Guernsey sees growth in number of ILS structures in 2018

Insurance-linked securities (ILS) and collateralised reinsurance activity in the island domicile of Guernsey has accelerated in 2018, with more than double the number of ILS structures established in 2018 so far compared to the whole of last year.

Guernsey has seen close to 200 ILS structures established on the island in 2018 to date, significantly up on the 88 established in 2017.

Collateralised reinsurance activity has been increasing steadily on the island, but 2018 has seen activity levels accelerate to a new high as ILS business becomes increasingly embedded in the global insurance and reinsurance marketplace, with Guernsey taking its share.

“We have seen a huge growth in interest in the setting up, structuring, servicing and financing of ILS structures in the past few years,” commented Dominic Wheatley, Chief Executive of Guernsey Finance.

“This year we have seen a massive up-tick and many more are in the pipeline, as companies recognise that they don’t need to cross the Atlantic to find a supportive and attractive environment to operate ILS and other insurance entities.”

Guernsey provided a home to 853 international insurance entities, largely commercial insurers and captives, by the end of 2017, so it’s no surprise ILS activity is increasing there as well.

A number of the world’s largest ILS fund managers utilise Guernsey as one of their locations for domiciling transaction structures and it is likely these fund managers that are helping to drive the islands growth in ILS.

“We have the back and front office support to manage all kinds of risk management solutions, which makes us ideal for ILS,” Wheatley explained. “We are now seen as a competitive alternative to offshore jurisdictions across the Atlantic.”

Guernsey sees itself as a complement or alternative to established ILS domiciles such as Bermuda and this is clearly beginning to pay off.

“Guernsey and Bermuda share many attributes, such as a strong tradition in finance and insurance, a competent and innovative regulatory regime, and a tax-neutral platform,” Wheatley said.

“We’re both financial innovators, and we are working very hard to make sure that when ILS is mentioned, Guernsey is recognised as the competitive alternative.”