Yes — fully. Puerto Rico is a U.S. territory, meaning X-Square Re operates under U.S. federal law, NAIC accreditation, and the oversight of Puerto Rico's Office of the Commissioner of Insurance (OCS). Your captive is domiciled within the American regulatory framework — not offshore, not in a grey zone. What makes Puerto Rico exceptional is that it pairs this U.S. legal clarity with its own favorable tax code: a 0% tax rate on captive income up to $1.2M, and just 4% on income above that threshold. It is one of the few jurisdictions in the world that offers both U.S.-grade rule of law and institutional-grade tax efficiency in the same package.

Offshore domiciles can create friction — currency conversion, foreign banking relationships, regulatory arbitrage perception, and limited access to U.S. financial markets. Puerto Rico eliminates all of that. As a U.S. jurisdiction, X-Square Re holds reserves at NAIC-approved banks including Morgan Stanley, Goldman Sachs, Bank of NY Mellon, and PNC — providing U.S.-grade counterparty quality with no cross-border capital repatriation issues. Captives are approved within 60 days if not objected, and the Island hosts over 516 protected cell companies with more than $12B in annual premiums — a mature, well-regulated market. For Latin American and international clients, Puerto Rico also provides legal certainty that offshore islands simply cannot.

X-Square Re I.I. is the reinsurance arm of X-Square Capital LLC, a Puerto Rico-based SEC-registered investment advisor founded in 2013 by Ignacio Canto, CFA, FRM. X-Square manages over $800M in assets across publicly traded funds listed on Nasdaq ($SQBFX) and NYSE ($ZTAX), a long-short equity hedge fund (ADAFI), and separately managed accounts. The reinsurance operations are led by Gustavo Canto, CPCU, ARe, AMIM — founder of LimeBridge and a specialist in Latin American and Lloyd's market reinsurance. The company is overseen by a six-member Board of Directors with backgrounds spanning First Boston, Santander Securities, Raincoat (SoftBank-backed insurtech), Hannover Ruck, and MAPFRE.

X-Square Re accepts a wide range of non-catastrophic risks across several lines of business. For captive and rent-a-captive clients, common programs include property (excluding windstorm), product liability, trade credit, D&O, cyber, and coverage gaps not adequately served by domestic commercial markets. For cedents and reinsurance treaties, we write quota share and excess-of-loss across surety, casualty, marine, and non-catastrophic property. We also accept life and annuity blocks via coinsurance and loss portfolio transfers. What we do not write: catastrophe-driven property (hurricane, earthquake as primary exposure), highly speculative risks, or risks where the underlying business has not been operationally validated. Every structure is purpose-built — we do not apply standard templates.

Reserves held within X-Square Re are managed by X-Square Capital LLC, the parent company — an SEC-registered investment advisor with over a decade of publicly verifiable performance. The investment mandate prioritizes liquidity and capital preservation, typically deploying a balanced allocation between fixed income and equities via institutional platforms. X-Square Capital's public funds — $SQBFX (Nasdaq) and $ZTAX (NYSE) — are covered by Morningstar and MarketWatch, providing third-party track record verification. This is a meaningful differentiator: most reinsurers outsource reserve management to generic external managers. We manage it in-house with a team that has executed over $18B in capital markets transactions.

X-Square Re is licensed as a Class 3 and Class 5 international reinsurer under Puerto Rico's International Insurer Act 399-2004. Class 3 covers traditional reinsurance treaties; Class 5 covers segregated asset plan (SAP/protected cell) structures used in the rent-a-captive model. Our risk appetite is disciplined and selective: we focus on non-catastrophic, actuarially predictable risks with documented loss histories, transparent capitalization, and strong underlying business fundamentals. We target combined ratios below 55%, maintain premium-to-surplus ratios well below the 3:1 regulatory maximum, and require liquid-only capitalization — no real estate, no future earnings projections, no illiquid collateral.

A rent-a-captive allows you to access all the economic benefits of a captive — tax efficiency, premium retention, reserve control, and underwriting profit — without the cost or complexity of forming a standalone insurance company. Through X-Square Re's Segregated Asset Plan structure, your risks and capital are held in a legally isolated cell within our platform. Your assets cannot be touched by other participants; your liabilities are fully segregated. Formation typically takes 60–90 days in Puerto Rico, compared to 12–18 months and significantly higher upfront costs for a standalone captive. X-Square Re manages formation, compliance, financial reporting, and reserve management — all under one roof.

