The Island of Mauritius has, since the late 1980s, and more significantly since 1992, sought to establish itself as a credible offshore financial services centre with a natural bias towards Indian Ocean rim countries.
Four hours out from Johannesburg as the aircraft begins its decent the Captain wishes you a pleasant holiday in Paradise on Earth. Amongst the couple of hundred or so holidaymakers, an increasing number of briefcases and laptops can be observed.
So what is currently creating the interest in Mauritius as an offshore insurance centre? The answer almost certainly lies in the enthusiasm and commitment offered by the Mauritius Offshore Business Administration Authority (MOBAA) which acts as a regulatory and supervisory body for non banking offshore business. There is no doubt that there is a strong willingness to do business as an offshore domicile, and this willingness is complemented by a firm, yet flexible, regulatory regime which provides the backbone upon which Mauritius is building its attractiveness. This attractiveness is offered to captive insurance company owners through the application of well tried and tested principals of regulation developed from experience gleaned from other territories.
Capitalisation and solvency requirements are not dissimilar to other jurisdictions. The Offshore Insurance Regulations 1992 require minimum paid up capital of $100,000 and a margin of solvency of the greater of 15% of net premium income or $100,000 for assets over liabilities. Minimum paid up capital in respect of long term insurance business is $250,000.
Statutory reporting from the company's resident principal representative requires:
• The furnishing of audited financial statements.
• A certificate of margin of solvency.
• A certificate of liquidity ratio.
• In respect of long term business an actuarial valuation of adequacy of premiums and loss reserves.
Captives themselves should apply for registration through an offshore management company licensed under Section 23 of the MOBA Act and are considered by the captive admissions committee of MOBAA.
The law prescribes the application form to be used and requires a very straightforward approach including provision of:
• Memorandum and Articles of Association.
• The name of the principal representative.
• A business plan.
With a straightforward format of application there is no doubt that attractiveness can be offered to prospective parent companies but this does have to be complemented by cost advantage and resident experience. It is in the last two or three years that there has been strong recognition of the need to bolster insurance experience.
Mauritian law is a hybrid of English Common Law, and the French Code Napoleon, thus ensuring common ground with other captive and offshore jurisdictions. The Companies Act is substantially modelled on the United Kingdom's Companies' Act of 1948.
This is being actively pursued with the move on the part of a number of international groups to establish a presence in Mauritius. Predominantly these groups originate from South Africa, or involve management companies with a strong commitment to servicing clients in that territory. The relocation of key staff from other territories, introducing expertise in offshore insurance matters to the local workforce, is a welcome development and will only serve to assist in the development of the local marketplace.
From a fiscal standpoint, Mauritius is well served by double tax treaties and its membership of the Southern African Development Community (SADC) further assists in relation to its dealings with African territories. Its modest cost base provides advantage over domiciles oriented to sterling or United States dollar fees, and its geographic position certainly places it well strategically to serve territories on the Indian Ocean rim.
As with all territories seeking to establish in a new field, there are downsides present. Time zone and distance present their operating difficulties, but these issues are readily overcome with ever increasing use of e-mail and video-conferencing. There is no doubt that Mauritius, will continue to generate interest from the international business community, aided by strong enthusiasm within and a workforce estimated at just over half a million to adapt and develop in new sectors.
These developments are amply evidenced by growing interest in the captive sector and the ongoing establishment of captive management companies licensed by MOBAA.