Guernsey has seen a positive start to the year in the insurance linked securities (ILS) market.
Statistics for new cells of protected cell companies (PCCs), the main method of writing new ILS business, are well ahead of those for 2017 to date.
According to industry figures, business flows from established and new clients have been good so far this year. Overall net growth, including ILS, reached 2.2 per cent last year, with top-line growth of 10 per cent.
The total number of international insurers in Guernsey stood at 853 at the end of 2017, with more than half (57 per cent) represented by PCC cells.
Derek Maddison, Chairman of the Guernsey International Insurance Association, said this reflected the island’s strong position in ILS.
One driver for the industry was the increasing number of natural catastrophes for which people are seeking cover, he said.
“Some of these risks can be difficult to place in conventional insurance markets. There may not be enough capacity, or the insureds may want a particular trigger to be used instead of proving an event in the conventional insurance sense.
"There is also a growing appetite among the institutional investors to diversify into such risks.”
Guernsey was the first jurisdiction to establish legislation permitting the formation of PCCs more than 20 years ago. Recently, the Guernsey insurance industry has been considering establishing entities combining insurance and investment activity in one vehicle.
“Although this is at an early stage, this could present significant efficiencies for ILS fund managers,” said Guernsey lawyer Christopher Anderson, Partner at Carey Olsen.