The Government of Gibraltar has announced new legislation to support a protected cell company (PCC) designed specifically for the insurance linked securities (ILS) sector. Known as an SPV PCC the 100% collateralised vehicles are Gibraltar’s newest offering to encourage ILS business to its shores.
Gibraltar has been working steadily over the last two years to establish itself as a domicile that is attractive to insurance-linked securities (ILS) issuers, managers and investors, enacting legislation to support catastrophe bonds, collateralised reinsurance and other ILS instruments.
This latest offering is a new category of PCC that will be regulated under Gibraltar’s Insurance Companies (Special Purpose Vehicles) Regulations 2009.
Each SPV PCC will only be permitted to establish cells that are 100% collateralised, which means the solvency capital requirement are low, with core capital required of the SPV PCC being just £500.
That could make the SPV PCC attractive to ILS managers looking to transact collateralised reinsurance or ILS business within the European Union.
Albert Isola, Gibraltar’s Minister of Financial Services, commented on the announcement; “This is yet another example of how we can innovate and work together with the private sector and the regulator to be at the forefront of new quality business for our Jurisdiction.
“The launch of SPV PCCs is the next step in our ambition to become the premier ILS jurisdiction within the European Union. The SPV PCCs will complement Gibraltar’s existing standalone insurance SPVs.”
Gibraltar’s financial regulator, the Financial Services Commission, published its ILS Guidelines in 2014, establishing concise timescales for the authorisation of insurance linked securities.
The new SPV PCC’s will also be subject to these timescales, providing the insurance and capital markets the opportunity to structure ILS transactions in Gibraltar knowing that authorisation can be a swift and transparent process.
The new structure should prove attractive to ILS issuers and managers looking for diversification in the locations they transact collateralised reinsurance in. Gibraltar is steadily positioning itself as an ILS domicile, located within the European Union, that can offer a full range of services for ILS, providing additional choice to the market.