The number of new registrations was appreciably less than last year. One reason for this drop in new business is the soft insurance market, which has had the effect of companies opting to place certain risks in the 'commercial' insurance market, to take advantage of favourable premium rates, rather than using the captive route. The various recent mergers and acquisitions of insurance brokers has led, in turn, to the merging of captive management operations which will inevitably have diverted these companies from the development of new business.
Legislative developments throughout the year included the introduction of the Migration of Companies Ordinance, which will make it much easier for captives to transfer to and from Guernsey, and company specific financial guarantee insurance (FGI) legislation. FGI enhances the credit ratings of issuers of investment bonds by guaranteeing their obligations to pay principal and interest when due. Only the State of New York has similar legislation. Legislation to supervise insurance intermediaries is awaiting the approval of Privy Council in the U.K. and is expected to come into force early in 1998.
The most exciting and innovative development came in the form of the new Protected Cell Companies (PCC) legislation, introduced in February 1997. Guernsey has introduced this unique piece of legislation to allow for the assets of one cell to be legally separated from the liabilities of another, thereby preventing contamination between cells. Any creditors will have recourse only to the funds of a particular cell and to the core capital. This new legislation has great potential in the way it can be utilised and has already generated much interest; it is also possible to convert from an existing company to a PCC. To date 5 insurance PCC's have been registered and more are on the way.
Notable registrations during 1997 have included Portway Insurance PCC Limited, a new European joint venture, between Commercial Union and Kleinwort Benson and managed by J&H Marsh & McLennan, which takes advantage of the new PCC legislation in offering corporate insurance buyers a rent-a-captive vehicle with the additional protection afforded by statutory segregation. Channel Life PCC Limited, another Protected Cell Company, is a locally based life insurer providing tax efficient products to the clients of local banks and other financial institutions. Iberia Reinsurance Limited, a captive reinsurance company, has been established by the major Belgian group SAPEC S.A., to insure their Credit Risk, Keyman and Weather Bonds covers; this company is managed by Aon Insurance Managers. Most recently, American Phoenix Life and Reassurance Company, part of the Phoenix Home Life Mutual Insurance Company group of Connecticut, U.S.A., has established a branch office in Guernsey to handle long-term insurance and reinsurance business.
Last year has brought even more geographical diversity in terms of captive ownership. Whilst the U.K. remains the principal source of business for Guernsey, over 50% of new captive business in 1997 came from North America, mainland Europe, the Far East as well as South Africa (5 new captives).
Regulatory requirements relating to Mortgage Indemnity Guarantee (MIG) business have altered following the conversion of many Building Societies to Banks. In this regard a new set of guidelines have been issued by the Commission.
Two new captive management operations have been established in the past 12 months: Mutual Risk Management (Guernsey) Limited, set up by Mutual Risk Management, a major U.S. risk management services provider; also, Griffiths & Armour Captive Management Limited. SINSER, the Swedish based international captive insurance and reinsurance management group, have established 'a presence in Guernsey by taking over Spread Insurance Management Limited.
Within the offshore life insurance sector Sun Alliance International Life Assurance Company Limited has been acquired by Generali Worldwide Insurance Company Limited and is now a part of the multi-national Generali Group.
List of new registrations and surrenders during 1997 and a parentage split of captive additions are attached
INSURANCE COMPANY ACTIVITY DURING 1997
TOTAL AS AT 31 DECEMBER 1996 335 NEW REGISTRATIONS DURING 1997: American Phoenix Life & Reassurance Company - Guernsey Branch Bailiwick Insurance PCC Limited Censure Insurance Company Limited Channel Life PCC Limited Cindy Limited City & Provincial Insurance (PCC) Limited Clarges Insurance Limited Continental Indemnity Limited First Century Insurance Limited Foresight Insurance Limited Grampian Insurance (Guernsey) Limited Grange Insurance Company Limited HJM Insurance Company Limited Iberia Reinsurance Limited Kirkstone Insurance Limited Michaelangelo Insurance Limited Mill Stream Insurance Limited Misys Group Insurance Limited New Horizon Insurance Limited Norwich Union Life & Pensions Limited Portway Insurance PCC Limited Rugby Insurance Limited Samson Insurance Limited Two Oceans Reinsurance Company Limited UN& M Insurance Company Limited Universal Insurances Limited 26 SURRENDERS DURING 1997: Albert Fisher Insurance Limited Alpha General Insurance Company Limited Arab Commercial Insurance Company Limited Geest (R.M.) Limited Hindsight Limited Personal Insurance Limited Pybus Insurance Limited RHM Insurance Limited The Criterion Insurance Company Limited (9) TOTAL AS AT 31 DECEMBER 1997 352 OTHER ACTIVITY: Life Association of Guemsey Limited - Reactivated White Rock Insurance Company Limited - Changed to a PCC (now called WhiteRock Insurance Company PCC Limited) NOTES FOR EDITORS As at 31 December 1997, the total of 352 offshore insurance companies registered is broken down as follows: Pure captives 293 Broad captives 22 Commercial 20 PCC's 4* Total Captives 339 Offshore life (active) 6 (Generali Worldwide, Generali Intemational, Life Association of Guemsey, Nordben, Old Mutual International, South African Mutual) Offshore life (running off) 6 (Aberdeen International, Continental Life, Cornhill Ins. (Gsy),European Life (C1),Finistere, Premium Life) Offshore Life (PCC) 1* 352 * Number of PCC cells 14
GUERNSEY - OFFSHORE INSURERS: ADDITIONS 1997
PARENTAGE NO U.K. 11 REST OF EUROPE 7 SOUTH AFRICA 5 U.S.A. 1 FAR EAST 1 GUERNSEY 1 TOTAL 26
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