With the enactment of the Insurance Companies
(Amendment) Ordinance 1997 on 1 May 1997, concessions are
well in place in the territory's regulatory framework to provide
incentives for multinational conglomerates to establish their
captive insurers in Hong Kong. It would be an infallible choice
for you to make Hong Kong the home of your captive insurance
operations.
Salient regulatory concessions to a captive
insurer are highlighted as follows :
Item
General
Business Insurer
Captive
Insurer
Minimum Capital
Requirement:
HK$10 million
HK$2 million
Solvency Margin:
The greatest of:
a.
generally 20% of the relevant
premium income; or
b.
generally 20% of the relevant claims outstanding;
or
c.
HK$10 million
The greatest of:
a.
5% of the net premium income;
or
b.
5% of the net claims outstanding;
or
c.
HK$2 million
Requirement
for Assets in Hong Kong:
To maintain assets
in Hong Kong of an amount not less than 80% of its Hong
Kong liabilities plus solvency margin
Exempted
Valuation
Regulation:
Assets and liabilities
to be valued on statutory basis as prescribed by Valuation
Regulation
Assets and liabilities
to be valued on the basis of Generally Accepted Accounting
Principles
In addition, a captive is also exempted
from the requirements to demonstrate to the Insurance Authority
before authorization that :
it has undertaken
a feasibility study in respect of its proposed operation
in or from Hong Kong;
it would not engage
in a "fronting" operation;
it would be managed
and operated independently of its group.
