Alberta: Considerations in Establishing a New Captive Jurisdiction

The determination of which domicile to choose when setting up a captive depends largely on the risk profile of the owner, the flexibility of the captive regulator, the capital and solvency requirements of the domicile, taxation, and the location of the risks to be insured in the captive. [...] The process of domicile selection by a company considering a captive involves a comprehensive examination of the key considerations that will determine the benefits and costs of the captive. [...] This includes both the captive business climate (e.g., what is done to support the industry and relationships with the regulator) and the actual legislation and regulations that govern the captive industry, such as the licensing process, requirements for ongoing operations, capital and solvency requirements, and the time needed to form a captive and gain regulatory approval. [...] This is because a key interest of the regulator will be the financial ability of the parent to repay the loan, possibly with the captive calling in the loan on short notice, to ensure the captive remains solvent (Newton Media Ltd. [...] Factors to consider when approving the admissibility of an IL for regulatory capital should include the ability of the captive to call the loan on short notice, any collateral that the loan is secured against, and the financial standing of the recipient of the loan within the captive’s corporate group.