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GRAND CAYMAN, B.W.I.-While Cayman captives are operating under a new regulatory body and a new head of insurance, all regulations, capitalization requirements, tax laws, licensing fees and reporting requirements remain unchanged on the island domicile.

As required by the Insurance Law of 1979, captives with a Class B license-the most common license issued for single-parent captives writing property/casualty insurance-must be capitalized with at least $120,000.

Captives writing long-term coverages, such as life insurance, must maintain at least $240,000 in working capital.

Captives that write both long-term and general business need capital of at least $360,000.

The annual licensing fee for most companies still is $5,625.

While the Monetary Authority does not set a fixed premium-to-surplus ratio, William N. McCullough, the new head of insurance supervision, said captives writing liability and other long-tail lines should maintain a 5-to-1 ratio, while shorter-tail business may require only a 3-to-1 ratio.

Captive investments are not regulated, and there are no direct local taxes or controls on exchanges of currency, transfers or withdrawals.

Solvency is monitored by the Monetary Authority through the review of audited financial statements that must be filed no later than six months after the close of a captive's fiscal year. Newly licensed captives must submit a financial report within six weeks after their first six months of operation.

All captives need a resident manager, which much provide a certificate showing the captive had adhered to its department-approved business plan. The annual fee for captive managers is $9,375. An auditor also can provide the certificate of compliance.

For more information, contact Mr. McCullough or Christopher Collins, deputy head of insurance supervision, Monetary Authority, Elizabethan Square, George Town, Grand Cayman, B.W.I.; 345-949-7089; fax: 345-949-2532.