Vermont introduces onshore reinsurance
alternative in wake of tax reform
THE STATE OF VERMONT has passed
new legislation offering an onshore
affiliated reinsurance alternative
to insurers affected by the recent
imposition of the Base Erosion Anti-
Abuse Tax (BEAT) on reinsurance ceded
to offshore affiliates.
Signed by Vermont governor Phil
Scott, the law is aimed at creating more
favourable reinsurance alternatives for
US companies conducting business
in offshore jurisdictions that are now
faced with a substantial tax burden
from BEAT provisions included in the
Trump administration’s tax reforms.
The Tax Cuts and Jobs Act enacts
significant changes for controlled
foreign corporations (CFCs) and passive
foreign investment companies (PFICs),
and it introduces the BEAT. There is
now a minimum tax on multinational
corporations that have at least $500
million of annual US gross receipts
over a three-year lookback period and
a base erosion percentage of at least 3
percent for the taxable year.
Fitch Ratings’ Bermuda 2018 Market
Update suggested that the combination
of the cut in the US corporate tax to 21
percent (from 35 percent) along with the
BEAT will “significantly reduce the long-standing
tax advantage of Bermudian
re/insurer over those in the US”.
that we were able to work quickly
and collaboratively to pass a bill
that creates a viable alternative for
companies conducting these types of
transactions while also maintaining
our high regulatory standards and
providing a fiscal benefit to the state.
“This bill represents our state’s ability
to adapt quickly to regulatory changes
in support of this industry.
“Vermont’s financial services industry
is highly sophisticated, and our team
of captive insurance professionals is
well-equipped to regulate these types
of complex transactions.” l
BDA CEO Webber steps down; search for replacement begins
ROSS WEBBER, the CEO of the
Bermuda Business Development
Agency (BDA), has stepped down from
his position, prompting the BDA to
search for a replacement.
Webber stepped down on May 17, but
he will continue to work with agency in a
consultancy role through the transition
to new leadership.
Paul Scope, board chair at the BDA,
says the board will now launch an
executive search to replace Webber.
Sean Moran, the agency’s head
of business development, will take
responsibility in the interim.
“Having been integrally involved with
“The agency remains committed
to its focus on proactive business
development, jurisdictional advocacy,
supporting our stakeholders, and
fostering an environment to encourage
economic growth on the Island,” Scope
added. “We have every confidence the
dedicated and strong BDA team will
continue to execute the BDA’s strategic
Captive International recently spoke to
Jereme Ramsay, business development
manager at the BDA, about initiatives
that are proving successful in generating
growth from the Latin American and
Canadian markets. l
Vermont’s deputy commissioner
of captive insurance David Provost
said the state had been considering
this legislation for some time, but the
imposition of BEAT taxes on foreign
reinsurance “made the timing critical”.
Provost explained that the companies
are akin to a hybrid between captives
and traditional insurance.
“Like captives, they will be limited to
reinsurance of affiliates, but they will
be regulated in accordance with NAIC
accreditation standards as a commercial
reinsurer would be,” said Provost.
Scott commented: “I’m proud
the BDA since its inception, I am proud
of what we’ve built and accomplished
to date,” said Webber. “I will continue
to support the agency during this
transition, and I have great faith the BDA
team will continue its excellent work.”
Scope said the board and BDA
employees will work together closely to
facilitate a smooth changeover to new
“I thank Ross on behalf of the BDA,”
he said. “Under his leadership, the
company has been transformed into
a true business-development agency
which the country can be proud of. We
wish him well in the future.
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