www.captiveinternational.com EDITOR’S LETTER 3
A dynamic time
Owen Faulkner, editor, Captive International
Captive International is published
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Captive International – ISSN
Cayman Islands Monetary Authority (CIMA)
ith so much going on in the captive insurance industry as we
enter the new year, Captive International is proud to announce the
launch of this new monthly magazine.
To complement our website www.captiveinternational.com as
well as our regional titles, which include US Captive, Bermuda Captive and
Cayman Captive, this monthly publication aims to capture all the biggest
issues affecting the captive industry globally through a range of exclusive
interviews, news analysis, features, and articles from prominent industry
voices, as well as offering a roundup of the biggest news stories.
2017 was a bullish year for captives globally with robust levels of growth in
most domiciles. Numerous regulatory changes have also paved the way for
more innovative ways to transfer risk, with more innovative captive structures
becoming more commonplace.
Some captives felt the sting of hurricanes Harvey, Irma and Maria via their
reinsurance as the losses triggered harder reinsurance rates across the
board. This was especially a problem for group captives with meaningful
property-catastrophe exposure in the US.
One of the most closely watched court cases in the captive industry drew to
a close last year. The US Internal Revenue Service (IRS) scored a win against
831(b) captives—also known as microcaptives—in the case of Benyamin and
Orna Avrahami et al v Commissioner of Internal Revenue. There are concerns
that the outcome of this case could subject microcaptives to further scrutiny
in 2018, and embolden the IRS to audit more of these structures.
Towards the end of the year, President Donald Trump’s administration signed
into law the Tax Cuts and Jobs Act of 2017, arguably the most dramatic tax
change for US businesses in decades, bringing the corporate tax rate down
from 35 percent to 21 percent.
The full impact of this legislation and what it means for captives remains to
be seen, and the market is currently poring over the details.
Against this backdrop, a greater number of onshore jurisdictions are
becoming more sophisticated, and domicile selection and the onshore versus
offshore debate becomes increasingly important.
In this first monthly issue, Captive International spoke to the Cayman
Islands Monetary Authority about its view on the new US tax rules, and how
the offshore domicile intends to say competitive in 2018.
There are many changes to the industry to keep abreast of, and it’s difficult
to predict how the rest of the year will pan out, but these are surely exciting