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🏛️ '''Exempted company''' is a corporate structure permitted under the laws of certain offshore jurisdictions — most notably Bermuda and the Cayman Islands — that is widely used by [[Definition:Insurance carrier | insurance]] and [[Definition:Reinsurance | reinsurance]] entities, [[Definition:Captive insurance company | captive insurers]], and [[Definition:Special purpose vehicle (SPV) | special purpose vehicles]] involved in [[Definition:Insurance-linked securities (ILS) | insurance-linked securities]] transactions. The "exempted" designation means the company is incorporated primarily for conducting business outside the jurisdiction of incorporation, is exempt from local exchange-control regulations, and — critically for the insurance industry — typically benefits from a government guarantee that no income, capital gains, or withholding taxes will be imposed on the company for a specified period, often extending twenty years or more from the date of incorporation. This tax-neutral status has made the exempted company one of the foundational building blocks of the global reinsurance and alternative capital market.

🔧 Structurally, an exempted company in Bermuda is governed by the Companies Act 1981 and must maintain a registered office on the island and appoint a local resident secretary or registered agent, though its directors and shareholders may be located anywhere in the world. In the Cayman Islands, the Companies Act provides a similar framework. For insurance purposes, these entities must also obtain the appropriate license from the local regulatory authority — the [[Definition:Bermuda Monetary Authority (BMA) | Bermuda Monetary Authority (BMA)]] or the Cayman Islands Monetary Authority (CIMA), respectively — which imposes [[Definition:Solvency | solvency]], [[Definition:Capital adequacy | capital adequacy]], and reporting requirements that have been increasingly aligned with international standards. The BMA's regulatory regime, for instance, has achieved [[Definition:Solvency II | Solvency II]] equivalence recognition from the European Union, meaning Bermuda-domiciled exempted reinsurers can access EU markets on comparable terms to EU-based reinsurers. Exempted companies are prohibited from conducting business with local residents (with limited exceptions), reinforcing their nature as vehicles for international risk transfer.

🌐 The prevalence of exempted companies in the insurance landscape reflects the industry's need for tax-efficient, well-regulated, and administratively flexible corporate vehicles to house reinsurance operations, [[Definition:Catastrophe bond | catastrophe bond]] SPVs, [[Definition:Sidecar | sidecar]] structures, and [[Definition:Captive insurance company | captive insurance programs]]. Bermuda alone hosts a substantial share of the world's reinsurance capacity, and the exempted company structure has been central to this concentration. For institutional investors deploying capital into the [[Definition:Insurance-linked securities (ILS) | ILS]] market, the exempted company — often structured as an exempted limited partnership for fund vehicles — provides a transparent, jurisdiction-neutral wrapper that avoids creating unintended tax liabilities for investors. While the structure carries reputational scrutiny in the context of global tax-reform debates, the regulatory substance of the Bermuda and Cayman regimes — including robust [[Definition:Anti-money laundering (AML) | anti-money laundering]] frameworks and adherence to OECD information-exchange standards — has helped exempted insurance companies maintain credibility with counterparties, regulators, and [[Definition:Rating agency | rating agencies]] worldwide.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Captive insurance company]]
* [[Definition:Bermuda Monetary Authority (BMA)]]
* [[Definition:Special purpose vehicle (SPV)]]
* [[Definition:Insurance-linked securities (ILS)]]
* [[Definition:Solvency II]]
* [[Definition:Offshore reinsurance]]
{{Div col end}}

Definition:Exempted company - Revision history

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