Collateralised reinsurance, ILS, longevity cells registered in Guernsey

First-half 2015 insurance and reinsurance company registrations in Guernsey show that the domicile continues to have success in attracting collateralised reinsurance, ILS and longevity risk transfer related protected and incorporated cell business.

The latest figures from the Guernsey Financial Services Commission (GFSC) show that the domicile licensed 45 new international insurers during the first half of 2015.

The new licenses were given to six limited companies, two Protected Cell Companies (PCCs), 30 PCC cells, one Incorporated Cell Company (ICC), two ICC cells and four life policy cells.

Once again the formation of protected and incorporated cells has driven new licenses, many of which are utilised by either insurance-linked securities specialists, funds, investors or reinsurers looking to transact reinsurance contracts on a fully-collateralised basis, backed by third-party capital.

The new registrations mean that there were 816 international insurers licensed in Guernsey at the end of June 2015, consisting of 244 limited companies, 67 PCCs, 393 PCC cells, 13 ICCs, 40 ICC cells and 59 life policy cells. This is 19 more than the 797 that there were at the end of December 2014.

The new license owners come from locations such as the UK, Cayman Islands, Finland and Switzerland, while the range of businesses written includes Insurance Linked Securities (ILS) and insurance lines covering property, After the Event (ATE) legal expense and longevity risk.

Guernsey has had some success in the last year attracting incorporated cell companies used as intermediary insurers for transacting longevity risk transfer deals. These cells are established as captive type insurers, enabling a pension scheme to more directly access the international reinsurance market for longevity capacity.

“Guernsey’s experience and expertise in establishing and effectively utilising the cell company concept for businesses across the globe mean it is ideally positioned to service this emerging area and we expect that to continue in the latter part of this year. Those in charge of these pension schemes recognise the fact that Guernsey has modern and well-regarded insurance legislation and a reputation for innovation within the sector, which is supported by a mature financial services infrastructure,” commented Wheatley.

Guernsey still faces stiff competition from the other main ILS domiciles, of Bermuda, Cayman, Dublin, but it’s clear from the continued success it is having that the ILS market does want choice in locations to place transaction vehicles. Of course with London set to throw its hat into the ILS domicile ring, Guernsey may find the competition increases.