The regulatory burden and costs of operating either United States or Lloyd’s-based captives in the 1960s inspired Mr Reiss to seek an alternative jurisdiction to establish captives. Ultimately, the location, reputation and political stability of Bermuda proved appealing. Bermuda is now the world’s leading offshore captive domicile with approximately 900 captives together holding assets exceeding $85 billion.
Numerous Fortune 500 companies in industries spanning manufacturing, mining, healthcare and property have established Bermuda captives to insure workers’ compensation, general liability, errors and omissions and directors’ and officers’ liability insurance. Bermuda captives are increasingly insuring reputational, regulatory, credit, terrorism, mergers and acquisitions, environmental, satellite technology, political and cybersecurity risks and funding employee benefits.
Many profitable family-owned businesses and the family offices supporting them should consider the benefits of captives. Contractors, retailers, physicians and other healthcare providers, hotels, restaurants, transportation and car dealers are increasingly establishing small captives to cover risks including business interruption, reputational, regulatory risks and the risk of loss of a key supplier, customer or employee.
Family-owned and more widely-held businesses based in Latin America — particularly in Mexico, Columbia, Peru and Chile — have experience utilising Bermuda captives to insure against property and, increasingly, political risk. This has been facilitated by Bermuda’s network of tax information exchange agreements with those countries.
