Global Captive Management
After a short time away from GCM, Ian Bridges has returned as vice president to find that things are still looking bright for Cayman’s captives
Firstly can you give us an overview of Global Captive Management (GCM), and how your role has altered since your return?
As GCM is an independent, privately owned practice and not instructed by various global corporate mandates, the company is able to be very flexible. This flexibility is a huge advantage of GCM and has allowed it to grow into one of the 10 largest captive managers worldwide while maintaining our independent client focus. Our flexibility has allowed us to adapt to the changing needs of the market place and our clients. We hope to continue to evolve with the captive market in the future.
From a personal standpoint, it was pretty much business as usual the day I walked in. I am happy to see some people hired during my first time at GCM are now more senior and there are a few new faces but, as was typical with my past employment with GCM, the atmosphere in the office is still great.
I have a portfolio of my own clients, which I oversee on a daily basis. These clients range from smaller doctor groups to larger Securities and Exchange Commission (SEC) subsidiaries and anywhere in between. I also get involved with any tax issues our clients have, which involves anything from an IRS notice to potential tax planning options. I also get heavily involved from day one on any new client leads because, inevitably, when new US based clients and their captives are being set up—they have a number of US tax questions. This is my area of expertise here at GCM.
I am able to talk with potential new owners, potential new directors and their CFOs, accountants and tax providers who may not understand some of the captive tax issues. These can be in relation to certain outbound transactions (US investors investing outside the US) or the US insurance tax rules. Captive insurance taxation is a niche subject matter so, the earlier I can get involved in any of the new captives discussions, the better. We can then see from the get go, whether a particular captive is going to work and meet their insurance needs while having an understanding of the tax implications. We hope that our unique level of tax experience separates us from other competitors on the island.
If we get into a situation where we have a new captive, there is only one insured in the form of a parent company, and they are looking for a tax deduction on their premiums—then we can discuss the feasibility of different options. My objective is to begin a dialogue of the issues at a high level. GCM does not provide tax advice, per se, so we still highly recommend the client engages a tax provider or attorney. There have been a number of highly reputable accounting and law firms we have worked with in the past and are happy to list these options to a new client.
How does GCM compare with some of the other Cayman-based operations?
Our practice is led by Peter MacKay, who established GCM in 1982 and has been involved with captives in Cayman since the infancy of the industry. Monique MacDonald is our senior vice president and a former regulator, who has a unique insight into government regulations and keeps update with the latest regulatory changes. Jennifer Reid, who has been working with captives on the island since 2002, has an excellent knowledge-base on group captives.
There are a number of high quality captive managers on the island but we are very well established in the marketplace given both our longevity in the captive market along with the size of our captive portfolio. As an independent captive manager we have invested heavily in technology such as various web-based applications to share information through a web portal—but at the end of the day it all comes down to relationships, and that is what GCM really focuses on.
I believe our independence also separates us from some of the other broker owned managers on the island. There are no conflicts of interest with an independent manager, as they work for the best interests of their client. Our goal is to truly maximise the potential of our client’s captives and provide them with information on all available options to make informed decisions. A testament to the quality of service we provide is the fact that we have grown to one of the ten largest captive managers worldwide while maintaining our independence and personalised client focus.
Our captive insurance company to staff ratio is lower than most other captive managers. We are easily able to do this as we are not constricted by corporate mandates or policies from a head office. While there is obviously a cost for GCM, we feel our clients benefit from a higher level of service. This lower ratio also contributes to our staff’s job satisfaction and leads to what I believe is a better than average turnover of our staff, both Caymanians and expatriates, which in turn also benefits our clients.
What are your opinions of the US market, in terms of the new developments in New Jersey and South Carolina?
A number of states have enacted captive legislation and, while we certainly have not seen an outflow of existing captives, there is a potential threat of new US clients looking at their own home states for captives. Entering into both the South Carolina and New Jersey markets have been strategically done to provide specific solutions to our clients.
What do you see as the long-term development of GCM?
There are always people looking for a new jurisdiction. I know when Canada signed the TIEA (Tax Information Exchange Agreement) with the Cayman Islands; people really started looking at Canada as a potential source. Even though some business came out of the TIEA, there is just not an abundance of captive work there compared to the US—given the different litigation environments.
Stakeholders in the captive industry are continuing to look at emerging markets. Recently we have had some leads from the UK and Central Europe—more so than our traditional markets in the US. When we are looking at the recent Cayman Islands’ recent intergovernmental agreements for both US FATCA (Foreign Account Tax Compliance Act) and the FATCA-like UK regime, we are seeing further evidence of globalisation of business.
We are currently working on a captive writing certain risks in China that, four or five years ago, may not have been available. When I first started with captives in 2002, we would wonder which US state a new client lead was going to come from—these days we do not even know which country.
What is Cayman and GCM doing in order to stay ahead of the competition?
If Cayman rested on its laurels, it would be making a mistake. There is a lot of demand and competition in the captive industry so we are always looking to improve.
Evidence of this is the new portfolio insurance company (PIC) law we are developing, which would provide similar benefits as incorporated cell companies such as establishing a cell as a separate legal entity, allowing for a PIC to have its own board of directors and to also contract with other PICs.
We are always looking at innovative solutions because we know that there are jurisdictions out there to compete with—whether they are domiciles for large captives or domiciles for smaller captives perhaps in the 831(b) space. We know that we cannot be complacent, at GCM or in the Cayman Islands as a jurisdiction.
When a client chooses Cayman it is because of its excellent reputation and industry expertise. With over 34 years of experience in the captive arena, the wealth of knowledge here is unparalleled.
