Guernsey seeks to become a catastrophe bond SPV domicile

There’s an interesting article (may require login) on the FT.com website which discusses Guernsey and its ambitions to continue to be the leading captive domicile in Europe but to also broaden its scope to take more advantage of reinsurance and its convergence with the capital markets through alternative risk transfer.

Guernsey is the largest captive domicile in Europe and the fourth largest in the world. It is home to captive insurance companies for around 40% of the UK’s FTSE 100 companies. However they haven’t managed to attract much in the way of reinsurance or alternative risk transfer SPV’s.

The article states that Guernsey seeks to capitalise on the convergence of the insurance and capital markets and the issuance of insurance-linked securities such as catastrophe bonds.

We see no reason why they couldn’t become a domicile for cat bond SPV companies. Guernsey should look closely at the Cayman Islands regulatory set up to see what it is that makes Cayman so attractive to insurers. It would be beneficial to the market to have another location to domicile a cat bond issuing company in.

Guernsey has also recently signed the International Assn. of Insurance Supervisors’ Multilateral Memorandum of Understanding which means it will have to share regulatory information with other organisations. This should help Guernsey increase its profile and attractiveness to companies seeking to domicile.