Guernsey: Saying Expertise-Led Innovation

Last Updated: 29 November 2012
Article by Fiona Le Poidevin

Most Read Contributor in Guernsey, September 2016

Guernsey's lofty reputation within the insurance industry didn't happen overnight or without merit. Fiona Le Poidevin of Guernsey Finance gives an overview of the successful innovations the island has played host to in the past that now make Guernsey a 24 square mile innovation lab for the captive industry.

Innovation has been at the heart of Guernsey's continued development as a leading international finance centre.

The jurisdiction's mix of talent, independence and foresight has allowed financial services to flourish and resulted in Guernsey practitioners being among the most innovative in the world.

Guernsey's origins in the insurance industry actually date back to the 18th century, while the island's first captive insurance company was incorporated in 1922. Since then, Guernsey's insurance market has grown to the extent that research from Captive Review recognises the island as the largest captive domicile in Europe and number four globally.

Risk purpose trust

It is the expertise honed in the captive insurance market that has led to Guernsey's latest innovative product - the risk purpose trust (RPT). An RPT is a new mechanism, which allows corporates to fund effectively for both foreseen and unforeseen expenses and business risks. Developed on Guernsey by Princeps, a joint venture between Robus Group (a Guernsey-based provider of insurance management and corporate services) Marlborough Trust, (a Guernsey-based independent trust company) and Richard Gale (an independent consultant with 40 years' experience in insurance broking and captive management), the RPT acts as a repository for funds which are then used by the corporation to fund their foreseen and unforeseen risks. The RPT receives contributions from the corporation to fund those risks and uses those contributions to support the corporation.

The RPT's varied uses range from budgeting assistance for gratuity payments, incentive payments or sports bonuses; provision for future repair costs or replacement costs; rental guarantees for landlords of large property portfolios; pension shortfalls, and the support and provision for unforeseen risks of corporates generally, from the traditionally insurable to the non-insurable.

Before adding the RPT to its offering, Robus Group already provided services to captive insurers, open market insurers and reinsurers, insurance intermediaries and insurance linked securities (ILS) fund managers. Indeed Guernsey's expertise in ILS was demonstrated back in 2011, when law firm Bedell Cristin's Guernsey office advised Swiss ILS managers Solidum Partners AG on a groundbreaking CAT bond transfer, namely a private transformer of catastrophe risks into $12.4m of securities in three separate deals through a Guernsey-based incorporated cell structure, Solidum Re.

Cell concept

Guernsey's position as a captive domicile was strengthened back in 1997 when Guernsey practitioners pioneered the cell company concept with the introduction of the protected cell company (PCC) for use in the captive insurance sector. The subsequent success of this innovation is illustrated by the fact that the cell company is now used across the fi nancial services world as an alternative application for the structuring of many different types of products. As well as adopting the similarly innovative incorporated cell company (ICC), the island has, through legislative advancements, developed a regulatory infrastructure that enables them to be widely employed.

The island also boasts provisions that give notable flexibility to cell company structuring arrangements, in particular: an ordinary company can convert to a PCC or ICC; a PCC can convert to an ICC; an ordinary company can convert into an incorporated cell (IC) and become part of an ICC; and an IC can leave the umbrella of the ICC and convert into an ordinary company. Furthermore, Guernsey allows for inward and outward migration of companies and the amalgamation of companies.

Other examples of Guernsey's innovation and expertise in the cell structure field include:

  • Aon's White Rock Insurance Company PCC Limited was established in Guernsey as the first PCC in the world. Since inception it has been used by more than 50 corporations as a cell captive facility and grown to be the largest structure of its kind globally
  • White Rock Insurance (Guernsey) ICC Limited - also Aon owned - was the first ICC in the world to be insurance licensed
  • Guernsey-based Heritage Insurance Management achieved a worldwide first in 2010 by amalgamating two PCCs - with 17 cells between them - into one

Captive growth

Continued recognition of Guernsey as the European captive leader has been borne out by the number of international insurance entities licensed in Guernsey growing by 54 so far this year. Figures from the Guernsey Financial Services Commission (GFSC) show that there were 687 international insurers listed on the island at the end of December 2011, but that this has now risen to 741 at the end of August 2012, comprising 252 companies, 400 PCC cells, 67 PCCs, 5 ICCs and 17 ICC cells.

