Originally published as sponsored editorial in Captive Review, December-January 2007-2008
2007 was always going to be a landmark year for Guernsey as a captive insurance domicile: it represents 21 years since the Island put in place its robust yet pragmatic regulatory framework for captives and the tenth anniversary of when the jurisdiction introduced the Protected Cell Company (PCC) to the world. Beyond these milestones, the year has also proved particularly significant in terms of the continued growth in the Islands captive insurance industry, the substantial promotion of the sector and enhancements to the Islands captive infrastructure. Guernsey is far from resting on its laurels.
Since the first captive to be established in Guernsey was formed in 1922, the Island has developed to become one of the leading captive insurance domiciles in the world. The expansion of Guernseys captive industry meant that by the end of 1998 the Island was playing host to 349 captives. By the end of September 2007 though this had dropped to 303. However, far from illustrating decline, these figures demonstrate the evolution in the continuing growth of the Islands captive insurance industry.
Ten years ago, in 1997, Guernsey pioneered the PCC concept. By the end of that year there were six PCCs and 14 cells but by the end of September 2007 this had risen to 70 PCCs and 262 PCC cells. In addition, following from its introduction of the innovative Incorporated Cell Company (ICC) concept, Guernsey now has its first insurance writing ICC and an ICC cell. The total number of entities has risen from 399 at the end of 1998 to 637 at the end of September 2007. Alongside this, whereas in 1996 the industry wrote business with gross assets of £6.4bn, a net worth of £2.3bn and premiums of £1.7bn, in 2006 this was £18.8bn, £6.5bn and £3.4bn respectively.
Put simply, Guernsey is still the leading captive insurance jurisdiction in Europe and number four in the world in terms of premiums written.
A Marsh report from March 2007 shows that half of the captives established by UK companies are domiciled in Guernsey. However, while last year 51% of the captives licensed in Guernsey had UK parents, this is a smaller percentage than in the past; and with the remaining 49% of captives established by companies from across the world, including Europe, the USA, Hong Kong, Japan, the Cayman Islands, Saudia Arabia and South Africa.
Guernseys move into new markets has been precipitated by its position as a mature captive domicile for example, approximately 40% of the FTSE 100 companies already have captives in the Island. Therefore, Guernsey is now engaging with the UK broker community to inform them on how the development of the cell company with lower barriers to entry means that the benefits of captive insurance are now more accessible to their clients of small to medium sized enterprises.
Indeed, GuernseyFinance the promotional agency for the Islands finance industry has been disseminating these messages at national and regional events of the British Insurance Brokers Association (BIBA), with contributed articles and advertisements in its in-house publication The Broker and through editorial and advertising opportunities in other journals aimed at brokers. The agency continues to work with BIBAs Executive Board and Regional Committees in organising initiatives, including presentations at a local level, to educate brokers.
This is in addition to GuernseyFinances work, in conjunction with the local industry, to promote the captive sector more broadly through attendance at third-party events, such as RIMS, AIRMIC and FERMA; hosting our own events, notably the Guernsey Insurance Forum 2007 in London; and gaining publicity through editorial and advertising in the international trade media. Next year promises a further increase in these activities and it has already been announced that the Guernsey Insurance Forum 2008 will be held on Wednesday 12 November, again at the Queen Elizabeth Conference Centre in Westminster.
Enhancing The Infrastructure
In promoting the industry one of the key features that we emphasise is the expertise and infrastructure that has developed in Guernsey. The Island now plays host to 26 captive managers, ranging from boutique operations to large international players and independent captive managers through to broker-tied managers. Guernseys captive industry is renowned for its experience, expertise and professionalism and in addition, devotes significant resources to business development, enabling the identification and implementation of innovative and bespoke insurance solutions.
The Island also has a robust yet pragmatic regulatory environment provided by the Guernsey Financial Services Commission (GFSC). It is also at the forefront of regulatory developments, as demonstrated by the fact that Guernsey, through the GFSC, sits on the Executive Committee of the International Association of Insurance Supervisors (IAIS) and has been asked to Chair a sub-group that is producing a guidance paper on the supervision of captives as a way of informing and educating fellow IAIS members who are less familiar with the concept.
2007 has been a year in which Guernsey has through growth, promotion and infrastructure enhancements further consolidated its position at the top-table of international captive insurance centres. In addition, this year the Island has conducted a thorough review of its insurance laws and it will be a further boost to the local captive industry when the modernised legislation comes into force during 2008 a year in which the Island also moves to a standard rate of 0% corporate tax. The future is bright.
For more information about Guernsey's finance industry please visit www.guernseyfinance.com .
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