Guernsey has seen a positive start to the year in the insurance-linked securities (ILS) market, building on the solid growth it experienced in 2017, according to Guernsey Finance, the promotional agency for the island’s financial services sector.
Statistics for new cells of protected cell companies (PCCs), the main method of writing new ILS business, are well ahead of those for 2017 so far, while business flows from both established and new clients have also been good.
Last year, Guernsey’s insurance industry saw overall net growth, including ILS, of 2.2%, with top line growth of 10%.
The total number of international re/insurers in Guernsey stood at 853 at the end of 2017, with more than half represented by PCC cells.
Derek Maddison, Chairman of the Guernsey International Insurance Association, said this figure reflected the island’s strong position in ILS, attributing the growth partly to an increase in demand for natural catastrophe cover.
“Some of these risks can be difficult to place in conventional insurance markets,” he said. “There may not be enough capacity or the insureds may want a particular trigger to be used instead of proving an event in the conventional insurance sense. There is also a growing appetite among the institutional investors to diversify into such risks.”
Guernsey was the first jurisdiction to enact legislation permitting the formation of PCCs, and its insurance industry has recently considered establishing entities that combine insurance and investment activity in one vehicle.
“Although this is at an early stage, this could present significant efficiencies for ILS fund managers,” said Guernsey lawyer Christopher Anderson, Partner at Carey Olsen.
Dominic Wheatley, Guernsey Finance’s Chief Executive, added: “These are exciting times for ILS. With international fragility and uncertainty on the rise, and innovation in the market, the ILS sector is rapidly developing.”
