recent developments & issues; segregated accounts companies & rent-a-captives
TRANSCRIPT
Recent Developments & Issues; Segregated Accounts Companies
& Rent-a-Captives
SAC PANEL
• Andy McComb
President & CEO, CTC Allegro Insurance & Risk Management Ltd
President, Lansdowne Insurance Company, Ltd
• Brad Adderley
Partner, Appleby
• Jonathan Reiss
Partner, Ernst & Young
• Richard Irvine
Tax Partner, PricewaterhouseCoopers
Segregated Accounts Companies
ACCOUNTING/AUDIT
TAXATION
LEGAL/REGULATORY
OPERATIONAL
Segregated Accounts Companies
ACCOUNTING/AUDIT
TAXATION
LEGAL/REGULATORY
OPERATIONAL
What is the prevalent presentation format for cell information in GAAP financial statements of SACs?
Segregated Accounts Companies
ACCOUNTING/AUDIT
TAXATION
LEGAL/REGULATORY
OPERATIONAL
Should individual cells require their own audit opinion?
Segregated Accounts Companies
ACCOUNTING/AUDIT
TAXATION
LEGAL/REGULATORY
OPERATIONAL
What will be the likely impact of the convergence of US GAAP with IFRS on SAC accounting?
Segregated Accounts Companies
ACCOUNTING/AUDIT
TAXATION
LEGAL/REGULATORY
OPERATIONAL
Do contractual and/or statutory limitation of liability to individual cell assets affect whether the cell program can be accounted for as insurance?
Segregated Accounts Companies
ACCOUNTING/AUDIT
TAXATION
LEGAL/REGULATORY
OPERATIONAL
What are the current 3 most significant issues experienced in the audit of SACs?
Segregated Accounts Companies
ACCOUNTING/AUDIT
TAXATION
LEGAL/REGULATORY
OPERATIONAL
What is the status of IRS Notice 2008-19 (separate tax election for individual cells)?
Segregated Accounts Companies
ACCOUNTING/AUDIT
TAXATION
LEGAL/REGULATORY
OPERATIONAL
Can a cell satisfy the “insurance risk” requirements of the IRS Code?
Segregated Accounts Companies
ACCOUNTING/AUDIT
TAXATION
LEGAL/REGULATORY
OPERATIONAL
In meeting the tax “insurance risk” requirement does the SAC violate its section 56 Direction if its committed to facilitating only “fully funded” programs?
Segregated Accounts Companies
ACCOUNTING/AUDIT
TAXATION
LEGAL/REGULATORY
OPERATIONAL
Is a preferred share investment in a cell considered an investment in a Passive Foreign Investment Company?
Segregated Accounts Companies
ACCOUNTING/AUDIT
TAXATION
LEGAL/REGULATORY
OPERATIONAL
If a SAC structures its programs under Participating Agreements rather than Preferred Shares, and elects to be taxed as a US corporation, can it deduct “Good Experience Returns” or provision for “Good Experience Returns” as a tax expense?
Segregated Accounts Companies
ACCOUNTING/AUDIT
TAXATION
LEGAL/REGULATORY
OPERATIONAL
Can the General Account or “Core” enter into a contract with an individual cell?
Segregated Accounts Companies
ACCOUNTING/AUDIT
TAXATION
LEGAL/REGULATORY
OPERATIONAL
Under what circumstances can a cell transact business with another cell?
Segregated Accounts Companies
ACCOUNTING/AUDIT
TAXATION
LEGAL/REGULATORY
OPERATIONAL
If an individual cell has multiple owners, what is the potential liability of one of the owners for funding shortfalls of other co-owners?
Segregated Accounts Companies
ACCOUNTING/AUDIT
TAXATION
LEGAL/REGULATORY
OPERATIONAL
Have there been any legal challenges to the sanctity of closed cells?
Segregated Accounts Companies
ACCOUNTING/AUDIT
TAXATION
LEGAL/REGULATORY
OPERATIONAL
Is Bermuda considering legislation for incorporated cell companies (ICCs)?
Segregated Accounts Companies
ACCOUNTING/AUDIT
TAXATION
LEGAL/REGULATORY
OPERATIONAL
What main advantages would ICCs offer over SACs?
Segregated Accounts Companies
ACCOUNTING/AUDIT
TAXATION
LEGAL/REGULATORY
OPERATIONAL
What potential liability do the directors of SACS have in the event of the liquidation of a cell?
Segregated Accounts Companies
ACCOUNTING/AUDIT
TAXATION
LEGAL/REGULATORY
OPERATIONAL
With the expected increased regulation of the financial services industry, what is the regulatory outlook for SACs?
Segregated Accounts Companies
ACCOUNTING/AUDIT
TAXATION
LEGAL/REGULATORY
OPERATIONAL
What are the main operational challenges arising from the credit crisis?
Segregated Accounts Companies
ACCOUNTING/AUDIT
TAXATION
LEGAL/REGULATORY
OPERATIONAL
What is the prevalent business being facilitated by SACs this year?
Segregated Accounts Companies
ACCOUNTING/AUDIT
TAXATION
LEGAL/REGULATORY
OPERATIONAL
What do you consider “fully funded” with respect to meeting Board underwriting guidelines and/or regulatory requirements?
Segregated Accounts Companies
ACCOUNTING/AUDIT
TAXATION
LEGAL/REGULATORY
OPERATIONAL
Can a SAC make distributions from an individual cell ahead of receiving a release of policy liability or commutation of all reinsurance contracts?
Recent Developments & Issues; Segregated Accounts Companies
& Rent-a-Captives