Wednesday, April 25, 2007

BVI Offshore Tax Haven Attracts New U.S. Insurance Companies

The new shareholder-owned insurance companies join a growing list of U.S. insurers seeking to avoid taxes and regulation in their homeland. According to figures recently released by the British Virgin Islands International Finance Centre, in 2006 the British Virgin Islands licensed 57 such companies known as 'captives'. This amount represented a 15% growth, which brought the domicile’s captive count to more than 400; more than half of these companies were formed in the past four years.

Humphry Leue, CEO of the BVI International Finance Centre, has said in his statement, “Almost 250 new captives have been formed in the last four years and 2006 was another very good year.” By his words, the jurisdiction is strengthening its position as the third largest regional insurance center, behind Bermuda and the Cayman Islands, and is especially attractive to small and medium-sized captives.

A captive insurance company, owned and operated by shareholders, lets its members stabilize the cost of insurance, invest their premiums and retain profits. In the last years U.S. insurance companies are moving to the British Virgin Islands, to take advantage of the corporate and banking secrecy and tax benefits offered by the territory.

Simon Owen, chairman of the BVI Association of Insurance Managers, said that in the BVI, the initial capital requirements for an insurance company owned by one company can be just $100,000 – 10 times lower than in some U.S. states. He also noted that in the British Virgin Islands there are no restrictive requirements of some other jurisdictions, like the appointment of local directors and holding annual general meetings.

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