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Seychelles Insurance Companies
A captive insurance or reinsurance company is a limited purpose insurance or reinsurance company established primarily for the purpose of insuring the risks associated with a single organization, such as a corporation (a 'single-owner captive') or corporate group (sometimes referred to as a 'group captive'), or the members and affiliates of an association (sometimes referred to as an 'association captive'). There are other variations on the captive concept, but these are among the most widely used forms.
Common reasons for forming a captive are:
- to obtain lower insurance rates and better coverage terms. The captive's insureds may believe that:
- their loss experience has been, and will continue to be, better than the overall loss experience for similar insureds, thereby justifying lower premiums;
- better terms are available for the same risks in the reinsurance market than in the primary insurance market;
- income from the investment of reserves will further reduce costs;
- they can retain profits that would otherwise have been earned by third-party insurers; or
- they can reduce the inherent cost of taxes by incorporating the captive in a low-tax jurisdiction;
- to obtain coverage for risks which cannot be readily or adequately insured by traditional insurance companies;
- to create an incentive for the captive's insureds to improve risk management and loss control practices;
- to obtain more control over the settlement of claims; or
- to establish a relationship with an insurer which is less expensive to manage.
The Insurance Act, 1994, which is modeled on the Insurance Act of Singapore has been recently amended to make provisions for the licensing of offshore insurance companies, insurance managers and principal insurance representatives.
The Act regulates both domestic and non-domestic insurance business and serves as an excellent legal framework for conducting offshore insurance business. Full confidentiality si also ensured, except in the case of criminal investigation.
There are two forms of offshore insurance companies, it can either be a company limited by shares or an unlimited company incorporated or registered under the local Companies Act.
The tax treatment of offshore insurance companies is equivalent to that of offering by the most reputable offshore jurisdictions (corporation tax, withholding tax on dividends and interests, wealth tax, capital gains tax, customs duties, transfer tax on assets or securities, exchange control are non-existing).
Key features include:
- No need to appoint resident directors;
- Ability for captive insurance companies to re-domicile in Seychelles without being liquidated in the original territory;
- Insurance companies incorporated outside Seychelles may apply for a license to carry on an insurance business from Seychelles;
- licensed offshore insurance companies are exempt from corporation tax, customs duty, stamp duty, withholding taxes, employerâs contribution to the social security fund etc;
- Speedy and effective approval process;
Confidentiality guaranteed by law.