Guernsey Insurance Industry Grew In 2007

by Carla Johnson, Investors Offshore.com, London

23 January 2008

The number of international insurance entities based in Guernsey grew again during 2007 despite the Island’s maturity in the sector and the difficult market conditions, according to newly released figures.

As part of this growth over the past twelve months, the world’s first local authority captive has been established in the Island, Guernsey’s first major commercial reinsurer has been licensed, and the Island’s first insurance writing incorporated cells have come on-stream.

“The increase in the number of entities domiciled in the Island and the several new ‘firsts’ that we have seen during the past year illustrate that Guernsey’s international insurance industry is continuing to perform robustly into 2008,” observed Peter Niven, Chief Executive of GuernseyFinance – the promotional agency for the Island’s finance industry.

Figures from the Guernsey Financial Services Commission (GFSC) show that at the end of 2007, there were 298 traditional captives domiciled in Guernsey.

In addition, between the end of 2006 and the end of 2007, the number of Protected Cell Companies (PCCs) grew from 68 to 69, PCC cells rose from 243 to 257, Incorporated Cell Companies (ICCs) remained at one, and the first seven insurance writing incorporated cells were established – taking the total number of international insurance entities up to 632.

David Riley, Chairman of the Guernsey Insurance Companies Management Association (GICMA), announced that:

“It is positive news that the number of licences in issue increased during last year despite there being a slowdown globally in the formation of new captive insurance companies given soft markets for many types of cover and Guernsey being a mature captive insurance market."

“In addition, Guernsey’s international insurance sector now has an annual net premium income of more than GBP3.4bn. – double what it stood at ten years ago."

"This reflects the fact that as well as more captives being established, corporate parents are placing more business with existing captives and there is increased use of the cell company concept, which allows different companies to use the same captive and where the individual cells are often bigger than many traditional captives.”

Guernsey reportedly remains Europe’s leading captive insurance domicile, and fourth in the world in terms of premium written.

Last year represented the tenth anniversary of the Island spearheading the cell company concept with the introduction of the PCC.

Mr Niven observed that:

“Developments over the past year illustrate how Guernsey’s international insurance industry is continuing its tradition of innovation and maintaining business growth by diversifying its range of products and services to match evolving client needs.”

Statistics from the GFSC show that last year 40% of all licence applications were from UK parent companies (compared to 30% from Europe).

Therefore while the UK still remains the largest single source, in percentage terms it is less significant than in the past as Guernsey’s spread of business becomes more international.

In addition, the GFSC has said that the new entities are writing a diverse mix of business from simple deductible infill policies to major reinsurance.

This news comes as the Island is undertaking a specific promotional campaign to attract reinsurance business.

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