X-Square Re has engaged with multiple rating agencies and is actively pursuing its first financial strength rating. The company is regulated by Puerto Rico's Office of the Commissioner of Insurance (OCS), which is NAIC-accredited — the same accreditation body that governs all U.S. insurance regulators. Puerto Rico's regulatory framework is materially equivalent to U.S. state-level insurance regulation. Regulatory documents including the Certificate of Authority and Certificate of Incorporation are available for download on our website. As a subsidiary of X-Square Capital LLC, we are also subject to SEC oversight at the parent level.

Through Praetor — our proprietary enterprise risk management platform, built in-house specifically for this purpose. After surveying the market and finding no existing tool that met our transparency standards, we built Praetor from the ground up. It gives both our internal team and clients a live dashboard showing policy data, reserve positions, premiums, claims, investment performance, IRRs, and regulatory compliance metrics. Most captive managers provide quarterly reports from external providers. Praetor delivers continuous, real-time visibility — so you always know exactly where your capital stands, not where it stood three months ago.

Puerto Rico's International Insurance Center (IIC) is the regulatory framework that governs international insurers and reinsurers domiciled on the island. It was established under Act 399-2004, also known as the International Insurers Act, which created a dedicated legal structure for companies like X-Square Re to operate as international risk carriers within the U.S. regulatory ecosystem — distinct from Puerto Rico's domestic insurance market and from offshore jurisdictions.

Act 399-2004 defines the licensing classes, capital requirements, permitted activities, and governance standards for international insurers. Under this Act, X-Square Re holds a Class 3 license (traditional reinsurance) and a Class 5 license (segregated asset plans / protected cell companies). The Act also establishes the framework for Segregated Asset Plans — the legal vehicle behind our rent-a-captive model — ensuring that each cell's assets and liabilities are fully isolated from one another and from the general account.

Rule 80 governs the formation, operation, and ongoing compliance requirements for international insurers under Act 399-2004. It establishes the standards for business plans, capital adequacy, solvency reporting, investment guidelines, and the annual filing requirements that X-Square Re submits to Puerto Rico's Office of the Commissioner of Insurance (OCS). Rule 80 is the primary operational rulebook for the IIC.

Rule 81 governs Segregated Asset Plans specifically — the protected cell structure at the core of X-Square Re's rent-a-captive offering. It defines how cells must be structured, how assets must be segregated, what disclosures are required to participants, and how the solvency of individual cells is monitored independently from the master license holder. Rule 81 is what gives legal enforceability to the promise that your cell's assets cannot be reached by another participant's liabilities.

Together, these regulations place Puerto Rico's IIC in a category of its own — more rigorous and transparent than most offshore captive domiciles, fully backed by U.S. rule of law, and specifically designed to attract sophisticated international risk programs. The OCS, which administers all of these rules, is NAIC-accredited, meaning its regulatory standards meet or exceed those of any U.S. state insurance department.

Puerto Rico operates under its own tax code, separate from U.S. federal taxation, which creates a uniquely favorable environment for captive insurance. Underwriting income generated by a captive domiciled in Puerto Rico is taxed at a flat 4% rate on income above $1.2M — and at 0% on everything below that threshold. For life insurance and annuity premiums specifically, the tax rate is 0% at any income level, which creates a long-term structural advantage for life reinsurance programs as they scale.

Beyond the income tax rate, there is no withholding tax on dividends distributed to shareholders of Puerto Rico-domiciled insurers — meaning capital can be repatriated to owners efficiently, without the friction common in offshore structures. Investment income earned on reserves held within the captive also benefits from Puerto Rico's favorable tax treatment when managed through the island's regulatory framework.

Critically, these benefits exist entirely within the U.S. legal system. Unlike Cayman or Bermuda structures — which can attract IRS scrutiny or require additional reporting under PFIC or CFC rules — Puerto Rico captives operate under a U.S. territorial framework with full access to U.S. banking, U.S. courts, and NAIC-accredited regulation. The tax efficiency is a feature of the domicile, not a workaround.