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Guernsey has clarified a number of rules in relation to insurance-linked securities (ILS) cells, including agreeing to allow them to benefit from rollover provisions.
Following talks with the Guernsey International Insurance Association (GIIA), the Guernsey Financial Services Commission (GFSC) has clarified a number of issues in relation to the authorisation process for ILS cells.
The GFSC confirmed the availability of rollover provisions, a ‘grace period’ for the application of collateral at both the formation of new special purpose insurer (SPI) cells, and renewal of deals in SPI cells.
In a letter to the GIIA, Katherine Jane, director of risk and financial stability at the GFSC, said the commission accepted that the timing difference between a SPI committing to a collateralised reinsurance transaction, and the point at which the trust account is fully funded, was a commercial decision for the ILS industry with the full knowledge and acceptance of the cedant.
It has agreed a 30-day period at the start of a transaction where a cell would not be considered to breach the fully-funded requirements of its ILS rules.
Peter Child, managing director of Artex Risk Solutions in Guernsey and chairman of GIIA’s market development committee, welcomed the affirmation and said the GIIA had raised a number of regulatory matters with the GFCS, which it believed would make the domicile more attractive to its global client base.
Child committed: “We already believe that Guernsey holds a number of advantages as an ILS domicile, including the breadth of our funds and insurance knowledge, our status outside Solvency II, our experience and, as proved here, the responsiveness of our regulator.”
Dominic Wheatley, chief executive of Guernsey Finance, stated the move would be well received in the international insurance industry.
He added: “A responsive regulator is an important contributor to the success of our supportive business environment.”