively than a domestic insurance company.

The considerable advantages of captives have led to the development of a major world-wide captives industry, and IOFCs have vied with each other to establish attractive regimes for captives.

The jurisdictions which have been most successful at attracting captives are as follows:"

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