1 January 1970USA analysis

How Anguilla joined the global top five

Over the last decade, US business owners have increasingly begun to consider options within the US when choosing where to domicile their captive insurance company. This is due in part to a positive shift in the number of states that have captive domicile legislation, flexible programmes and capacity for growth. It is also due in part to caution among wary business owners who are fearful of anything associated with offshore activity due to administrative crackdowns.

Historically, captive insurance companies were domiciled offshore, and many good options remain among these domiciles. The decades of experience, knowledgeable regulatory agencies and understanding of complex programmes continue to make offshore domiciles the best choice for some captive insurance companies. An example of this is Anguilla, a domicile that has seen continued growth due to the relatively low cost of formation, reasonable capital requirements and well informed regulators.


After the success of Anguilla’s Commercial Online Registration Network (ACORN) for company formations in 1998, Anguilla looked for an encore performance. It found it with the passing of the Insurance Act of 2004. Combined with helpful and reasonable regulators, the Insurance Act has led to eight solid years of captive growth in Anguilla. These legislative and economic initiatives have strengthened and diversified the overall economic base, providing employment for Anguillans who are obtaining university education in unprecedented numbers. Anguilla now regulates approximately 268 captive insurance companies, ranging in size from tens of millions in premium down to the sub-million premium captive.

“Anguilla is a well regulated jurisdiction and we want to attract only reputable business. We are constantly looking for ways to improve our already modern legislation and the diversity and quality of our services,” said Anguilla’s chief minister Hubert Hughes.


Anguilla is a self-governing overseas territory of the UK with a constitutional relationship to Britain that is similar to that of the Cayman Islands or Bermuda. Located in the Eastern Caribbean, Anguilla is the northernmost island in the Leeward chain, less than 10 miles north of St Martin and just a few hundred miles away from Puerto Rico. Anguilla offers postcard-perfect beaches with the privacy and seclusion that have attracted celebrity visitors ranging from Bill Clinton to Michael Jordan (who spent his 2011 holiday in Anguilla along with friends Derek Jeter and 50 Cent).

Anguilla is a member of the Eastern Caribbean Currency Union, a development of the Organisation of Eastern Caribbean States (OECS). Created in 1981, the OECS is an inter-governmental organisation dedicated to economic harmonisation and integration, protection of human and legal rights, and the encouragement of good governance between countries and dependencies in the Eastern Caribbean.

Regulatory strength

The jewel in the crown of Anguilla’s efficient system is ACORN, which allows companies to be formed using an online system. Developed in partnership between the Anguillan and British governments, ACORN is frequently updated to satisfy user needs and maintain its status as one of the most technologically advanced company registration systems in the world.

The Insurance Act of 2004 also provides a stable and respected regulatory structure. The Act permits various types of captive licences, including long-term business, non-long-term business, association, group, pure captives, and protected cell companies.

There are plans to update and revise the Insurance Act later in 2012. This revision will allow for the separation of international business, as well as improvements to the existing legislation to reflect the evolution in the size and complexity of Anguilla captives.

The Anguilla framework for the incorporation and licensing of captives is strongly enforced by the regulators, but tempered by consistency, fairness and common sense. The process for securing an insurance licence includes gathering extensive information on any directors, officers or owners, a description of operational and financial responsibility on the part of the companies to be insured,and a feasibility study to verify the insurance company will be solvent and sound.


The Anguilla Financial Services Commission is well staffed with regulators who understand finance, insurance and captive operations. There is an emphasis on quality, both in the education of the staff and in the service they provide.

Keith Bell was appointed director of Anguilla’s Financial Services Commission in July 2012. He has served on 25 IMF/World Bank missions to assess countries’ systems of banking supervision, including six dealing with international financial centres.

Anguilla is a participant in the Offshore Group of Insurance Supervisors (OGIS), a grouping of regulators representing domiciles engaged in the supervision of international insurance business. OGIS allows offshore jurisdictions to exchange information and share in the experiences of other members. The most recent training session, which was attended by 15 domiciles including Anguilla, Bermuda and the Cayman Islands, covered topics ‘to promote the development of fair, safe and stable insurance markets’ (visit news/139/report-of-ogis-training-session-in-the-bahamas/181 to read the report).

Formation process

While legal entities may be formed quickly with ACORN, the approval of a captive insurance licence requires a very different approach. Captive insurance licences require a hard copy submission of all required documents. The regulatory analysts will then carefullyreview all the documents to make sure the captive programme is well thought out, the business plan is complete, and the feasibility study contains both expected and adverse pro forma scenarios to ensure sufficient solvency.

The minimum amount of required capital for an Anguilla captive licence for most captives is $100,000, which is close to the Cayman Islands requirement of $120,000. However, Anguilla reserves the right to require additional capital where necessary.

Anguilla takes great pride in its background checks on captive owners, directors and officers. They search US and international databases to ensure that those individuals are upstanding citizens and capable of being involved with a highly regulated entity.

The time it takes for a captive licence to be approved is typically one to two months, but some of the more complicated captive programmes may take several months for approval. One of the strengths of Anguilla’s licensing process is that captive application meetings are held regularly to discuss the specific licence in question and the improvements that are needed in order for a licence to be granted.


While Anguilla maintains strict standards, it also seeks to understand the needs of its market. Anguilla’s rules and rule applications are a balance between good regulation and rationality.

For example, while investment standards are rigorous, Anguilla has allowed for a select amount of real estate to be included in a captive insurance company’s portfolio on a discounted basis, rather than disallowing real estate completely, as do some other domiciles. This highlights Anguilla’s approach, which considers the overall purpose of a captive insurance company’s investments and takes into account the investment portfolio as a whole.

Anguilla also maintains high standards on dividends, investments and other matters that might affect solvency. Pre-approval is required for many captive actions through the submission of formal declarations by the captive insurance company directors, but responses are issued in a timely and fair manner, with an open invitation for discussion.

Another illustration of the commonsense approach is Anguilla’s less restrictive on-site meeting requirement. This is appreciated by owners of closely-held businesses, whose schedules are usually already full without additional travel obligations.

As the economy continues to become global, business owners should consider both US and offshore domiciles when looking to form a captive insurance company. The many benefits of a domicile such as Anguilla may make it the best fit for the business their captive is looking to insure.

Karl Huish is senior vice president at Artex. He can be contacted at:

James Tehero is branch operations manager at Artex. He can be contacted at:

Anguilla case study

An example of Anguilla’s strengths is evident in the case study of a captive formed to insure a medical group. The large medical group with a number of facilities, including surgical and other specialty centres, was looking for a solution to help manage risk outside the traditional market and decided to form a captive. In consultation with Artex—the Island’s largest captive manager with more than 100 captives under management—it was determined that a protected cell company would be the best structure for their captive needs. This would allow various physicians, who were owners of the insured businesses, to own the captive without having to co-mingle their assets and liabilities. And because Anguilla’s comprehensive Insurance Act of 2004 allowed for protected cell companies, Anguilla was selected as the medical group’s domicile of choice.

During the formation process in 2007, Anguilla worked overtime to perform the screening of the four owners, understand the businesses and their risks, and get the captive formed in a timely manner. Over the years, physicians have come and gone from the medical group, and Anguilla regulators have worked with Artex to dissolve and create cells as needed to accommodate these changes to the business risks and ownership of the captive. The process has been such a success that one of the physician owners, who has now expanded to other business enterprises, formed another Anguilla captive in 2011 to provide for those new risks.