Major insurance deals expected for Guernsey

03 April 2017

Some major deals should come through in the Guernsey insurance sector in the next few months, according to one of the industry's leading experts.

Mark Helyar, the former Managing Partner of Bedell Cristin, now working for the firm as a consultant, told the Guernsey Press that he expected news to break of a major longevity transaction locally, and more ‘value in force' securitisations.

“These types of transaction are at the cutting edge of insurance and reinsurance structuring and demonstrate Guernsey’s pre-eminent position for this type of complex, high-value structure,” he said.

“Guernsey has become the go-to jurisdiction for complex pension longevity transactions.

“This is possible because of the complex mixture of professional expertise and experience available in the jurisdiction, as well as a flexible and highly supportive regulatory environment.”

Longevity-based transactions involve the reduction of risk in large pension schemes. Pension trustees and employers have been faced with great difficulty in managing the adequacy of their pension schemes as people live longer and investment returns have reduced since 2008. Longevity schemes involve the formation of special purpose insurers and purchase of reinsurance to bear some of the longevity risk at a reduced cost.

VIF securitisations involved the transfer by a life insurer of a portfolio of life policies at a fixed price to a special purpose insurer, which then runs off those policies at a profit. The transferring life insurer benefits by capitalising part of its policy base, enabling it to use the capital for further underwriting.

“Guernsey has become the go-to jurisdiction for complex pension longevity transactions. This is possible because of the complex mixture of professional expertise and experience available in the jurisdiction, as well as a flexible and highly supportive regulatory environment.”
Guernsey lawyer Mark Helyar

Bedell Cristin Guernsey Partner Richard Sharp said that the local market was still seeing ‘active growth’ in the first few months of the year, particularly in insurance-linked securities and collateralised reinsurance.

“The completion of rules for special purpose insurers in early 2017 has further assisted the jurisdiction to demonstrate transparency in its regulatory approach and its attractive ness to clients when selecting a jurisdiction in which to place their special purpose structures,” he said.

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