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HAMILTON, Bermuda-Risk managers seeking to establish a captive in Bermuda face a variety of regulatory requirements depending on the risks the captive covers.
Under the Insurance Amendment Act of 1995, insurers and captives are licensed in four classes.
Class 1 licenses are issued to single-parent captives insuring only the risks of the parent and its affiliates.
Minimum capital for this class of company is $120,000.
Class 2 licenses are issued to group and association captives that derive no more than 20% of net premiums from unrelated companies.
Minimum capital for this class is $250,000, and the companies have to file an actuarial certification of loss reserves every three years.
Class 3 licenses are issued to commercial insurers and reinsurers writing third-party business. This includes finite risk insurers and captives with more than 20% of their business from unrelated companies.
Minimum capital for this class is $1 million, and companies must file annual actuarial certifications of loss reserves.
Class 4 licenses are issued to excess liability insurers and catastrophe reinsurers.
Minimum capital for these companies is $100 million, and they also must file annual actuarial certifications of loss reserves.
Fees for insurers in Bermuda changed April 1.
Previously, all companies paid the same $2,315 registration fee and the $1,155 annual business fee, but now the level of fee varies by the class of license.
Class 1 and 2 insurers pay a $1,500 registration fee and an $800 business fee; Class 3 insurers pay a $2,500 registration fee and a $2,500 business fee; and Class 4 insurers pay a $15,000 registration fee and a $15,000 business fee.
The annual company tax for insurers remains unchanged. The maximum tax is $25,000 for companies with $500 million or more in capital. The minimum tax for any company is $3,360.
Information on incorporating a Bermuda captive is available from the Kymn C. Astwood, Registrar of Companies, Government Administration Building, 30 Parliament St., Hamilton HM 12, Bermuda; 441-297-7574; fax: 441-292-6640.