MAURITIUS
FOCUS
32 AN EMERGING
CAPTIVE DOMICILE
Richard Li of Rogers Capital
highlights the potential of Mauritius
as it evolves in the captive landscape
34 THE RISE OF
MAURITIUS
Bipin Ragoo of SWAN examines the
growth of Mauritius in the captive
industry and looks to its future
MAURITIUS FOCUS | ROGERS CAPITAL
Richard Li of Rogers Capital highlights the potential of
Mauritius as it evolves in the captive landscape
he origins of captive insurance
in Mauritius can be traced back
as early as the 1990s with the
introduction of the Mauritius
Offshore Business Activities
(MOBA) Act 1992. While the MOBA Act 1992
laid down the foundation of the legislative
framework for the formation of captives,
its purpose was also to facilitate the formation of a whole range of offshore business
activities structures in Mauritius, including
offshore banking.
This marked the beginning of Mauritius
as an offshore financial centre. With the
highly advantageous Mauritius-India Double Taxation Avoidance Treaty, the country,
despite itself, became unavoidable for foreign investors seeking to invest into India.
Mauritius quickly rose to become the highest source of FDI into India and made itself
a reputation. Unfortunately, that overshadowed to a large extent everything else
it could offer as a jurisdiction, including
the numerous advantages it has as a captive
jurisdiction.
In the meantime, the Insurance Act
2005 became effective on 28 September
2007 and superseded existing captive legislations, making it more difficult for the
creation of captives in Mauritius by substantially increasing the minimum capital
and putting in place onerous governance
requirements.
Recognising Mauritius’ huge potential
as a captive jurisdiction and wanting to
diversify, the government of Mauritius
introduced new captive legislations in
Rich
hard Li
Rich
hard Lii is a fellow of the Institute and Faculty
of Actuaries. He previously worked as a consulting
actuary in London for firms like PwC and KPMG
and has over 15 years of experience in the insurance industry. He heads Rogers Capital’s actuarial
and captive insurance business.
2016 to separate captives from local insurance companies. Capital and governance
requirements have been softened, hence
facilitating the formation of captives.
Dom
micile
e of ch
hoice
e fo
or Africcan bu
usine
esssess
Mauritius has attracted a lot of interest as a
captive domicile in the last couple of years,
especially from businesses with large African-based operations. Many agree that regulations in African countries are very challenging and many businesses find it almost
impossible to obtain locally either a competitive premium for the desired insurance
cover or simply enough capacity from local
insurers to protect their business.
The island of Mauritius has the unique
advantage of location and reputation of an
established financial centre in the region
which can offer sophisticated solutions
for these African businesses by designing
a combination of legal structure and fully
compliant insurance programmes. Indeed,
many African businesses have their head-
32
March 2017
captivereview.com
quarters in Mauritius, making the island a
natural home for their captives.
Furthermore, Mauritius is the jurisdiction with one of the largest number of
Double Taxation Agreements with African
countries and forms part of the Southern
African Development Community (SADC)
and the Common Market for Eastern and
Southern Africa (COMESA).
An intern
natio
onal fina
anccia
al centre
e
Mauritius is internationally recognised
as a well-regulated and transparent jurisdiction and adheres to international best
practices and standards. Not unsurprisingly, it has received commendable rankings on international benchmarks, including the World Bank Doing Business, Global
Competitiveness, Corruption Perceptions
indices, Mo Ibrahim Index of African Governance and Forbes Survey of Best Countries for Business.
Investors choose Mauritius for its reputation as a jurisdiction of substance and
its rigorous but business-friendly regulatory framework. We understand that these
are very important to institutional investors and that tax is often just a secondary
benefit.
The government is committed to build
on that reputation and this is evidenced
by the authorities’ decision to be an
early adopter of the Common Reporting
Standards and by being one of the first
countries to sign up to it. We are already
Fatca compliant.
The regulator has also introduced the
ROGERS CAPITAL | MAURITIUS FOCUS
Insurance (Risk Management) Rules last
year, incorporating all of the International
Association of Insurance Supervisors (IAIS)
core principles and the local insurance
industry understands that the international insurance industry is moving to a
risk-based supervisory approach.
In addition, Mauritius boasts an
excellent pool of bilingual insurance,
financial and legal professionals and has
a hybrid legal system, governed by both
the French Code Napoleon and the British law based on the common law.
The absence of exchange control in
Mauritius also facilitates the movement
of currency in and out of the country
which is in contrast with many African
countries, including South Africa.
Cap
ptive legisllation
n
The Captive Insurance Act 2016 came
in force in January 2016 and allows for an
entity to carry out pure captive insurance
business which is the business of undertaking liability restricted exclusively to the
risks of the parent and affiliated business.
The rules for third-party captives have
already been drafted and are expected to
come in to force during the first half of 2017.
A pure captive must maintain a minimum
capital and a surplus that is greater of:
a) MUR3m ($85,000)
b) The sum of asset capital and underwriting capital
Asset capital is based on the type of assets
held by the captive, with cash attracting
zero charge and corporate bonds, a 4%
charge.
“M
Mauritiu
us has atttraccted
da
lott off inttere
estt as a caaptiv
ve
do
omicile
e in th
he lasst coup
ple
e
off ye
earss, especially
from bussin
nessses with
h
larrge Afrriccan-b
bassed
operratio
onss”
Underwriting capital is 10% of the greater
of: (a) max (gross written premiums, gross
earned premium) less approved ceded premiums, (b) gross outstanding claim liability
less approved reinsurer’s share in technical
provisions.
A captive must have a board of directors
composed of not less than three directors,
with at least one being a resident director.
A captive also needs to appoint an actuary who is responsible for carrying out
an annual actuarial investigation. Annual
returns on the insurance business of the
33
March 2017
captivereview.com
captive also have to be submitted to the
regulator.
To operate as a captive, an application
for a licence has to be made to the Financial
Services Commission by a captive agent
and the application pack must include
a business plan, the investment policy
of the captive insurance business and
information on the adequacy of the loss
prevention programme.
Rogerrs Cap
pital
Rogers Capital is a leading provider of
corporate, technology and financial
services in Mauritius, offering a suite
of professional services, all under one
roof. Our corporate services include
corporate administration, fund administration, tax advisory, accounting and
payroll outsourcing, actuarial services
and captive insurance management.
Our team of experienced professionals
advise and assist businesses on the optimum corporate structure and insurance/
reinsurance programme through the use
of a captive in Mauritius and our captive
insurance management team provides all
of the administrative and operational support required to set up and run a captive.
Rogers Capital is the Fintech arm of the
Rogers Group, one of the largest conglomerates in Mauritius, listed on the Stock
Exchange of Mauritius and with more than
115 years of pioneering story.