Anguilla Hot To Form Captive Domicile

The act, which would regulate both domestic and foreign insurance businesses, would allow pure captives and protected cell captives, "which is an enhancement for captives," he said.

Mr. Lawrence told National Underwriter that the island of Anguilla currently has a strong financial infrastructure that "in one way is ahead of just about every jurisdiction in the world because the company's registry is totally electronic."

This enables all documents, including corporations, to be filed electronically, he said. He added that Anguilla has the advantage of being a "zero tax jurisdiction."

Other captive services that are needed, such as captive managers, "get built up as you develop the industry," he said.

Anguilla's motivation for establishing itself as a captive domicile competing with such giants as Bermuda, offshore, and Vermont in the U.S., he said, is to "widen the appeal of Anguilla in other areas" as well as "the type of product that Anguilla can deal with."

Mike Mead, former board chairman of the Captive Insurance Companies Association and president of M.R. Mead and Company, LLC, in Chicago said that a new domicile raises concerns about "the qualifications and expertise of the regulators and the understanding of the legislature."

He added that, "If this is an under-funded or unfunded 'me-too' it won't amount to much."

However, if the island's government brings in well qualified regulators "and spends money to promote the venue, then it will be welcome, and have a chance," he said. "I am not aware of any particular advantages or negatives involving Anguilla, and I have never been there, nor do I know any one there."

Nick Leighton, manager, insurance services for Caledonian Bank & Trust Limited in Cayman said that to attract captives, Anguilla "needs to have credibility. Who's going to be the first one to form [a captive] in Anguilla," he asked.

He said the island most likely is "facing some sort of budgetary deficit and they're looking at this as a way of getting extra income?tourism's down."

He added that the larger domiciles "will continue to get bigger and more professional than the smaller ones because they have the necessary expertise and infrastructure."

But new domiciles on the scene may be "getting in the game too late," he said. "It's too little, too late. They don't have the reputation or the infrastructure."

Mr. Lawrence said the main pieces of the legislation include a companies act, an international business companies act, a limited partnership act, a limited liability company act, a company management act, a trust act, a fraudulent dispositions act, a confidential relations act and an offshore bank and trust companies act.

Mr. Lawrence emphasized that legislation is "still in draft form, and may undergo some final amendments, particularly the insurance draft."