Guernsey has introduced the world’s first insurance-linked securities (ILS) hybrid vehicle.
The hybrid is a protected or incorporated cell company that is both a licensed insurance company and a regulated investment fund, meaning ILS managers will no longer have to rent cells of protected cell or segregated account companies to act as Special Purpose Insurers (SPIs).
These SPIs are often established in a different jurisdiction and operate entirely separately from the ILS manager’s fund.
According to Guernsey Finance, the hybrid vehicle will lead to increased simplicity and efficiency for ILS fund managers.
Corey Olsen, partner at Christopher Anderson and creator of the hybrid concept, with the support of the Guernsey Financial Services Commission, said: “For the first time, the Guernsey hybrid provides managers with the opportunity to operate an investment fund and any number of sub-funds and SPIs in one place, supervised by one regulator, governed by one board of directors with one set of service providers and one auditor.”
“No other jurisdiction in the world offers such a unique combination.”
He added: “Guernsey is a world leader in both the investment funds and insurance sectors so the concept of fusing two regulated structures into one vehicle makes perfect sense and is a development that will generate significant cost savings and other efficiencies as well as greater control for ILS fund managers."
Dominic Wheatley, chief executive of Guernsey Finance, commented: “Guernsey is one of two key players in the ILS transformation market, and as the asset class grows we see Guernsey’s role growing too.”
“Guernsey will continue to be at the forefront of innovation in ILS and this is a perfect example of forward-thinking.”
He concluded: “This thinking builds on Guernsey’s expertise in insurance and ILS and in funds, where we are global specialists in private equity, listed debt and alternative assets, and should lead to Guernsey becoming a natural choice for ILS managers to establish a fund.”