insurance company management in ireland - willis group

INSURANCECOMPANYMANAGEMENTIN IRELANDAugust 2010

We communicate with you tounderstand your business,providing the expertise andcreativity to develop and deliverexcellent captive solutions, andwe do so with passion.

CONTENTSSECTION 1

INTRODUCTION 2

SECTION 2

CAPTIVE MANAGEMENT SERVICES 4

SECTION 3

IRELAND AS A CENTRE FOR CAPTIVE

INSURANCE COMPANIES 8

SECTION 4

WILLIS IN IRELAND 12

Malcolm Cutts-WatsonEmail: [email protected] line: +44 (0)1481 735628Mobile: +44 (0)7781 135628

Nigel GoodladEmail: [email protected] line: +44 (0)1446 773675Mobile: +44 (0)7715 759451

DominicWheatleyEmail:[email protected] line: +44 (0)1481 735630Mobile: +44 (0)7781 135630

Brendan DugganEmail: [email protected] line: +44 (0)20 3124 7977Mobile: +44 (0)7931 259334

GLOBAL CAPTIVE PRACTICE CONTACTS

SECTION 1 –INTRODUCTION

THE WILLIS GLOBAL CAPTIVEPRACTICE IS A MAJOR FORCEIN THE GLOBAL CAPTIVEINDUSTRY WITH OPERATIONSWORLDWIDE.

2 WillisManagement (Dublin) Limited

The 1987 Finance Act established theInternational Financial Services Centre(IFSC) in Dublin with the intention ofattracting internationallymobile financialservices to Ireland.

The IFSC also proved an attractive locationfor international insurance, reinsurance andcaptive insurance companies. A notablefeature of Dublin’s profile is its globalpopularity, with a broad diversity of captivesfromUSA, Europe, Japan and theNordiccountries.Most of themajor captivemanagement companies are established in

Dublin in recognition of its rapid growth asan international centre for captiveinsurance companies.

Ireland offers a variety of favorable conditionswhen considered as a captive location:

– High quality professionalinsurancemanagement

– First class governmental, regulatory andtax environment

– Stable democratic political environment– Excellent business infrastructure– Convenient location and time zone– Full member of the EuropeanUnion

WillisManagement (Dublin) Limited 3

SECTION 2 –CAPTIVEMANAGEMENTSERVICES

THEWILLIS GLOBALCAPTIVEPRACTICE ISATTHEFOREFRONTOF INSURANCEMANAGEMENTTECHNOLOGYWORLDWIDE.


Willis is one of the largest captivemanagers inEurope and hasmanagement companies in allthemajor reputable captive locationsworldwide.WillisManagement (Dublin)Limited is a wholly owned subsidiary of theWillis Group, the world’s third largestinsurance broking organisation. It wasformed in 1989 and now has:

– 17 companies undermanagement– 16 staff employed in Dublin– Gross written premiums in excess of

€385million– Funds undermanagement in excess

of €750million

Our client base includesmajormultinationalcorporations, industrial and commercialoperations and financial institutions.

We offer a high quality full captivemanagement service, encompassingall aspects of strategic developmentand administration.

Our comprehensive consulting serviceinclude the provision of feasibility studiesand specific advice in relation to captiveprogramme design, structuring andoperation.We also provide incubationservices for new self managed start upoperations, including commercial insuranceand reinsurance companies.

The experience, commitment, expertise andprofessionalismof our Dublin team are thequalities that we believe set us apart fromour competitors.

Willis has teams of professionals qualifiedand experienced in each of the relevantdisciplines, which include:

– Insurance– Accountancy– Company Secretarial– Corporate Governance– RiskManagement

Each servicing team benefits from qualifiedaccountants and insurance professionals,supported by a number of experiencedadministrators. The office has a supportinfrastructure including a ComplianceOfficer, and I.T. support.

Willis has established relationships withThe Irish Financial Services RegulatoryAuthority (IFSRA) all major (andmanyminor) fronting insurers, reinsurers andbroking houses to facilitate the smoothand effective administration of your captiveinsurance programme.Willis also hasestablished relationships with all themajorbanks, legal advisers, auditors, actuariesand other service providers to ensure thesmooth running of the company.Whateveryour requirements,Willis has a team ofdedicated professionals available to deliverservice excellence.

