www.captiveinternational.com EDITOR’S LETTER 3
Still defending the
case for captives
Owen Faulkner, editor, Captive International
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Captive International – ISSN
Cover Image: iStock Photo / Georgijevic
n the last month, the OECD published many of the comments it
received to its most recent discussion draft on Actions 8 to 10 of
the BEPS initiative. A theme among the responses was clear: a call
for more clarity, consistency and certainty on the implementation
of these measures.
Many consider the recommendations from the OECD to essentially reverse
the burden of proof on the legitimacy of captives, referring to them as
potential vehicles for tax avoidance. While a lot of progress has been made
over the years through the efforts of industry bodies such as Insurance
Europe, FERMA, ECIROA and CICA, it seems as though more fine-tuning is
required before tax administrations are properly equipped to address tax
avoidance in a way that doesn’t unfairly scrutinise captives.
BEPS is not the only hurdle in the European captives landscape: Solvency
II and Brexit pose some unique challenges to the sector, which Alexandra
Gedge of JLT Insurance Management outlines in this issue.
With regard to the specific domiciles in Europe, Guernsey has been bucking
the trend in an otherwise fairly stagnant market in terms of new formations.
Dominic Wheatley of Guernsey Finance outlines some of the progress it has
made in attracting new business from China, with significant players looking
to expand their focus internationally.
September was a time of significant M&A activity, such as Marsh’s surprise
deal to acquire JLT Group. Details of how this will affect the captive insurance
businesses Marsh Captive Solutions and JLT Insurance Management will be
determined closer to the closing of the deal in Spring 2019.
During the past month ratings agency Moody’s captive came under fire from
a former employee, who accused the vehicle of defrauding New York State of
potentially millions of dollars of tax revenues. Moody’s moved to dismiss the
complaint, but the New York State appellate sided with the whistleblower’s
Also in this issue, Wendy Dine of Strategic Risk Solutions explains some of
the ways group employee benefit captives can save employers money and
bend the medical trend curve. In addition, Gary Harris of Appleby explores
various trends which are having an impact on captives in Bermuda. l