11 June 2015Actuarial & underwriting

Latin America offers plentiful opportunities

The numbers of captives being formed on Bermuda by entities in Latin America has hit healthy levels in recent years but has the potential for further strong growth.

This is the finding of a panel of experts at the Bermuda Captive Conference held in Bermuda this week (Monday June 8 to Wednesday June 10).

Giulianna Molero Solari, manager of assurance at PwC, said that Bermuda remains the premier domicile for captives globally and it is the first choice of many companies in Latin America when they consider this risk-transfer option.

“We consider Bermuda as a leader of captive domiciles and we think there is potential for a lot more growth from Latin America for Bermuda,” she said.

Solari ran through some statistics that showed that the US remains the main source of business for Bermuda with 60 percent of all new Bermuda insurance registrations made by US entities.

In terms of captives alone, some 54 percent of Bermuda captives are formed by entities from North America and 6 percent by entities in Latin America or the Caribbean. “But we believe this will grow,” she said.

Solari said a diverse range of companies from Latin America are increasingly exploring the captives route and when they do, Bermuda is their first choice.

Eduardo Fox, senior manager, Appleby, said some of the reasons Bermuda is considered a good base for a captive include: its location, infrastructure, respected regulatory regime, links to the reinsurance markets and high quality of service providers. “It has the highest reputation globally and that makes a difference,” he said.

He added that the many tax treaties it has with countries in Latin America are also a positive factor.

Luis Delgado, senior account manager, JLT Insurance Management (Bermuda), summed up some of the good reasons for forming a captive which included: better and more optimised risk management, lower costs, easy access to the reinsurance markets and tax advantages.