Keywords
insurance captivates
PCC or cellular capital companies
fronting
How to Cite
Abstract
“Offshore societies” are entities constituted in tax havens and characterized by the development of their corporate activities in a different country from the one they were set up. “Captive companies” are a type of offshore society involved in insurance activities, and their characteristics include being constituted by a parent company, which may be a part of a holding group or not; and being the recipient of most of
the main company’s risk and that of its subsidiaries. The two major benefits of having a “Captive companies” are:
1. It provides a channel that allows for a smaller fiscal impact to the insurance captive, and to the parent company itself, through different mechanisms contemplated in the law.
2. The second benefit is that it allows the parent company to change and improve the way it manages risk. The lease of “Captive companies” takes place when the capital is at the disposal of other societies that attempt to obtain the previously mentioned benefits, through the payment of a fee. This figure gives place to “Cellular capital companies”, where the capital is divided into cells, which can only be used by the corresponding beneficiary, eliminating any possibility that one single disaster absorbs the totality of an insurance company’s capital. The best way to execute this operation is through the use of a figure known as “fronting”, where a Colombian insurance company subscribes an insurance policy and yields it to a foreign insurance captive.
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