Design and formation
Accurate Assessment and Analysis in Captive Insurance Formation and Design
Captive insurance formation and design requires careful planning, and the process will vary depending on the size, structure, and complexity of your organisation. At IML, we begin with a thorough assessment and analysis to determine whether a captive is the right fit for your risk profile and financial objectives. This stage ensures that your captive is structured for cost-effectiveness, regulatory compliance, and long-term efficiency. By evaluating feasibility, projected financial performance, and potential regulatory considerations, we provide clients with a clear roadmap that minimises risk and maximises value before moving forward with the formation process.
STEP ONE
Feasibility Study
IML will conduct a preliminary feasibility review to assess the viability of captive insurance formation and design in advance of a complete feasibility study. This involves evaluating a business’s current risk management framework and commercial insurance plan to determine if incorporating a captive insurance company would be suitable for the organisation’s operations.
Once proper client discovery and the viability of the captive insurance formation is confirmed, a complete feasibility study will be performed. This includes financial analysis, market assessment, risk assessment, legal and regulatory compliance, and operational evaluation of the proposed captive. The captive feasibility study provides essential information for assessing the benefits and costs of captive insurance formation and design and becomes a critical part of the overall business plan.
STEP TWO
Business Plan
A comprehensive business plan is required by the regulator as part of the application process for captive insurance formation and design. IML has extensive knowledge in the preparation and submission of business plans and will guide you through the process. The business plan plays a crucial role in guiding the overall strategy and operations of the insurance company. It provides a roadmap for success and helps outline the company’s goals, objectives, and financial projections.
The feasibility study forms a large part of the business plan and includes Pro forma income statements and balance sheets on a five-year basis, demonstrating the viability of the business plan, and ensuring that the applicable Minimum Solvency Margin (MSM) and the Liquidity Ratio (LR) under the Act will be maintained at all times. By integrating these elements, the business plan becomes a key foundation in successful captive insurance formation and design.
STEP THREE
Insurer Application Process
IML will then proceed with the incorporation and registration of the insurance company which involves the following steps:
Over the years IML has developed strong relationships and works well with industry partners, we are well positioned to advise on selecting professional service providers (including lawyers, auditors, insurance managers, bankers and actuaries, if necessary)
Application will be sent to the Registrar of Companies to reserve the preferred name of the new company (if approved, the name will be reserved for three months)
Bermuda Monetary Authority (BMA)
Application will be sent to the BMA to incorporate the new company and simultaneously we will submit:
(a) the pre-incorporation form for registration as an insurer (including details of ownership, proposed business plan, five -year pro-forma financial projections and company administration); and
(b) an insurance licensing application to the BMA’s Assessment and Licensing Committee
Registrar of Companies (RoC)
Additionally, we will submit an application for registration of a company to the RoC (including the proposed Memorandum of Association, name reservation and applicable annual government fee).
The RoC will proceed with the registration after receiving notice from the BMA that it has consented to the incorporation of the new company.
Once the incorporation and licensing applications are approved, incorporate and capitalise the new company and convene the initial organisational meetings
File final approved licensing documents with the BMA’s Licensing and Authorisations Department for registration and issue of the licence
The BMA issues the new company’s insurance licence
Company commences insurance operations