MANAGEMENT OF THE MANAGEMENT OF THE CAPTIVES OPERATIONSCAPTIVES OPERATIONS

PRESENTED BY:PRESENTED BY:

CHARMAIN AGGARWALCHARMAIN AGGARWAL

BARBARA FAWCITTBARBARA FAWCITT

3 CYCLES OF OPERATIONS3 CYCLES OF OPERATIONS

FISCAL REPORTING CYCLEFISCAL REPORTING CYCLE

UNDERWRITING CYCLEUNDERWRITING CYCLE

MEETING CYCLEMEETING CYCLE

FISCAL REPORTING CYCLEFISCAL REPORTING CYCLE

Financial ReportingFinancial Reporting AuditAudit Tax FilingsTax Filings Regulatory FilingsRegulatory Filings

FISCAL REPORTING CYCLEFISCAL REPORTING CYCLEFINANCIAL REPORTINGFINANCIAL REPORTING

Timing of ReportingTiming of Reporting Monthly, Quarterly, AnnuallyMonthly, Quarterly, Annually

Duties for ReportingDuties for Reporting Co-ordinate and receive recordsCo-ordinate and receive records Prepare management accountsPrepare management accounts

Financials and notesFinancials and notes Working papers and schedulesWorking papers and schedules

Distribute Management AccountsDistribute Management Accounts

FISCAL REPORTING CYCLEFISCAL REPORTING CYCLEAUDITAUDIT

Planning MeetingPlanning Meeting Engagement LetterEngagement Letter ConfirmationsConfirmations Year End Loss RunYear End Loss Run Year End Actuarial ReportYear End Actuarial Report Year End Tax CalculationYear End Tax Calculation Year End Management AccountsYear End Management Accounts Audited StatementsAudited Statements

FISCAL REPORTING CYCLEFISCAL REPORTING CYCLETAX FILINGSTAX FILINGS

Co-ordinate with Tax ConsultantCo-ordinate with Tax Consultant Beware of Filing DeadlinesBeware of Filing Deadlines

Big Penalties if missedBig Penalties if missed Examples of Filings & PaymentsExamples of Filings & Payments

Quarterly Tax DepositsQuarterly Tax Deposits 1120 Income tax returns1120 Income tax returns March 15 1120 filing extensionMarch 15 1120 filing extension 720 FET returns 720 FET returns

FISCAL REPORTING CYCLEFISCAL REPORTING CYCLEREGULATORY FILINGSREGULATORY FILINGS

File Audited StatementsFile Audited Statements Inform filingInform filing Email copy of audited statementsEmail copy of audited statements

Deadline 6 months after Fiscal Year Deadline 6 months after Fiscal Year EndEnd

FISCAL REPORTING CYCLE DECEMBER 31 YEAR ENDFISCAL REPORTING CYCLE DECEMBER 31 YEAR ENDJJAANN

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Quarterly ReportingQuarterly Reporting ►► ►► ►► ►►Audit – Planning MeetingAudit – Planning Meeting ►►Audit – Engagement LetterAudit – Engagement Letter ►►Audit – ConfirmationsAudit – Confirmations ►►Year End Loss RunYear End Loss Run ►►Year End Actuary ReportYear End Actuary Report ►►Year End Tax CalculationYear End Tax Calculation ►►Management Accounts to AuditorManagement Accounts to Auditor ►►Audited StatementsAudited Statements ►►CIMA FilingCIMA Filing ►►

UNDERWRITING CYCLEUNDERWRITING CYCLE

Underwriting period may be different Underwriting period may be different than than

fiscal periodfiscal period RenewalRenewal Loss Runs/Cession statementsLoss Runs/Cession statements PoliciesPolicies Premium collectionPremium collection

UNDERWRITING CYCLEUNDERWRITING CYCLERENEWALRENEWAL

Determination of LimitsDetermination of Limits Board ApprovalBoard Approval

Determination of PremiumDetermination of Premium Actuarial Funding StudyActuarial Funding Study

Reinsurance renewalReinsurance renewal Pricing and Board ApprovalPricing and Board Approval

UNDERWRITING CYCLEUNDERWRITING CYCLELOSS RUNSLOSS RUNS

Provided by a TPA Provided by a TPA annually/quarterlyannually/quarterly

Loss Runs tied to paids in FSLoss Runs tied to paids in FS Year End losses tied to losses in Year End losses tied to losses in

Actuarial ReportActuarial Report Serious Claims Reports to Serious Claims Reports to

ReinsurersReinsurers

UNDERWRITING CYCLEUNDERWRITING CYCLEPOLICIESPOLICIES

Issuance of policies at beginning of Issuance of policies at beginning of underwriting cycleunderwriting cycle Written by brokerWritten by broker Board Approval – executed by Board Approval – executed by

authorized representativeauthorized representative Cover notesCover notes

Receipt of Reinsurance policiesReceipt of Reinsurance policies Reviewed by counsel/broker/managerReviewed by counsel/broker/manager