Much of this increase relates to a UK government-backed product utilising Guernsey's experience and reputation for innovation and expertise in the use of cell companies. The mortgage indemnity insurance scheme, introduced by the UK's Home Builders Federation (HBF) and the Council of Mortgage Lenders (CML) in March, sees mortgage risk for the lenders on new build homes underwritten by house builders and the government. By insuring the risk of default losses, the NewBuy scheme allows lenders to offer 95% loan to value mortgages on new homes. The JLT Group is managing the scheme through a joint initiative of its operating companies, including JLT Insurance Management (Guernsey) Limited which is running the captive insurance company established for HBF.

JLT Insurance Management (Guernsey) managing director Nick Wild believes the NewBuy scheme has broken new ground with many aspects in the design of the insurance coverage and PCC structure, while Guernsey's PCC legislation had once again proved its flexibility. At the start of October, he reported to us at Guernsey Finance that there were currently 46 cells in the captive insurance company established for HBF PCC.

The mortgage scheme itself is also proving popular with the hope it can fund the purchase of 100,000 homes over the next few years. Such has been its success that it has now rolled out across Scotland, backed by a Scottish government guarantee called MI New Home. Launched on 12 September, MI New Home Insurance PCC already has six cells - with the expectation for this to double by the end of 2012.

The strength of Guernsey's captive insurance sector is further underlined by the fact that approximately 40% of the leading 100 companies on the London Stock Exchange with captives have them domiciled on the island. Indeed, some 60% of the international insurers licensed in Guernsey have their parent company located in the UK, however the island's insurance sector is truly international. Firms from across Europe, the USA, South Africa, Australia, Asia, the Middle East and the Caribbean have all established captives on the island.

It was with this pedigree in mind that Guernsey decided against seeking equivalence with Solvency II, which may now have its implementation delayed beyond 2014. The island wanted to give current and potential clients certainty and clarity regarding the regulation of insurance business in Guernsey. The island also believes applying Solvency II as it is presently constructed would burden insurers in Guernsey with additional costs and render currently effective captive business plans uneconomic.

Other non-EU jurisdictions such as Bermuda and Switzerland are adopting a different stance. These countries were in the first wave of equivalence applications. They were not seeking equivalence for their captives but to protect their commercial reinsurance industries and Bermuda in particular is seeking to mitigate the impact on its captive business. There is still a degree of uncertainty surrounding equivalence and what this means for third countries.

Officials in Guernsey understand that the finalization of the transitional provisions may depend on the actions of the European Parliament and the European Council. Until their position is understood, there will remain a degree of uncertainty about how it will progress. On this basis, Guernsey remains committed to the policy outlined in January 2011 that it is not as of now seeking equivalence under Solvency II.

Ringing endorsement

Oil giant BP has its own captive insurance company, Jupiter Insurance, domiciled in Guernsey, as does global mining company BHP Billiton through Stein Insurance Company, which has assets of approximately $1.3bn and had revenue of $214m in 2011. Stein covers property damage, business interruption, construction, terrorism, marine cargo and some primary general liability for BHP Billiton.

Matthew Frost, vice-president of risk finance at BHP Billiton, told Captive Review in July that the Australian company's finance risk management committee looked at the issue of domiciles about 18 months ago, particularly when it significantly increased its self-insurance, and asked itself if BHP Billiton was starting "all over again from scratch, given where the management teams are based, would we have a captive and, if so, where it would be located?". Mr Frost said Guernsey came out on top along with Singapore, but that after establishing the pros and cons of each domicile, "Guernsey came out significantly ahead".

That fantastic endorsement of the island comes as no surprise when you consider our innovation and expertise across the risk management sector.

Originally published in Captive Review, November 2012

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.