Captive industry representatives from the Cayman Islands met with key decision makers from leading law firms, insurance brokers and actuaries at the annual convention of the Canadian Risk Insurance Management Society in Ottawa, Canada, from 19-21 September. The annual conference followed the signing of a tax information exchange agreement between Canada and the Cayman Islands in June 2011.
“Having ratified the Tax Information Exchange Agreement between Canada and Cayman earlier this year, Cayman is poised to offer Canadian business a viable option to Barbados for forming captive insurance companies,” said Clayton Price, current chairman of the Insurance Managers Association of Cayman and managing director of Marsh Management Services. The agreement is expected to offer a more tax-effective platform for Canadian owned companies that have foreign operating subsidiaries. It will exempt certain dividends payable to foreign affiliates resident in the Cayman Islands and distributed to their Canadian parent companies from relevant Canadian taxation, according to a note by law firm Conyers Dill Pearman. In addition, it will make it easier for Canadian firms to form new Cayman companies, particularly captives and financing vehicles, and to potentially move business to Cayman from other double-tax treaty jurisdictions. “The TIEA puts Cayman in the same favourable position as Barbados,” said Mr. Price. Before the TIEA ratification, Barbados had enjoyed an advantage for doing business with Canadian companies due to the tax treaty the country has concluded with Canada. While Bermuda has also ratified a TIEA with Canada at the same time as Cayman, Mr. Price believes Cayman captives will offer a more efficient proposition, because Bermuda has chosen to adopt the European Solvency II regulations, which may add extra costs.
Mr. Price said that after the meetings in Canada, the Cayman representatives felt encouraged and enthusiastic about the future prospects of incorporating captives with Canadian parents in the Cayman Islands being the domicile of choice.
In addition to the IMAC chairman, other attendees included IMAC members and industry representatives, including former chairman Ron Sulisz, director, Strategic Risk Solutions; Dan MacLean, managing director, Aon Risk Solutions; Harry Thompson, Captiva; Stephen Gray, Head of Office, Willis Management; Alan Craig, partner at Campbell’s; Dara Keogh, director with KPMG and Gordon Rowell, head of Insurance, Cayman Islands Monetary Authority.