Gibraltar will make it easier for licensed Protected Cell Companies (PCC’s) to underwrite third-party insurance and reinsurance business, after the regulator has relaxed its view and will now treat applications to do so on a case-by-case basis.
Gibraltar has had protected cell company legislation since 2001, seeing activity in the captives space as well as some insurance-linked securities (ILS) transactions, specifically the lottery winning related deals such as Lottoland’s Fortuna that was renewed recently.
While its PCC’s have been technically allowed to underwrite third-party business the regulator has restricted them from doing so in the past. But now the regulator has come round to the idea and will consider any applications to do so.
Albert Isola MP, Minister for Commerce, HM Government of Gibraltar explained; “Following detailed discussions with a number of insurance businesses and the Gibraltar Financial Services Commission (“the GFSC”) I am pleased to announce that third party business will in future be considered from Gibraltar PCCs. We believe this will open up new opportunities for Gibraltar’s insurance sector in a safe and robust manner.”
Earlier this year the GFSC’s Innovate and Create Team reviewed activity within PCC’s in Gibraltar and has concluded that third party business can now be permitted, as long as there are appropriate safeguards in place. Applications to begin underwriting third-party insurance or reinsurance business in a PCC will now be reviewed on a case-by case-basis.
This could help to make Gibraltar a more attractive location for ILS underwriting business, as to date the only activity has been the lottery transactions, which we believe to have been transacted in a PCC owned by the sponsors.
Now an ILS manager or investor could establish a PCC in Gibraltar and, with the necessary approvals received from the regulator, enter into international insurance or reinsurance underwriting business on a collateralized basis for its funds, using the Gibraltar structure as its vehicle.
Minister Isola also said; “Government fully supports the GFSC’s view that cells writing third party business will need particularly close scrutiny and the cell’s assets and reinsurance programme will be crucial in determining if such business can be authorised. The approach to new applications will be heavily reliant on the quality of the business plan, the quality of the people and organisations involved and a robust and comprehensive regulatory process. If all these aspects are satisfied then we are confident that Gibraltar PCCs can offer a flexible and secure platform for new third party insurance business.”