UNDERWRITING CYCLEUNDERWRITING CYCLEPREMIUMPREMIUM

Premium determined by Actuarial Premium determined by Actuarial Funding StudyFunding Study

Distribution of Premium invoices Distribution of Premium invoices (annual/quarterly/monthly)(annual/quarterly/monthly) Timely collectionTimely collection Investment of incoming premiumInvestment of incoming premium

Consideration of Premium HolidayConsideration of Premium Holiday Timely payment of reinsurance premiumTimely payment of reinsurance premium

Consider if FET payable on premium cededConsider if FET payable on premium ceded

UNDERWRITING CYCLE - OCT 1 TO SEPT 31UNDERWRITING CYCLE - OCT 1 TO SEPT 31

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Determination of Limits/PremiumDetermination of Limits/Premium ►►Reinsurance renewalReinsurance renewal ►►Loss RunsLoss Runs ►► ►► ►► ►►Serious Claims Reports to reinsurersSerious Claims Reports to reinsurers ►► ►► ►► ►►Issuance of Policies/Receipt of Issuance of Policies/Receipt of Reinsurance PoliciesReinsurance Policies ►►Actuarial Funding StudyActuarial Funding Study ►►Premium collectionPremium collection ►► ►► ►► ►►Premium Holiday considerationPremium Holiday consideration ►►Payment of FET on Reinsurance Payment of FET on Reinsurance Premium cededPremium ceded ►►

MEETING CYCLEMEETING CYCLE Governed by the Articles of AssociationGoverned by the Articles of Association

Frequency of Meetings Frequency of Meetings Meeting proceduresMeeting procedures

Manager will coordinateManager will coordinate DatesDates VenueVenue AgendaAgenda Meeting materialsMeeting materials Notices & ProxiesNotices & Proxies Auditor attendanceAuditor attendance

MEETING CYCLEMEETING CYCLETYPES OF MEETINGSTYPES OF MEETINGS

Board of Directors MeetingBoard of Directors Meeting Most Operating decisions and approvals made hereMost Operating decisions and approvals made here Proxy Meetings are acceptable if board can not meetProxy Meetings are acceptable if board can not meet

Annual General Meeting Annual General Meeting (AGM)/Shareholders Meeting (AGM)/Shareholders Meeting Auditor Appointments and Dividend Auditor Appointments and Dividend

approvalsapprovals Committee Meetings Committee Meetings

(Finance/Claims/Executive)(Finance/Claims/Executive) Sub groups created to perform certain Sub groups created to perform certain

tasks/make recommendations to the tasks/make recommendations to the Board of DirectorsBoard of Directors

MEETING CYCLEMEETING CYCLETYPICAL MEETING AGENDATYPICAL MEETING AGENDA

Approval of Prior Meeting MinutesApproval of Prior Meeting Minutes Appointment of Service ProvidersAppointment of Service Providers Approval of Audited Financial Approval of Audited Financial

StatementsStatements Approval of Underwriting Approval of Underwriting

Limits/Premium/ PoliciesLimits/Premium/ Policies Claims reviewClaims review Investment reviewInvestment review Director and Officer appointmentsDirector and Officer appointments

MEETING CYCLEMEETING CYCLETYPICAL MEETING AGENDATYPICAL MEETING AGENDA

Cont.Cont. Risk Management Framework reviewRisk Management Framework review Business Plan reviewBusiness Plan review DividendsDividends Review reinsurers ratingsReview reinsurers ratings Budget ApprovalBudget Approval Legal UpdatesLegal Updates Cayman Islands UpdatesCayman Islands Updates

MEETING CYCLEMEETING CYCLE

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Finance Committee MeetingFinance Committee Meeting ►► ►► ►►Board of Director MeetingsBoard of Director Meetings ►► ►► ►►Annual General MeetingAnnual General Meeting ►►Executive and Claims Committee Executive and Claims Committee MeetingsMeetings ►► ►► ►►Distribute Notices and ProxiesDistribute Notices and Proxies ►► ►► ►► ►► ►► ►►Schedule meeting with RegulatorSchedule meeting with Regulator ►►Auditor attendance at Finance/Board Auditor attendance at Finance/Board MeetingMeeting ►►

CAPTIVE CYCLESCAPTIVE CYCLES

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Fiscal Reporting Cycle Fiscal Reporting Cycle December 31 Year EndDecember 31 Year End ►► ►► ►► ►► ►► ►► ►►

Underwriting Cycle Policy Underwriting Cycle Policy Period Oct 1 to Sept 30Period Oct 1 to Sept 30 ►► ►► ►► ►► ►►

Meeting Cycle based on Cycles Meeting Cycle based on Cycles aboveabove ►► ►► ►► ►► ►► ►► ►► ►► ►►