Bermuda Woos Canadian Captives
Bermuda officials have told A.M. Best’s news service the island has seen an uptick in interest from Canadian companies considering Bermuda as a domicile for their captives.
This follows Bermuda and Canada agreeing to a Tax Information and Exchange Agreement earlier this year. The TIEA makes Bermuda subsidiaries of Canadian corporations eligible for tax benefits.
“We’re optimistic,” said Shelby Weldon, director of insurance for the Bermuda Monetary Authority. “There’s been a marked increase in interest in Bermuda for Canadian captives.”
Barbados, which has a similar tax arrangement with Canada, has been the offshore domicile of choice for Canadian captives, but Bermuda is hoping Canadian companies will consider Bermuda as well, he said.
At year-end 2010, Bermuda had 27 captives from Canada. They had a collective $9.5 billion in assets and $240 million in gross written premiums, Mr. Weldon said. Two new Canadian captives were launched in 2011, in part due to the TIEA, he added.
Canada only has about 250 captives.
“It’s a large country with a relatively small amount of captives,” said John Andre, A.M. Best group vice president. “It could be an opportunity for Bermuda officials and service providers to attract Canadian companies to Bermuda.”
Mr. Andre said there’s a lot of competition among captive domiciles.
“Captives bring a lot of benefits and very little down side,” Andre said. “All the states compete with each other, and offshore domiciles. Now that Bermuda has changed its tax treaty, it puts them on equal footing with Barbados.”
Bermuda also gives captives “access to highly rated insurers and reinsurers,” Mr. Andre said.
A delegation of Bermuda officials and captive service providers recently visited Canada to promote Bermuda as a business centre.
“Bermuda will continue to strengthen its relationship with the Canadian government and regulators to ensure that at least companies are fully informed about what Bermuda has to offer,” Mr. Weldon said. “There’s a real excitement about opportunities arising out of Canada.”
One significant step is the Bermuda Stock Exchange has been granted designed exchange status by the Ottawa Department of Finance. This means that securities listed on the BSX are now eligible for Canadian Registered Retirement Savings Plans, as well as tax-free savings accounts.
“We’ve seen as a result of the TIEA an increased interest from Canada looking at Bermuda, largely because of our proximity and infrastructure. The one thing we have that one else has is our physical proximity between the US and Canada and the European Union,” said Greg Wojciechowski, chief executive officer of the BSX.
Bermuda can’t compete with the near guaranteed perfect weather and amenities Barbados has to offer. And when it comes to work ethic and service in Barbados the quality is top notch and Bermuda just can’t – or won’t – compete.
The only thing Bermuda really has to offer is that we are less than two hours away from New York City by plane.
Despite the TIEA agreement we need to ask ourselves: What is Barbados’ work permit situation like? How do they treat their guest workers and visitors? What else can Bermuda do to better ourselves and attract more customers?
Face the facts: Barbados is bigger and it’s better and it has way more to offer tourists and international business.
No matter what Barbados is a far more desirable destination than Bermuda at present time.
“Face the facts: Barbados is bigger and it’s better and it has way more to offer … international business.”
You’d be hard-pressed to find many people — other than Barbadians, perhaps — who’d agree with that statement. Bermuda is simply a more sophisticated domicile with a consistently better reputation than Barbados.