WillisManagement (Dublin) Limited offerfollowing captivemanagement services:

– InsuranceManagement– Accountancy– Company Secretarial– Regulatory– Corporate Governance– Banking and investment– Consulting and technical support


INSURANCE MANAGEMENT– Captive development and

programme design– Underwriting– Premium administration– Policy documentation– Claims handling, administration

and reporting– Liaisonwith insurance and

reinsurance brokers– Maintaining underwriting accounts

and statistics

ACCOUNTANCY– Management accounts– Group consolidation reporting– Statutory annual accounts– Full accounting documentation

including budgets andcashflow statements

COMPANY SECRETARIAL– Compliance with Irish regulations– Provide registered office (if required)– Act as Company Secretary– Maintenance of corporate records– Notice andMinutes of

directorsmeetings– Preparation of board papers

REGULATORY– Ensuring compliance with

local Regulators– Monitoring Solvency and capital– Provision of Compliance Officer

CORPORATE GOVERNANCE– OperationsManual– ProcedureManual– Key Risk and ControlMatrix– Schedule of Key Actions

BANKING AND INVESTMENTS– Cashmanagement– Monitoring of investmentmanagers

(if appointed)– Monitoring currency exposures– Authorisation and payment

of expenses

CONSULTING AND TECHNICALSUPPORTTheWillis Global Captive Practice is anintegrated captive service provider,providingmanagement and consultingservices from its operations based in allmajor reputable captive domiciles.


SECTION 3 –IRELANDAS A CENTREFOR CAPTIVEINSURANCECOMPANIES

WILLIS IS PROUD TO BEAMONG THE VANGUARDOF INTERNATIONALINSURANCE MANAGERSIN IRELAND.


INSURANCE REGULATORYPOSITION

Ireland is a full member of the EUproviding access to the Single EuropeanMarket which is aimed at establishing freemovement of capital, removal of tariffbarriers, freedom to establish andfreedom to provide services. The generaldirectives of the EU in regard toregulation and supervisory control ofinsurance companies apply providing fullintegration into the EC regulatory system.

The Irish Financial Services RegulatoryAuthority (IFSRA) is the regulatory bodyresponsible for authorising insurancecompanies whichwish to establishin Ireland.

TAXATION

Dublin is a low tax area within the EU. Fornew companies corporate tax is 12.5%. Inaddition to the low corporation tax ratethere are a number of other favorableaspects to the taxation regime.

Ireland has treaties with 45 othercountries includingmostmajor tradingnations giving full tax sharing in amajority of cases. This facilitatesinternational tax planning using foreigntax credits and tax deferrals.

There are no restrictions on therepatriation of profits and there are nowithholding taxes on dividends paid bycaptives where the parent company islocated in a treaty country.

There are no restrictions or withholdingtaxes in interest paid to a non-residentparent in a tax treaty country.Movementsin technical reserves including IBNR areallowable in computing taxable income.This combinedwith the low rate allows acaptive to accumulate profits to financethe expansions of its insurance activities.

Capital gains will not generally arise forfinancial service business with theexception of securities or other assetsheld as investments. Dealings in securitiesby the financial service business would betreated as trading activities.

Most insurance related services areexempt from Irish VAT and no premiumtaxes are applicable to internationalinsurance transacted from Ireland.However premium taxesmay apply in thecountry where the risk originates.FET exemptionsmay be avaliable for U.S.owned captives.

CAPTIVES

Current insurance legislation does notidentify ‘captives’ as a separate type ofinsurance operation and thus captivesare regulated in the sameway as anyother insurance company. Irishregulations are fully in line withECDirectives for insurance.

Reinsurance captives are subject to therequirements of theEUDirective onReinsurance andmust be approved byIFSRA. Aminimumpaid-up capital of€1,000,000 is required for any reinsurancecaptive establishing in Ireland.

Authorisation to establish as insurer orreinsurermust be obtained from IFSRA.There are on-going requirements forsubmission of annual returns and accountsin prescribed formats to the regulatoryauthorities in addition to technicalreserves and solvency requirements. Acaptivewriting direct insurance is requiredto have aminimumpaid-up share capital ofat least €2,300,000.

SOLVENCY MARGIN

A captive is required tomaintain anadequate solvencymargin in respect of itsentire business, which corresponds to theassets free of all foreseeable liabilities.

TIMELINE

It takes approximately 4-6months fromthe time of submission of the licenceapplication to the time of a decision beingmade by IFSRA.



COMPANY ESTABLISHMENT

There aremore then 130 Captives operatingin Ireland. The licensing of an insurer is arelatively straightforward though detailedexercise, entailing the completion of anapplication form and the presentation of abusiness plan, which is normally based ona feasibility study.

The application formwill require detailsof the ownership, share capital and sharestructure of the captive as well as personalquestionnaires from each of the proposeddirectors of the Company. Administrativeissues such as Registered Office, CompanySecretary and InsuranceManager arealso addressed.

