Capstone is one of the U.S.’ largest sponsors of small and intermediate size captive insurance companies (property & casualty annual premiums of less than $1.2 million per year), which in turn insure middle market businesses.  Having formed over eighty captives in multiple domiciles over the last 12+ years, we understand the importance of choosing the right domicile, whether in the U.S. or abroad (so-called “offshore planning”).

Note that regardless of where the captive is domiciled, Capstone usually domesticates the captive insurer in the U.S. for federal income tax purposes with the result that the insurer has a taxpayer identification number and files U.S. federal income tax returns.

For a captive to be economically feasible, it must operate in a jurisdiction with an efficient and accessible regulatory environment.  Therefore, high on our criteria in recommending jurisdictions to our clients are licensing and regulatory regimes that are responsive, efficient and focused on providing cost-effective services to its regulated entities, yet respected in the international financial community.

Expertise in regulating these smaller captives is paramount, because appropriately, a captive insurer coverages written to affiliated businesses should be regulated differently than Allstate with its hundreds of thousands of public customers.  Similarly, a successful captive domicile should distinguish between the regulation of an Allstate, with billions of dollars of annual premiums written to the general public, and a captive with $1 million in premiums largely written to affiliates.  In this respect, Anguilla compares favorably with other captive domiciles such as Cayman, Bermuda, the BVI/the British Virgin Islands, South Carolina, Hawaii, Montana, Arizona, Utah and Vermont.

Owners of closely-held business prefer domiciles offering reasonable capitalization requirements, less restrictive on-site meeting requirements, coupled with sensible regulations and insurance specific expertise.  In these respects, Anguilla well fits the bill.

From the formation and licensing to the responsive regulatory oversight, Anguilla has met our expectations.  Its growth over the last few years as the domicile of choice for mid market captives is additional evidence that others also have reached this conclusion.