Guernsey continues to develop China’s captive market

23 October 2019

International co-operation agreements and Guernsey’s reputation in the market are helping to facilitate the growth of Guernsey captives with Chinese clients.

Guernsey's profile as a key captive insurance jurisdiction for Chinese clients continues to build as the business from the latter look to expand into Europe.

Kate Storey, Partner at Walkers in Guernsey, who was one of the speakers on captives at a Guernsey Finance Shanghai Masterclass, said that Guernsey was the best location for Chinese businesses to set up a captive.

“Proximity to London is a selling point, as is Guernsey's international reputation as a highly regarded legal and regulatory environment, and the high quality of professional services available within the jurisdiction,” Ms Storey said. “Another distinguishing factor is the existing co-operation agreements between Guernsey and China.”

Since March 2017 there have been agreements in place between the Guernsey Financial Services Commission and the China Banking and Insurance Regulatory Commission, and between Guernsey Finance and a key business hub, the Beijing Airport Economic Core Zone.

The key questions put to Ms Storey during her visit involved Brexit and the benefits of the Guernsey model.

“The message that we're not directly affected by Brexit because we are not part of the UK was positively received – as was the message about the cost effectiveness, speed of set up and proportionate risk-based regulation of the Guernsey captive,” she added. “The fact that entrepreneurs can set up captives to be owned by a trust arrangement for the benefit of their family members was of interest to the audience.”

Charles Scott, Managing Director of Guernsey-based Asset Risk Management, Europe’s largest independent insurance manager, has been pioneering Guernsey captives in China, and also spoke at the event.

“The Masterclass was a good showpiece for Guernsey with a number of potential clients in the audience,” he said. “Given our attendance and speaking slots in the masterclasses, ARM has and continues to raise its profile leading to further enquiries.

Work in China is paying dividends for companies that take the time to visit, as evidenced by Mr Scott’s update on his own progress.

“As regards new Chinese owned clients, we are working on a business plan for the first Chinese-owned Protected Cell Company as well as a cell in the ARM-owned Windward insurance PCC.

“There are a number of other captive projects we are working on, but these are not in the advanced stage yet.”

Guernsey remains Europe’s leading centre for captive insurance, responsible for more than a third of the European captives market. The island was recently named 'Best non-Asian Domicile' at the Asia Captive Review Awards.

Private wealth was the other key topic from the Shanghai Masterclass. The panel session focused on Private Placement Life Insurance (PPLI), an arrangement for wealth management which is suitable for the Chinese market.

Guernsey Finance Chief Executive Dominic Wheatley said: “Life insurance can enable the tax-efficient transfer of wealth from the older generation to the younger without the need for estate executors. Done properly it can be very cost-efficient. The potential clients in China means there is an opportunity for Guernsey firms to set up PPLI in the island.

“It is particularly useful when discussions coming out of events like these point towards new opportunities for our stakeholders.”

Guernsey has had a permanent representative in China for more than a decade and has built contacts with government, regulators and potential clients in a range of activities over that time.

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