ICs and ICCs
INTERNATIONAL INSURANCE COMPANIES (ICs)
St. Lucia entered the international financial services industry in mid-2001. Since the launch, there has emerged a niche area for this new model jurisdiction in international insurance. The legislation for this product is flexible and facilitates the establishment of captive insurance companies. The annual fees are amongst the lowest in the industry and the professional service infrastructure is rapidly developing. In fact, insurance managers from other jurisdictions are using the jurisdiction in some cases relocating parts of their operations to St. Lucia. With the increasing use of insurance vehicles for tax planning and asset protection, professionals, middle-sized businesses and mid - high net worth individuals are ready users of St. Lucian international insurance companies.
See also International Insurance Regulations No. 32 of 2007
INCORPORATED CELL COMPANIES (ICCs)
One of the hallmarks of the international financial services industry is its constant drive to create new products to meet the tax and financial planning needs of it clients. Many years ago the protected cell regime was introduced which attempted to provide segregation of assets and liabilities of different classes of shares from each other, while at the same time permitting the individual classes of shares (or cells) to carry out insurance business with third parties and even to contract with each other. There are some obvious legal issues raised here as all the classes of shares that represented the cells were shares in the same legal entity. The thinking however was clear that by providing these arrangements the cost and time for approval was reduced which thereby increased the market that could access its own captive program or rent a captive as it is sometimes referred to.
St. Lucia has introduced legislation which is similar in effect to the protected cell, though more robust in substance, as each cell is a separate legal entity/an IBC. The incorporated cell company regime is based on one entity, the incorporated cell company (ICC) being licensed to provide insurance business though separate companies which are called incorporated cells. The incorporated cell (IC) is not licensed but is registered and that registration is based on its contractual relationship with the parent or (ICC). The ICC must have control of the board of directors of the IC and as such the time for review and approval of the IC registration is significantly shorter than a stand alone insurance license would be.
All of the traditional benefits of a protected cell regime are available with the added protection of the IC's being separate legal entities. This it is widely accepted makes them more robust to challenges than protected cell regimes. In the event of dissolution or insolvency in one IC's the other ICs assets and liabilities are completely insulated.
With an ICC/IC arrangement there is also the pooling of the professional support required for establishing and managing captive insurance programs. This pool includes the insurance manager, the actuary, auditors, lawyers and promoters who would have the experience and infrastructural support to quickly and efficiently respond to a client's needs for its own insurance program.
The amendments to the law permitting the establishment of ICC's and IC's does provide for conversion of traditional insurance licenses to the ICC/IC format. This is achieved by amendments to the articles and memorandum of the company to make it an ICC/IC which is achieved by filing a resolution of the directors with the international business companies registry.
The relationship between the ICC and the IC is governed by an operating agreement which includes inter alia the type of investments allowed, mechanism for accepting and underwriting risk, and dividend policy. This effectively is the rule book for the relationship between the two companies that defines the parameters of what can and cannot be done and also defines the key procedures that are to be followed.
Disbursements:
- ICC- Application fee- $1000
- ICC- License, $2,500 and $500 for each IC registered through it.
- IC- Annual registration fee of $1000
Capital
- Minimum for an ICC- $200,000 with a statutory deposit of $50,000
- Minimum for an IC - $50,000 with no statutory deposit.
Fees
These vary from provider to provider and may vary depending on the complexity and the volume of the business. They are however lower than what would apply if the client was to proceed with a stand alone insurance license.
Key advantages
- Simplicity of operation- Each IC is a company with its own shareholders.
- Robustness - separate legal entity not an accounting segregation of assets.
- Cost of operation is reduced.
- Time for establishment/implementation of captive programs is reduced.
- Professional support- wide range available
- IC's can contract with and invest in each other
- Reduced risk of failure in one IC infecting the others.
ICC Legislation
Legislation related to Incorporated Cell Companies may be accessed via the following amendments:
- International Business Companies (Amendment) Act No. 43 of 2006
- International Insurance (Amendment) Act No. 44 of 2006
- International Insurance Regulations No. 32 of 2007
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