|
Set up Costs
Set up fee |
£5,000 |
(normal minimum, dependent on work) |
| |
|
|
Incorporation |
£750 |
(Includes duty on first £2,000 of capital) |
| |
|
|
Audit of business plan |
£1,175 |
(Estimate £1,000 plus VAT @ 17.5%) |
| |
|
|
One off authorisation fee |
£1,000 |
Payable to Insurance and Pensions Authority |
| |
|
|
Government Duty |
1.6% |
(of authorised capital in excess of first £2,000.
Maximum duty payable £5,000) |
Annual Costs
|
Insurance Licence |
£4,250 |
|
| |
|
|
| Non Executive Directors |
£3,000-£4,000 |
(Estimate – per person) |
| |
|
|
| Audit |
£5,875 |
(Estimate £5,000 plus VAT @ 17.5%) |
| |
|
|
| Management fee |
£45,000 |
(Minimum - dependant on work) |
| |
|
|
| Sundry |
£500 |
|
Management fees (which are exempt from VAT) are determined in accordance with the volume of transactions, number of classes of business underwritten in the Captive, accounting requirements and number of meetings anticipated for the year.
Fees can be structured as a flat charge for the year, payable quarterly in advance; alternatively a minimum/ maximum fee can be agreed with quarterly adjustments made on a time spent basis.
Minimum Capital Requirements/ Solvency Margin
|
Captive |
(Class 12) |
£50,000 |
| Reinsurer |
(Class 11) |
£100,000 |
The Captive must maintain assets that exceed a defined solvency margin at all times: for a Reinsurer this is £100,000; for a Captive: £50,000 plus 10% of net premium written up to £2million, 5% of net premium in excess of £2million.
Example
A Captive with paid up share capital of £150,000 and net premium Income of £900,000 will have a minimum solvency requirement of £140,000 (£50,000 plus 10% of £900,000). With a moderate work-load the cost will be approximately as follows:
Set up Costs: |
|
Set up fee |
£5,000 |
Incorporation |
£750 |
Audit of business plan |
£1,175 |
One off authorisation fee |
£1,000 |
Government Duty |
£2,368 |
Total |
£10,293 |
Annual Costs: |
|
Insurance Licence |
£4,250 |
2 Non Executive Directors |
£6,000 |
Audit |
£5,875 |
Management fee |
£45,000 |
Sundry |
£ 500 |
Total |
£61,625 |
VAT is calculated at 17.5% |
