Japan Tapping Hawaii For Captives
Hawaiis efforts to become the captive leader of the Pacific Rim moved a step closer this month when it licensed its second non-U.S. taxpaying Japanese company insuring business in Japan.
The captive owner, Citizen Watch Company Ltd., is headquartered in Tokyo and is one of the leading watch manufacturers in the world. Citizen is the 100th captive insurer licensed to date in Hawaii–80 of which are active.
“Hawaii is becoming like a Bermuda for Japan,” said Craig Watanabe, captive insurance administrator for the Hawaii Insurance Division in Honolulu. “With a Hawaii captive, companies can invest directly into the U.S. market and get stable and high investment yields relative to what they can get in Japan. They can also use the money to pay losses in Japan.”
Managed by Marsh Management Services Inc. in Honolulu, the captive is named Aquablue Insurance Company Inc. Alison Mortlock, branch manager for Marsh Management Services in Honolulu, explained Citizens choice of Hawaii as a domicile.
“Singapore used to be the domicile of choice for Japanese captives, but the reduction in the income tax in Singapore took it below the 25 percent threshold,” she said. “As long as a Japanese company pays at least 25 percent income tax in its domicile, the Japanese government wont ask for additional taxes.”
Mr. Watanabe said Japanese organizations also like the idea of forming a captive in Hawaii because of its convenience and business environment.
“We have a large population of Japanese and Asians here,” he said. “Our hotel facilities are very good, we speak Japanese pretty regularly, and once they get into Hawaii for their board meetings they can go anywhere else in the U.S.”
Mr. Watanabe said he is currently working with several other Japanese companies, which could form captives by “the end of this year.”
Hawaii was also chosen because “its one of the most flexible regulatory climates,” Ms. Mortlock added. “Craig [Watanabe] has a lot of personal discretion and the Japanese like that–they like the personal touch. Its a much more formal process with the Japanese and relationships are key.”
Aquablue, licensed Aug. 10, will begin with four lines of coverage–cargo, inland transit, property and workers compensation, Ms. Mortlock said. “Once [Citizen] sees that the captive is operating smoothly they will branch into other uses,” she added.
Before the formation of Aquablue–a startup captive–Citizen worked with a total of 12 insurers, she said. “Because they did not want to lose their relationships with the insurers they work with, they kept them as partners for fronting and reinsurance,” she added.
Hawaiis first Japanese captive owned by a Japanese corporation insuring risk in Japan was Heiwa Insurance Inc., licensed on March 30. The captive is owned by Heiwa Corp., Japans largest developer and manufacturer of pachinko game-machine systems.
Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, August 27, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.
Want to continue reading?
Become a Free PropertyCasualty360 Digital Reader
Your access to unlimited PropertyCasualty360 content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Breaking insurance news and analysis, on-site and via our newsletters and custom alerts
- Weekly Insurance Speak podcast featuring exclusive interviews with industry leaders
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical converage of the employee benefits and financial advisory markets on our other ALM sites, BenefitsPRO and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