The purpose of the licensing procedure is toensure that the insurer is being establishedfor bona fide reasons and that it will besufficiently capitalised to accept theunderwriting risk which is proposed.The insurance regulations in Irelandare designed to assist the developmentof insurance business.

A comprehensive business planmust besubmitted to IFSRA, including detailedthree year financial projections, givinginformation regarding the proposedbusiness, including programme structure,expected premiums/claims, operatingexpenses, investment income andreinsurancemarkets. Comprehensivedue diligencemust be undertaken toensure compliance with anti-moneylaundering legislation.

WillisManagement (Dublin) Limitedis experienced in the preparation andpresentation of insurer business plans inIreland.Wewould be pleased to describethe full process and to explain theresponsibilities of the insurermanagementcompany under the Irish regulatory regime.

CHECKLIST FOR ESTABLISHMENT

ESTABLISHMENT

Feasibility of aninsurer agreed

Business planprepared.

2 4 10

1 3 115

Business plan agreedwith insurer parent.

8 Companyincorporated.

6 Licence applicationsubmitted.

Full capitalsubscribed.

Commencebusiness

Parent companyboard approvalof insurer.

Select board ofdirectors, and discussbusiness plan.

Draft licence application andbusiness plan discussed withThe Irish Financial ServicesRegulatory Authority (IFSRA).

9 Directors’ meeting to issue shares,discuss Business Plan and toappoint: Auditors, Secretary, Bankers and Managers.

7 Licenceapproved.

Licenceissued.

Willis Management (Dublin) Limited 11

ASSOCIATED COSTS

The costs associated with the incorporation, licensing and operation of an Irish basedcaptive insurance company are very low comparedwith the financial benefit a successfulcaptive can offer its parent.

IFSRA APPLICATION FEE SINGLE PARENT CAPTIVE NIL

STAMP DUTY NIL

COST OF ESTABLISHMENT

MANAGEMENT FEE PURE CAPTIVE – DIRECT WRITING (MIN) €100,000

MANAGEMENT FEE PURE CAPTIVE – REINSURANCE (MIN) €70,000

MANAGEMENT FEE NON-CAPTIVE (MIN) €125,000

AUDIT FEE – DIRECT WRITING CAPTIVE (MIN) €15,000

AUDIT FEE REINSURANCE CAPTIVE (MIN) €10,000

(Typical fees for a simple insuranceprogrambutmaybehigher formore complexprograms.)

ANNUAL INSURANCE LICENCEDIRECT WRITING CAPTIVE €6,000

REINSURANCE CAPTIVE €3,000

DIRECTORS FEES* €10,000

* Typical feeperdirector, dependingonnatureof companyandbusinesswritten.

ANNUAL OPERATING COSTS


SECTION 4 –WILLIS INIRELAND

WILLIS’ TEAM COMBINESLOCAL AND INTERNATIONALEXPERIENCE TO PROVIDE THEMANAGEMENT STRENGTH TODELIVER OUR CLIENTS’EXPECTATIONS.

Willis Management (Dublin) Limited 13

Willis’ office in Dublin is situated at GrandMill Quay, Barrow Street, Dublin 4, Ireland.

Our business operation in Ireland adoptstheWillis Global Captive Practice standardsof insurance companymanagement services.The procedures are tried and tested butflexible to adapt to specific demands ofconducting business in Ireland.

Our Irish team offer access to:

– Seniormanagement has in excess of50 years combined experience incaptivemanagement

– Six professionally qualified staff basedin Dublin

– Thewider experience and expertise ofcaptive insurance available throughout thecaptive practice

– The substantial resources and expertiseavailable throughoutWillis

BOARD CONSTITUTION

Inmost cases, a captive will have at leastthree directors, some of whomwill be Irishresidents and some of whomwill beshareholder representatives. The CompaniesLaw demands that there be one local residentdirector of an Irish Registered Company.Other directorsmay be provided by thecaptive’s parent.Willis would be pleased tointroduce a number of potential localdirectors from a range of professionalbackgrounds and experience.Willisexecutives do not sit on the boards ofcompanies wemanage as we believe thiscreates a significant conflict of interest.

BOARD OF DIRECTORS MEETING PACKPrior to eachDirectors’Meeting,Willis willprepare and distribute to directors andapproved interested parties a bound boardpack containing information to assist thedirectors in the decisionmaking processand keep themproperly advised of theactivities of the company. Thesemay alsobe circulated electronically.

