The risk purpose trust (RPT), a mechanism allowing corporates to fund for foreseen and unforeseen expenses and business risks, has been launched in Guernsey.
Insurance management provider Robus Group, trust company Marlborough Trust and independent consultant Richard Gale jointly developed the RPT mechanism.
Guernsey was the first captive domicile to implement protected cell company (PCC) legislation, which it did in 1997. “The PCC as a product has become standard in the international financial market and it is expected that the RPT will follow this path,” said a statement from Robus Group.
Gale explained that the aim of the RPT mechanism is to solve captive insurer imperfections that have become apparent to him during his 20 years in captive management.
“What resulted was a product which, while I feel is successful in my initial goal, has morphed into a much broader solution to the budgeting for expenses of corporates. What’s surprising is how simple the model of the RPT is, what’s exciting is how well it can solve so many issues.”
The uses of the RPT include budgeting assistance for gratuity payments, incentive payments or sports bonuses, provision for future repair costs, rental guarantees for landlords of large property portfolios, pension shortfalls, and the support and provision for unforeseen risks of corporates generally, from the traditionally insurable to the non-insurable.
Nick Hannah, managing director of Marlborough Group, said that the RPT is steeped in innovation. “At its inception, the development of the trust throughout history has been fuelled by a series of problems looking for answers. The great merit of the trust has been its ability to evolve and cope with new and different problems. The RPT is the natural continuation of this evolution.”
Chris Le Conte, managing director of Robus Group, added: “We are excited about this new innovation for Guernsey, this could potentially change the way corporates view their budget and risk management. We have no doubt that this latest move for Guernsey will only help to cement us as a financial domicile of choice throughout the world.”
The three parties have simultaneously launched Princeps, a joint venture that will aim to sell the RPT to companies.
Gale said that the combination of the teams from Robus and Marlborough to create Princeps was the ideal choice.
“I have worked a great deal with Chris Le Conte over many years and spent a considerable amount of time with Nick Hannah during the two years of the RPT development. Their exceptional creativity and thought leadership moved the conception to reality. This is a product which will keep evolving to solve the problems that need to be solved.”
“We wanted to create an advisory company which would embody the innovation and expertise which has produced the RPT. We believe that in Princeps this has been achieved.”