Guernsey: An Attractive International Captive Domicile

Last Updated: 14 October 2011
Article by Peter Niven

Most Read Contributor in Guernsey, September 2016

Originally published MENA Insurance Review, September 2011.

Peter Niven, Chief Executive of Guernsey Finance, says that captive owners from across the globe continue to view Guernsey as an attractive domicile – and there is new evidence to support the claim.

Guernsey's first captive insurance company was incorporated in 1922. Since then, Guernsey's insurance market has grown to the extent that research from both Business Insurance and Captive Review recognises the Island as the largest captive domicile in Europe and number four globally.

The strength of Guernsey's captive insurance sector is reflected by the fact that approximately 40% of the leading 100 companies on the London Stock Exchange with captives have them domiciled in the Island.

Guernsey plays host to subsidiaries of global names such as Aon, Marsh and Willis as well as independent, boutique operators such as Heritage Insurance Management and Alternative Risk Management (ARM), providing a holistic environment for insurance solutions.

Nearly 60% of the international insurers licensed in Guernsey have their parent company located in the UK however firms from across Europe, the USA, South Africa, Australia, Asia, the Middle East and the Caribbean have established captives in the Island.

The Island's insurance sector has seen the value of business increase markedly over the last ten years so that today there are gross assets of £23.4bn, a net worth of £8.1bn and premium written of £3.4bn. In addition, the number of licensed international insurance entities is on the rise again so that by 31 July 2011 the total reached 680, comprising 265 companies, 63 Protected Cell Companies (PCCs), 335 PCC cells, 4 Incorporated Cell Companies (ICCs) and 13 ICC cells.

This is encouraging considering the maturity of our captive industry and the prevailing soft market conditions. In particular, we are seeing especially strong growth in the number of new cell formations. The Island pioneered the cell company concept when it approved PCC legislation in 1997 and has since also introduced the innovative ICC.

New Research

Strategic Risk has carried out a practitioner survey and published the results in a special supplement which accompanies the September 2011 issue.

The results show that more respondents have their captives in Guernsey than any other domicile; captive owners who use Guernsey recognise the Island's expertise in the sector, its strong links to London and the pragmatic attitude of the GFSC; and Guernsey's decision not to currently seek equivalence with Solvency II has the backing of owners with captives in the Island.

Solvency II was due to come into effect from 1 January 2013 but we are hearing is that this is now very likely to be delayed by a year to 1 January 2014. In Guernsey, we have opted for certainty. The Island is not part of the EU so we are not required to adopt Solvency II and our Government and the regulator have issued a joint statement to say that currently the Island doesn't have any plans to seek equivalence under Solvency II.

Bermuda and Switzerland (and indeed Japan) are adopting a different stance. These countries are in the first wave of equivalence applications but are doing so primarily not for their captives but to protect their international commercial reinsurance industries. However, Bermuda in particular is seeking to mitigate the effects on their captive insurance business and so we continue to monitor these developments closely.

Guernsey will continue to meet the standards of the International Association of Insurance Supervisors (IAIS) – the IMF has commended the Island for having high levels of compliance with the 28 insurance core principles of the IAIS – but its proportionality principles mean that we will provide a more attractive environment for captive owners and other niche insurers.

Questions & Answers

Q: When was captive legislation introduced within the domicile?

Peter Niven (PN): The insurance industry in Guernsey has its origins dating back to the 18th century and the Island's first captive insurance company was incorporated in 1922. Insurance business conducted in Guernsey has been subject to regulation by the Guernsey Financial Services Commission (GFSC) since December 1986 when The Insurance Business (Guernsey) Law, 1986 came into effect. This has been superseded by The Insurance Business (Guernsey) Law, 2002 as amended.

Q: What types of captive structure are available within the jurisdiction? How do these structures differ?

PN: Guernsey offers a wide range of structuring options for captive insurance entities, including limited companies as well as cell vehicles, the Protected Cell Company (PCC) and the Incorporated Cell Company (ICC).

The Island pioneered the cell company concept when, in 1997, it introduced PCC legislation. A PCC is one company made up of a core and individual cells. With a PCC, unlike in an ordinary company where all assets and liabilities are linked, the assets and liabilities of the different cells will remain separate from each other so no claim against one cell will be covered by the funds of another.

Guernsey has also introduced the innovative ICC, which, like a PCC, has cells but they are separately incorporated and distinct legal entities. This provides an extra layer of protection for investors who may be concerned about the legal standing regarding ring fencing in PCCs while also providing for more restructuring flexibility.

Q: What are the capitalisation and surplus requirements for each available captive structure?

PN: The minimum capital capitalisation requirements are £100,000 for insurers writing general (non-life) insurance business. Minimum margin of solvency requirements for general insurance business are 18% of the first £5 million of net earned premium plus 16% of any excess or 5% of the loss reserves, whichever is greater.

Q: What is the current tax regime applicable on captive insurance companies within the jurisdiction?

PN: Guernsey has a 'Zero-10' tax regime where the standard rate of tax for all companies, including all captive insurance companies, is 0%. Exceptions include certain banking business, which is taxed at 10%. The 'Zero-10' regimes of the Crown Dependencies (Guernsey, Jersey and the Isle of Man) have however come under scrutiny from the EU, with the Isle of Man and Jersey specifically under review from the EU Code of Conduct Group for Business Taxation. Guernsey is independently undertaking its own review but has been clear that any new regime must be both internationally compliant and competitive. Indeed, the Chief Minister, Lyndon Trott, has said "at the forefront of our deliberations is the need to retain the competitive edge of our insurance industry and we fully appreciate the need to retain tax neutrality for the captive industry."

Q: What recent amendments to the jurisdiction's legislation should risk/insurance managers be aware of?

PN: At the beginning of 2011, the Guernsey Government and regulator issued a joint statement to announce that currently the Island is not seeking equivalence with the EU's proposed regulatory regime for insurance and reinsurance business, Solvency II. This provides certainty to our existing and potential clients and we will continue to meet the standards of the International Association of Insurance Supervisors (IAIS) but the principles of proportionality mean we will provide a more attractive environment for captive owners and other niche insurers.

Guernsey was one of the first jurisdictions to introduce a risk-based approach to regulation and in recent years this has developed with the introduction of the Own Solvency Capital Assessment (OSCA) regime. This is an important part of meeting the standards of regulation and supervision of the IAIS. Indeed, the International Monetary Fund (IMF) has commended the Island's regulatory regime as having a high level of compliance with the 28 insurance core principles of the IAIS.

Q: Who is the regulatory contact for the jurisdiction?

PN: Dr Jeremy Quick, Director of Insurance, Guernsey Financial Services Commission (GFSC). Email:

For more information about Guernsey's finance industry please visit

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.