ILS dominates new re/insurance business for Guernsey in 2015

Insurance-linked securities (ILS) and collateralised reinsurance business dominated new business generated through vehicles registered during 2015 in Guernsey, as the domicile continued to prove an attractive location for ILS transactions to be completed in.

Guernsey Finance reported that of the range of business underwritten by new insurance and reinsurance vehicles registered over the course of 2015, 38% was insurance-linked securities (ILS) related, 14% involved insurance lines covering property, 10% insurance focused on After the Event (ATE) legal expense coverage and 7% was general liability insurance business.

The fact that ILS and collateralised reinsurance business remains the dominant source of newly sourced insurance or reinsurance registration related business is testament to the growth of this market, as ILS investment managers seek out attractive places to transact.

By the end of 2015 figures from the Guernsey Financial Services Commission (GFSC) show that the domicile ended the year with over 800 insurance or reinsurance registrations in force, the first time the year-end figures have reached that level.

At the end of 2015 there were 804 international insurers licensed in Guernsey, made up of 242 limited companies, 64 Protected Cell Companies (PCCs), 444 PCC cells, 13 Incorporated Cell Companies (ICCs) and 41 ICC cells. This compares to 797 international insurers being licensed by the GFSC at the end of December 2014, so a net growth of seven registered vehicles during the year.

66 new international insurers were licensed in 2015, including 13 limited companies, three PCCs, 43 PCC cells, four ICCs and three ICC cells, with the leading sources of this business being 44% from the UK, 24% the Cayman Islands and 8% Ireland.

Guernsey Finance Chief Executive Dominic Wheatley commented; “Confirmation that Guernsey ended last year with more than 800 international insurers is a terrific endorsement of our standing and expertise across the insurance sector. The Island’s excellent reputation in the London market ensures that much of our business originates in the United Kingdom but insurers from all corners of the world are establishing in Guernsey.

“The diversity of insurers choosing to establish here is testament to the professional environment in Guernsey. The Island offers the latest and most sophisticated legislation, pragmatic regulation outside the Solvency II regime and a wealth of insurance management expertise; all of which are conducive to establishing an insurance business.”

In 2014 Guernsey reported that 45% of the business underwritten during the year by the 85 newly registered vehicles being insurance-linked securities (ILS) related. So the percentage has declined a little in 2015, but remains significant as ILS continues to lead the way in terms of business volumes generated for Guernsey.

Guernsey remains an attractive ILS domicile for fund managers looking to transact collateralised reinsurance in protected cells, or to transform risks for their funds, and this activity remains meaningful as evidenced by the 38% figure.

Guernsey also continues to attract third-party capital backed reinsurance business through other registrations as well, including the second rated reinsurer launched by the Credit Suisse Insurance Linked Strategies team, Humboldt Re.