The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas must exploit its huge ship registry in trying to establish itself as an international insurance player, a senior industry executive revealing that one “bullish” manager was aiming to take his total captives to 50 by year-end.

Timothy Ingraham, Summit Insurance Company’s president, told Tribune Business that the sector was hoping for “a snowball effect” from a captive manager seeking to add another 10 captives to the 40 he already has domiciled in the Bahamas.

Acknowledging that it had been “a slow, tedious process” to-date in trying to establish the Bahamas as a captive/international insurance jurisdiction, Mr Ingraham said that while this nation may have ‘missed the boat’ on the US and European markets, emerging regions such as Latin America and Asia were still ripe with opportunity.

And, while the Bahamas would be unable to compete with the likes of Bermuda and the Cayman Islands for the larger, higher-end captives, Mr Ingraham said this nation’s lower living costs, greater physical space and proximity to the US gave it potential competitive advantages in attracting new business.

Mr Ingraham, who moderated the session on international insurance at the recent International Business & Finance Summit (IBFS) in Bimini, added that the sector’s volatile nature meant business could quickly switch from one jurisdiction to another.

B Just as the Bahamas lost its captive business to Bermuda in the early 1970s, due to ill-advised legal reforms, Mr Ingraham noted that the British Virgin Islands (BVI) had recently seen its book of business diminish due to new laws that were seen as less than favourable.

Striking a more upbeat tone on the Bahamas’ international insurance prospects than some of his colleagues (see other article on Page 1B), the Summit president said: “Over the last two years we’ve seen some positive developments in the area of captives specifically, which is very encouraging given the number of years we’ve been trying to get things moving in that area.

“One captive manager has established about 40 captives here in the last two years, and they see another 10 being set up this year as well. They seem to be very bullish on the Bahamas’ captive market, and the hope is that once they get moving that way, others will see the benefits and come along as well. We hope it will be a snowball effect.”

While the Bahamas would be unable to go head-to-head with top captive domiciles, such as Bermuda and the Cayman Islands, Mr Ingraham said it could seek to attract some of the “sidecar companies” set up by major global reinsurers.

“The way we’ve become innovative with wealth management and private banking products, we need to see the same applied to the external insurance market as well, something that can differentiate us from the competition,” he told Tribune Business.

“We have a huge ship registry. The question has to be asked: Is there any way we can serve these shipping companies by setting up captives here for their operations? It’s an area that needs to be looked at.”

Asked whether the Bahamas had effectively ‘missed the boat’ and delayed too long in seeking to re-establish itself as a captive domicile, Mr Ingraham replied: “Maybe in terms of the US and some European countries you might want to think that, but when you consider the economies growing in Latin America and Asia, I don’t think we have.”

Agreeing that the Bahamas might now grow to the size of Bermuda or the Cayman Islands, he added: “You don’t know what might come your way if you’re in the game.” Noting how business left the BVI when its laws changed, the Summit chief said: “There’s nothing to say that can’t happen again.”

“I think that at the moment, based on what we heard in Bimini, the legislation is there, the environment is there, the responsiveness of the regulator is there,” Mr Ingraham said of the Bahamas’ prospects. “It’s a matter of getting the word out and marketing the jurisdiction to captive managers, letting them know we’re open for business, are willing to meet them, sit down and do whatever it takes to get their business. The potential is as long as a piece of string.”

If the Bahamas was successful, among the most immediate beneficiaries would be attorneys and accountants, who would be involved in setting up and managing captives here. The second phase would involve inducing captive management companies to establish full-time offices in the Bahamas and hire staff.

Apart from captives, Mr Ingraham said another aspect of the international insurance sector – life insurance – could also generate business for the Bahamas. He added that life insurance products were a potential private wealth management tool, and received favourable tax treatment in some jurisdictions.