St. Kitts and Nevis: larger than life
Nevis is celebrating its silver anniversary as an international financial services centre at a time when the global economy is in the midst of a recession, one that is forecast to last until well into 2011. Coupled with this is the continued attack on offshore domiciles by industrialised countries, which are railing, albeit in softer tones, against their status ‘as tax havens’.
St. Kitts and Nevis is currently on the Organisation for Economic Development’s ‘grey list’; however, we have signed tax information exchange agreements with 14 countries, making us eligible for graduation to the ‘white list’. “These agreements serve to strengthen our industry by showing that the jurisdiction has nothing to hide but is in the business to provide above-board financial services,” says Premier Joseph Parry.
The Nevis Island Administration (NIA) has made significant efforts to promote Nevis as an attractive place for captive insurers to do business. Laws and regulations modelled on the most effective examples elsewhere have been put in place, making it easy for insurance companies to enter and operate here. Ease must not, however, be construed as inefficiency or ineffectiveness, but rather as Nevis’s ability to provide the right combination of business facilitation, tempered with prudent regulation.
Why incorporate a captive in Nevis?
The Nevis International Insurance Ordinance 2004 added a new dimension to Nevis’s insurance industry and provides the regulatory framework for captives. We have a legislative framework that is comparable to those of our longer-established competitors.
The hallmarks of Nevis as a captive domicile are a competitive and efficient regulatory environment with the flexibility to accommodate the very smallest end captives. Other attractions are competitive fees, an efficient regulator and low capitalisation requirements. Another key advantage is the timeliness and efficiency of the application process.
Derek Lloyd, director & insurance manager at AMS Insurance Management Services Ltd, which provides captive insurance administration in Nevis and the British Virgin Islands (BVI), with other group offices in Hong Kong and London, says: “While the capitalisation limit is low and undoubtedly attracts certain business to the domicile, the 20 percent solvency criteria for premiums up to $5 million compares favourably with the statutory financial security required for regulated entities in most onshore and offshore jurisdictions.”
"The hallmarks of Nevis as a captive domicile are a competitive and efficient regulatory environment with the flexibility to accomodate the very smallest end captives."
Martin Eveleigh, chairman of Atlas, one of the inaugural insurance managers in Nevis, agrees that its regulatory environment is sound and improving. He particularly showers praise on Section 17 of Nevis’s captive legislation, which enables the establishment of statutory funds. “It’s a form of risk segregation that is not quite like setting up a cell. It’s absolutely terrific for programme businesses. It makes great sense for relatively low premium businesses where people nonetheless want to segregate, and we find it a very flexible tool,” he explains.
In addition, Section 17 allows non-life insurers to segregate risks by establishing one or more statutory fund. It essentially allows for the creation of a new type of entity, known as a Statutory Fund company. The difference between this and the typical cell company legislation is, firstly, that there is no requirement to obtain regulatory approval prior to the formation of the Statutory Fund and, secondly, that the policy is issued by the insurance company and not by the fund, with the policy being allocated by the company.
Nevis is young, growing and improving. It has made a strong start with a good platform to go forward after just five full years in the captive business. The major advantages relate to legislative requirements that typically are more flexible with regard to ownership structure, allowable investments and capitalisation, and far less onerous in terms of margin of solvency and initial capitalisation.
The Marketing and Development (M&D) department by its very existence and operation is effectively a demonstration of the extent to which the NIA is committed to the offshore financial services industry. Clearly, the US is our closest neighbour, but we have to venture beyond the US market.
The M&D department is using the 25-year anniversary of Nevis Financial Services to re-energise the sector, and has received the full support of government and all its service providers and registered agents. The objective is to celebrate 25 years of excellence and take Nevis’s financial services industry to the next level. Our primary goals for the next five years are therefore to:
• Attract new players and licences to Nevis
• Ensure that Nevis is represented at the most important international financial services conference as an exhibitor
• Establish relationships with global financial services players
• Develop a working relationship with multinational trust company groups that already have a presence in Nevis, even though that presence is basically a ‘back office’
• Advertise in international offshore publications and encourage service providers to do the same
• Gain entry into the Asian market
• Become the preferred jurisdiction for doing business in the eastern Caribbean.
Bernadette Lawrence is the director of development and marketing at Nevis Financial Services. She can be contacted on: 1 869 0038 or at: email@example.com