DOMICILE FOR CAPTIVE INSURANCE COMPANIES

FSM is the nearest and most Japanese friendly captive insurance domicile

1. FSM’s captive insurance regulations were promulgated in January 2009
2. Infrastructure and service providers have come together to form the FSM Captive Insurance Council
3. One of the largest captive managers in the world has received its authority to conduct business through its branch in the FSM
4. Another captive manager with Japanese language skills has established its FSM company
5. The FSM has already received an application from one of Japan’s top ten companies, and it is expected to be fully established in 3Q’09

What a captive Insurance company is:

• A “pure captive” is wholly-owned by one parent
• The parent is usually NOT an insurance company
• Captive is formed to insure the risks of the parent
• Located offshore or onshore, but usually in a different jurisdiction for tax and regulatory reasons
• Captive insurance co must be licensed (by FSM)
• Regulated by captive-specific legislation

There are over 5,000 captives in the world and growing with over 3.000 from the United States but less than 100 from Japan so far. They are domiciled in one of 67 jurisdictions or domiciles, including Bermuda, Cayman Islands, Vermont, Hawaii, Singapore and Ireland.

Benefits to organizations registering captive insurers in the FSM:

• Risk Management Benefits
• Broad, simple contracts, deductibles
• Financial Benefits
• Cut Costs: underwriting profit, direct reinsurance
• Cash flow flex and better accounting matching
• Tax Benefits
• Low Premium Taxes, with a cap of $20,000
• Lower income taxes for Japanese, 21% versus 35% or 42%

Other features which make FSM attractive to foreign registrants:

• Class one “pure captives” and Class two available by law and flexible captive legislation , considering all domiciles
• Redomestication without changing legal vehicles, merely restate Articles
• Annual Board meeting, by phone, with Principal Rep in FSM
• No resident Director required
• Investment guidelines use “rating” data, and allow global investments
• Unlimited investment in US and Japan Government bonds
• Loans to parent allowed up to 50%, and more with Commissioner approval
• Minimum capital $1,000,000, though final amount determined by Commissioner based upon advice from expert appointed by FSM
• Premium tax: 0.05% flat, to $20K maximum
• Allow Japan CPA and Actuaries

Please review the Captive Insurance Application package including instructions, as a required step in applying for a captive insurance company license.” 

 

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TELEPHONE_	691 320 1830
EMAIL_	INFO@MRA.FM
OFFICE_	SUITE 12 TOWN PLAZA, KOLONIA, POHNPEI, FSM
MAILING_	P.O. BOX 902, KOLONIA, POHNPEI, FSM 96941