Captive Insurance Times Domicile Guidebook 2017 www.captiveinsurancetimes.com Luxembourg Luxembourg is internationally known for reinsurance and especially as a captive reinsurance domicile. It has a fully diversified financial centre and is the largest captive reinsurance domicile in the EU. Companies from around the globe have domiciled more than 200 captive reinsurance companies in Luxembourg, choosing it for a variety of reasons. They include its stable democracy and strong economy situated in the heart of Europe, its economic, social and political stability, which ensure a secure legal and tax framework, as well as a skilled multilingual workforce, excellent infrastructure, flexible and open-minded authorities, and a modern legal and regulatory framework for captive reinsurance companies. Luxembourg legislation requires that reinsurance companies collect adequate technical and balancing reserves, so allowing captives with less favourable risk diversification to build large technical reserves to cover their ‘high risk-low frequency’ exposures. It has implemented the Solvency II regime via the modified law of 7 December 2015 on the insurance sector. Any reinsurance company must be licensed by the minister before commencing its activities. The issuance of the licence is subject to the following main requirements: • Corporate purpose limited to the acceptance of risks ceded by insurance or reinsurance companies to the exclusion of direct insurance business • Central administration must be established in Luxembourg • Minimum capital requirement EUR 3.6 million for reinsurance companies and EUR 1.2 million for captive reinsurance companies • Transparency of the direct and indirect shareholding structure • Quality of the shareholders deemed satisfactory in view of the need the ensure the sound and prudent management of the company • Appoint a local manager who must be authorised by the minister • Implement among others reliable administrative and accounting procedures and adequate internal control mechanisms More information on captive reinsurance in Luxembourg can be found at at www.caa.lu. Luxembourg

Luxembourg - Captive insurance · Luxembourg Luxembourg is ... so allowing captives with less favourable risk diversification to build large technical reserves to cover their ‘high

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Page 1: Luxembourg - Captive insurance · Luxembourg Luxembourg is ... so allowing captives with less favourable risk diversification to build large technical reserves to cover their ‘high

Captive Insurance Times Domicile Guidebook 2017

www.captiveinsurancetimes.com

Luxembourg

Luxembourg is internationally known for reinsurance and especially as a captive reinsurance domicile. It has a fully diversified financial centre and is the largest captive reinsurance domicile in the EU. Companies from around the globe have domiciled more than 200 captive reinsurance companies in Luxembourg, choosing it for a variety of reasons.

They include its stable democracy and strong economy situated in the heart of Europe, its economic, social and political stability, which ensure a secure legal and tax framework, as well as a skilled multilingual workforce, excellent infrastructure, flexible and open-minded authorities, and a modern legal and regulatory framework for captive reinsurance companies.

Luxembourg legislation requires that reinsurance companies collect adequate technical and balancing reserves, so allowing captives with less favourable risk diversification to build large technical reserves to cover their ‘high risk-low frequency’ exposures.

It has implemented the Solvency II regime via the modified law of 7 December 2015 on the insurance sector. Any reinsurance company must be licensed by the minister before commencing its activities.

The issuance of the licence is subject to the following main requirements:

• Corporate purpose limited to the acceptance of risks ceded by insurance or reinsurance companies to the exclusion of direct insurance business

• Central administration must be established in Luxembourg• Minimum capital requirement EUR 3.6 million for reinsurance companies and EUR 1.2 million for

captive reinsurance companies• Transparency of the direct and indirect shareholding structure• Quality of the shareholders deemed satisfactory in view of the need the ensure the sound and

prudent management of the company• Appoint a local manager who must be authorised by the minister• Implement among others reliable administrative and accounting procedures and adequate internal

control mechanisms

More information on captive reinsurance in Luxembourg can be found at at www.caa.lu.

Luxembourg