McMahon: captives will pass substance test

  • Substantial industry: Tom McMahon

    Substantial industry: Tom McMahon


Bermuda’s captive insurance industry will not fall foul of imminent new rules on economic substance, according to an industry executive.

The Economic Substance Act 2018 Bill is due to be tabled today in the House of Assembly.

The new law is designed to keep Bermuda off the European Union noncooperative jurisdictions list by addressing the European Code of Conduct’s concerns over multinational corporations’ use of offshore entities to avoid onshore taxes.

Tom McMahon, president of Citadel Management Bermuda Ltd, said: “Our expectation is that companies who are regulated under The Insurance Act will be deemed to be compliant for economic substance requirements. This will include captives.

“Although captives do outsource to management companies like ourselves, economic substance will cover outsourced services. It is an accepted practice even in the EU.”

A source who asked not to be named, who worked in the captive industry for four decades, told The Royal Gazette this week that captives may struggle to meet substance criteria, because underwriting decisions and claims tended not to be dealt with on the island.

Mr McMahon said: “Captives do have significant economic substance here — through the management services they outsource, in addition to the other fees that they pay.

“Also, in 99 per cent of cases, board meetings are held in Bermuda, insurance and reinsurance policies are issued out of Bermuda and decision-making is usually made in Bermuda.”

You must be registered or signed-in to post comment or to vote.

Published Dec 7, 2018 at 8:00 am (Updated Dec 7, 2018 at 12:01 am)

McMahon: captives will pass substance test

What you
Need to
Know
1. For a smooth experience with our commenting system we recommend that you use Internet Explorer 10 or higher, Firefox or Chrome Browsers. Additionally please clear both your browser's cache and cookies - How do I clear my cache and cookies?
2. Please respect the use of this community forum and its users.
3. Any poster that insults, threatens or verbally abuses another member, uses defamatory language, or deliberately disrupts discussions will be banned.
4. Users who violate the Terms of Service or any commenting rules will be banned.
5. Please stay on topic. "Trolling" to incite emotional responses and disrupt conversations will be deleted.
6. To understand further what is and isn't allowed and the actions we may take, please read our Terms of Service
7. To report breaches of the Terms of Service use the flag icon

  • Take Our Poll

    • "Your new year's resolutions for 2019"
    • Quit smoking
    • 4%
    • Quit drinking/drink in moderation
    • 7%
    • Do not drink and drive
    • 2%
    • Lose weight
    • 40%
    • Stop procrastinating
    • 22%
    • Drive with greater care
    • 2%
    • Other
    • 22%
    • Total Votes: 2607
    • Poll Archive

    Today's Obituaries

    eMoo Posts