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OFFSHORE INSURANCE ACT

GATEWAY FOR INSURERS AND REINSURERS TO THE US AND LATIN AMERICA

Due to its many advantages, including direct • Exemption from premium taxes
access to the US and other international markets, • Exemption on dividends and other profit distri-
Puerto Rico is a gateway for insurers and reinsur- butions made by the International Insurer and
ers wishing to enter the Latin American insurance International Insurer Holding Company
and financial markets.
• Exemption on municipal franchise and real and
Since 2005, the international insurers and rein- personal property taxes
surers division of the Office of the Commissioner
of Insurance of Puerto Rico has sought to pro- • Exemption from withholding taxes on payments
mote Puerto Rico as an important member of the of dividends and other profit distributions made to
international insurance arena. The Government third parties, and from filing tax returns with the
of Puerto Rico adopted this initiative as part of its Puerto Rico Internal Revenue Service
economic agenda. • Isolation of the proceeds and benefits paid by
international insurers because of liquidation
procedures from income taxes
LEGAL BACKGROUND
• $1.2 million tax exemption on net income, applicable
Act 399 and Act 400 in Chapter 61 of the Puerto at the individual cell level for Protected Cell Com-
Rico Insurance Code were adopted in order to es- pany arrangements and at the company level. Pre-
tablish the basis for the International Insurance Cen- ferred 4 % tax rate on net income guaranteed by a
ter (IIC), which provides a competitive environment decree effective over a renewable period of 15 years
for insurers and reinsurers to cover risks outside of
Puerto Rico, under a secure and flexible regulatory
system, with attractive tax benefits. Act 98 provides BUSINESS OPPORTUNITIES
a long-term tax status that will guarantee the tax The International Insurance Center is a platform for
treatment of international insurers and reinsurers the following business activities, among others:
for an initial period of 15 years, renewable for two
additional 15-year periods. • Alternative risk management strategies as captive
or associated captives insurers
International insurance entities have various alter-
native ways to organize and operate within the IIC. • Insurers or reinsurers’ vehicle to enter Latin
These options include operating as an international America or US markets
insurance holding company, as an international • Special purpose vehicles
insurer or a branch of an international insurer and • Vehicle for integrated insurance plans
protected cell arrangements.
• Corporate reorganization using international
insurers holding companies
TAX TREATMENT • Segregated assets plans to serve high net worth

Tax exemptions conferred under the International individual markets
Insurers and Reinsurers Act of Puerto Rico include: • Securitization programs

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