The Guernsey reinsurance industry is still experiencing “a lot of confusion” concerning Solvency II regulations, but Guernsey reinsurance is still open to EU-domiciled insurers, according to Jason Noronha, head of actuarial and analytics at Aon.
At Guernsey Finance’s ILS Insight event, hosted in Zurich, Noronha discussed—and aimed to dispel—common misconceptions around Solvency II.
One such misconception was around how credit would be granted for reinsurance firms’ capital calculation for European-domiciled insurers who have bought from a non-equivalent regime if the entity is rated triple-B or above or collateralised
“If a reinsurance contract is fully collateralised, as long as the requirements are met, you can take full credit,” he said.
He continued: “There is no reason why an EU-domiciled insurance company should not be able to benefit from reinsurance from a non-equivalent domicile—that is, one operating in Guernsey.”
“There is no real restriction on the use of non-equivalent domiciled reinsurance, as long as there is some mitigation in place, such as a credit rating or collateral.”
Essentially, Guernsey’s reinsurance offering will still be eligible for EU-domiciled insurers to claim capital credit. This clarification follows Guernsey’s commendation for its recognition of international standards by the International Association of Insurance Supervisors.
Dominic Wheatley, CEO of Guernsey Finance, added: “This is a welcome confirmation of the island’s position with regards to Solvency II and reinsurance. Guernsey’s diverse insurance industry provides a flexible, responsive regulatory regime outside of the EU, which is quicker, less prescriptive and more flexible than Solvency II.”