TYPICAL PACK CONTENTS– Notice and agenda ofmeeting– Minutes of previousmeeting– Status report of all matters arising from

previousmeeting– Summary of insurance cover provided by

the Company– Manager’s report, whichwill include:

– Executive Summary– Underwriting Review

(including reinsurance)– Claims Review– Financial Review– Any other business (e.g. new business,

industry developments)

FINANCIAL INFORMATION– Management Accounts with

comparatives as required– Underwriting Accounts– Claims information,

appropriately analysed– Other relevant information

INVESTMENT INFORMATION– Report by the InvestmentManagers

(where appointed)– Portfolio Valuation (where appropriate)– Analysis of cash deposits

CORPORATE GOVERNANCE– Compliance Review– Schedule of Key Actions– Review of key risks and controls– Review ofmanagement procedures– Review of Corporate

Governance framework


INVESTMENT MANAGEMENT

An element of the financial return from anyinsurance companywill consist of investmentincome generated from the company’s sharecapital, from its reserves and premiumincome and from retained earnings. Theestablishment and execution of anappropriate investment policy is thereforevery important. Investment policy shouldinclude reference to the regulatory guidelinesand ensure:

– Security– Liquidity– Yield

The purpose of the investment policy is toenable the captive’s funds to be held in a formwhich is secure and liquid enoughtomeet the potential claims obligations,whilst obtaining the best possible yield on thefunds. In the case of a global insuranceprogramme, it is important to consider thecurrencies in which the assets are heldagainst potential liabilities in order to complywith regulation and reduce the risk fromcurrency exposure, and to consider the claimsprofile of the companywhen establishing aninvestment strategy.Many captive insurancecompanies use professional investmentmanagers, who follow formal guidelines laiddown by the captive’s board of directors.Ireland has access tomany reputableinvestmentmanagers experienced in theparticular demands of captive insurancefundmanagement.

The appointment of an investmentmanagermay be considered once the captive’s fundsreach the order of €20million, dependentupon the shareholders’ and board’s attitudeto investment risk. Tenders will normally beinvited from a panel of investmentmanagersand presentationsmade to the Board ofDirectors of the captive, whowill then decidewhichmanager to appoint.

Ireland has a wide choice of professionalinvestmentmanagers available. It is advisablethat the investmentmanager be accessible bythe captive insurancemanager as closeliaisonwill be required.

Until a captive has sufficient funds to justifythe appointment of an investmentmanager,the normal route is to place funds in fixedterm bank deposits across a number of E.U.regulated banks, appropriate to cashflowrequirements. This service can be providedbyWillis under delegated authority fromthe board.

Inter Company loans are possible from ‘free’assets subject to IFSRA notification.

KEY PERSONNEL

Daily supervision of our client companies isthe responsibility of one of ourManagersand/or Directors.

Themajority of our staff have (or aremakingsubstantial progress towards) relevantqualifications in either insurance oraccounting to ensure that an integratedservice can be offered incorporating all apectsof insurance companymanagement.

Development work is supported by ourspecialist Captive Consultants across theWillis Global Practice.

TimByrne, ACII, AIB –Managing DirectorDirect Line: +353 (1) 407 4984Mobile: +353 (86) 823 5256Email: [email protected]

Tim joinedWillis International Captive Practice in the Isle ofMan in 1986 havingpreviously spent six years involved in captivemanagement activities in Grand Cayman.Tim returned to the Cayman Islands in 1993 to set upWillisManagement (Cayman) Limited.In 1999 he crossed the Atlantic once again to take over asManaging Director of ourIrish captive business.

TrevorMadden – Director

Trevor joinedWillis in 2003having previously spent eleven yearsworking as an underwriterfor an IFSCbased reinsurance company and three years as an insurance business analyst for alargeU.S. based IT firm. Trevor leads a teamof five, responsible for the underwriting andclaims activities of a portfolio of client companies.

TrionaO’Sullivan, BBS, ACII, ACCA –Director

Triona joinedWillis in 1998 having previously spent a number of years in the Irish insurancebrokingmarket. She has significant experience in the production of captive feasibility studiesaswell as in financialmodelling for captives. Triona is a director of the company and isresponsible for client accounting, compliance, regulatory and tax relatedmatters.

RayMcCabe, ACCA – Director

Ray has worked in CaptiveManagement since 2001; joiningWillis in 2004. He is a director ofthe company and is responsible for all client accounting as well as compliance, regulatoryand tax related issues.


Willis Management (Dublin) Limited

GrandMill QuayBarrow StreetDublin 4IrelandTel: +353 (1)407 4984

www.willis.com

Willismanagement (Dublin) LimitedRegistered office: GrandMill Quay, Barrow Street, Dublin 4, Ireland

7209/08/10

insurance company management in ireland - willis group

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