Good people, short flights and a flexible regulator all help captives professionals decide on their ideal base. Liz Booth looks at the pros and cons of the main locations in Europe, and considers if being in or out of the EU is an advantage
Europe is home to a mix of captive domiciles. Some, like Guernsey and the Isle of Man, lie outside the EU; others, such as the relatively new domiciles of Malta and Gibraltar, have embraced all that being in the EU can bring. Meanwhile, Switzerland is in the unique position of being in the heart of mainland Europe yet one step removed from EU regulation.
All these domiciles are watching and waiting to see how the EU’s Solvency II regulation will affect their own rules.
EU membership is certainly not the only criteria to be considered when companies look to establish captives, however. Other issues include the type of business allowed – be it insurance, reinsurance, third-party provisions or becoming a member of either a protected or incorporated cell.
Airmic captives special interest group chairman Alan Fleming says the domiciles offer a wide range of options and he sees it continuing to be a “pretty strong growth industry”. He adds: “Malta and Gibraltar, for example, are expanding business because they are in the EU, while Luxembourg is also in the EU, but has concentrated on reinsurance and onshore European companies. In contrast, most UK companies have had captives in offshore locations like Guernsey and the Isle of Man.”
He says that the past few years have seen a dramatic change, with the advent of legislation for protected cell and incorporated cell companies (PCCs and ICCs).
Originally a Guernsey initiative, this has been embraced by other jurisdictions.
But other issues are important; infrastructure, along with security and ease of access to the home market, cannot be ignored. Experience of the people involved and the taxation regime are other critical factors.
Liz Booth is a freelance journalist