Dominic Wheatley (DW), chief executive of Guernsey Finance,
spoke to Global Reinsurance on captives and Insurance Linked
Q - What are your plans for (re)insurance on Guernsey in
DW - We are very much looking to support the work the industry
does here, in terms of providing them with a really good
promotional platform for their sales activities. What we are
focused on are the current growth areas, particularly around the
ILS space, and promoting Guernsey as a reinsurance centre.
You'll notice that Kelvin Re has become our first rated
reinsurer, and that is an important strategic milestone. We are
also looking to support our core captive business and make sure we
retain our status in the captive fraternity.
Our status in that market is very important to us. We are number
three or four in the world, depending on what you measure it on. We
are up there with the leading captive jurisdictions, but the three
that most people would recognise as being the leaders are Vermont,
Bermuda and ourselves. We are very proud of that record.
Q - Which countries are showing most interest in setting
up in Guernsey?
DW - There is interest from a number of different environments.
There is a significant amount of work going on in Asia. There is
work going on and licences being issued for American companies. A
lot of that has to do with assisting them in their European
operations. There is a lot of experience here of trading into
Europe. And there are isolated examples of interest elsewhere.
I can't point to a geographical area and say there is a
trend there, but there is definitely business here from the Middle
East, south Africa and south America. It is an increasingly global
type of business.
A lot of it comes from the need for expertise in providing
insurance into the European domain, bearing in mind that Europe has
quite significant regulatory hurdles to be crossed. The expertise
we offer is not only how to manage the captives and manage the risk
management side, but also on how to release that cover into the
Q - There has been a reduction in the number of insurers
getting licenses in Guernsey in recent years. What is your stance
DW - Like all mature industries, you'll find that there will
be some business that goes and some that arrives. The mix of
business will evolve over time in response to market conditions and
what's going on in the underlying market.
At the moment there's been significant growth in the
insurance-linked securities sector, and that is driving a lot of
formation of particular cells. We've seen a lot of interest
around the pensions area, predominantly UK pensions, which has
driven formation of cells.
In the captive industry, the conventional insurance market is
very soft, and the alternative to the risk retention that captives
provide is for corporations to buy external insurance.
Traditionally this would have meant that it was very difficult for
captives to compete, but I think that the limitations that insurers
can put on cover now for particular sorts of risks that they
don't like, and in terms of the overall market capacity for the
energy industry – those limitations mean there are increasing
strategic drivers for captives. The business being generated here
is quality business with strategic drivers that have legs and will
continue for some time in the future.
What I would say about the numbers is that they reflect a growth
that has slowed down elsewhere. We are not alone in seeing a
difficult market for captives, but I think ILS generation and our
penetration in that market is the focus of what we will be doing,
alongside the underlying captive promotion work we will be doing
Is there anything else you'd like to add?
DW - This is a story about continuing, solid performance of a
mature market that continues to generate value and deliver products
the market is looking for. Obviously, along the line are all sorts
of international challenges, and we need to constantly evolve as a
domicile, and there is a lot of work that goes into that.
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