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Guernsey: Offshore Business Sectors

Insurance

See Offshore Business Review - Insurance for a more general treatment of captive insurance companies.

The Guernsey insurance sector can be broadly divided into two main areas: domestic insurance - comprising local insurers, overseas insurers, recognised insurers and intermediaries who advise on or arrange contracts of insurance in or from within Guernsey; and international insurance - embracing captive insurers, protected cell companies and life assurance companies who arrange contracts of insurance from within Guernsey, covering international risks.

Access to protected cell status was enlarged in 2001 under The Protected Cell Companies (Special Purpose Vehicle) Regulations 2001, under which two further classes of company were permitted to be incorporated as, or converted into, a protected cell company. The first additional class of company is one that is "established principally for the purpose of issuing bonds or other debt securities where the repayment is to be funded from the proceeds of the company's investments." The second type of company is one that performs the "carrying on of finance business" with the exception of those supervised under specific laws such as the Protection of Investors Law, the Insurance Business Law, the Banking Supervision Law and the Regulation of Fiduciaries. The law took full effect from 6 February 2001.

Both categories of insurers in Guernsey are required to be licensed under The Insurance Business (Bailiwick of Guernsey) Law, 2002.

A survey conducted by Reactions Magazine in June, 2006, saw Guernsey voted the best domicile in Europe for PCC (Protected Cell Company) legislation, highly commended for its tailored legislation, and commended for its cost efficiency.

According to Guernsey Finance, the survey comes at a time when the growth in numbers of Captive Insurance companies slowed globally in 2005.

Peter Niven Chief Executive of Guernsey Finance commented:

"These accolades show the insurance industry recognizes Guernsey as a leading domicile for Captive Insurance and particularly for PCCs. This is set to continue with our pragmatic approach to legislation and our continuing drive to ensure that Guernsey is a good place to do business."

Captives in Guernsey can choose between various tax regimes; see Offshore Legal and Tax Regimes: Taxation of Offshore Entities and Domestic Corporate Taxation for details.

In the domestic market, there were 16 domestic insurers as at April 30, 2010, and 39 registered intermediaries. In addition, a number of 'Recognised Insurers' write business in Guernsey without having a physical presence. A recognised insurer cannot write business in the Bailiwick without being licensed in their home jurisdiction.

Registered insurance companies may take advantage of the Protected Cell (Guernsey) Ordinance 1997, under which multiple cells may exist within one company; the taxation basis of protected cell companies will probably be equivalent to that of exempt companies. Protected cell company status under the 1997 Ordinance is generally reserved for authorised collective investment schemes, insurance companies and closed-ended investment companies.

Two studies released in 2010 have reaffirmed Guernsey’s position as the leading captive insurance centre in Europe, and among the top four in the world.

Previously undertaken research has shown that Guernsey is home to more captive insurance companies than anywhere else in Europe and the fourth largest player in the world. This position has been endorsed by a new survey from weekly trade publication Business Insurance, while research from monthly insurance title Captive Review ranked Guernsey first in Europe and third globally.

Commenting, Peter Niven, Chief Executive of Guernsey Finance, said: “This is extremely positive news. We have built a reputation for expertise and innovation, but it also shows that there is strong competition so we cannot rest on our laurels.”

The Business Insurance rankings are based on the number of licensed captives at the end of 2010.

Leading the way is Bermuda (845), followed by the Cayman Islands (738), Vermont (572), then Guernsey (341) with Anguilla (252) completing the top five in the world.

The Captive Review rankings 2009 are based on the full range of international insurance entities, including Protected Cell Companies (PCCs), Incorporated Cell Companies (ICCs) and their related cells. In addition, it takes into account the captive premium and assets under management within the captives. As a result of the different methodology, Captive Review maintains the same top five but placed Guernsey in third and Vermont in fourth.

Captive Review findings says: “Guernsey is the undisputed king of the cell captive world. It may not have the most but it introduced both the protected cell company (PCC) and incorporated cell company (ICC) concepts to the world and set the template for other jurisdictions to copy.”

“It’s therefore a toss-up for third place in the global domicile listings between Guernsey and Vermont. Vermont undoubtedly has the greater number of single-parent, group and other large captive structures but… it is exceeded by Guernsey in sheer captive numbers by the latter’s volume of cells. Vermont writes more captive premium but Guernsey’s captives have a greater asset value.”

The number of insurance licenses issued in Guernsey in 2009 was almost 25% more than during 2008, according to figures released by the GFSC.

The figures for 2011 show that 72 insurance licenses were issued during the year, representing a 53% increase on 2010.

“It is very positive that we are attracting increasing amounts of new insurance business to the Island and thereby retaining our position as the leading captive insurance domicile in Europe and number four in the world,” said Peter Niven, Chief Executive of Guernsey Finance.

“What we are seeing is that business introducers are continuing to recognize Guernsey as a captive domicile offering real quality in terms of service providers and professional advisors, robust yet pragmatic regulation and high standards of corporate governance.”

The GFSC statistics show that Guernsey, as of 31 July 2013, plays host to a total of 774 international insurance entities. This comprises 339 international insurers. There are also 435 PCC cells.

The Island’s insurance sector has seen the value of business increase markedly over the last five years. In 2003, the industry had gross assets of GBP13bn (USD21bn), a net worth of GBP5.3bn and premiums of GBP2.5bn. Now there are gross assets of GBP22.9bn, a net worth of GBP9.34bn, and premium written of GBP4.63bn.

 

 

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