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Insurance
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EiFlow, a dedicated Gibraltarian legacy insurance company since 2012 with total net assets at end-2017 of €35m buys books of business that insurance companies don’t want to continue to handle and successfully received transfers of business from France (in 2016) and earlier a much larger Irish insurer.
The UK Statutory Instrument this year gives certainty, Ashton asserted. “We will be able to say to these UK legacy operators, why don’t you take another look at Gibraltar, there are compelling reasons to do so, and the UK legislation clearly states Part VII transfers are possible post-Brexit. We can make another push,” he said.
According to T&T senior associate lawyer, Javier Triay : “We believe many small and medium-sized EU insurers are still hoping that a hard Brexit does not happen and will be caught out unless they are taking the appropriate steps to continue operating under the respective ‘temporary permission’ regimes.
“Gibraltar may not have been on the radar for EU insurers, which is why the government’s new “Think Gibraltar” campaign launched in September in London may be useful in appealing to EU firms who want to continue offering their services in the UK without establishing a presence there by benefitting from the passporting permissions under the Gibraltar-UK common market. I don’t think we have shouted loud enough about the benefits of Gibraltar’s offering yet”, Triay maintained.
The Far East has for three years been a target for Gibraltar Finance making at least two visits annually to China and Hong Kong to position Gibraltar as a financial services hub that the region should consider using more often. Ashton explained: “Building contacts and relationships in the Far East takes time and certainly several visits so people get to know you and Gibraltar. We have an interesting proposition and we have started to have success.”
China moves ahead
Bruno Callaghan, of Callaghan Insurance, a broker, says Chinese business has already been gained. “We have Chinese business that we have put on the books,” he announced, after returning in October from the latest of more than ten visits there since 2016. “Now the Chinese are coming to Europe to follow up on our discussions, which is a big step forward and an indicator that they are serious,” Callaghan pointed out. “Some Chinese representatives have already been to Gibraltar and I also met in London in September with the Chinese on various insurance projects.”
Callaghan, who has 30 years experience in
Gibraltar insurance, revealed: “I am working on a very large Chinese insurance project, involving huge amounts of premium income which will flow through the jurisdiction during the next six months, and Callaghan Insurance is acting as a conduit between the UK and China.”
He also catalogued another Chinese initiative. “We are working through a pre-license application for a Life Insurance Protected Cell Company (PCC) to be established in Gibraltar, and also on a third joint venture project.”
A first was also chalked up in September when Premier Insurance became what it believes to be the first small to medium-sized motor insurer in Gibraltar to be awarded independent recognition of its financial strength by global credit ratings agency, A M Best, which noted that the insurer outperforms many UK motor writers and “produces healthy underwriting results”.
The specialist insurance ratings agency assigned Premier – a niche motor insurer – a financial strength rating in September of “B++ (Good)” and a Long-Term Issuer Credit Rating of “bbb”.
Ratings reassure
The ratings evaluation helps underscore Premier’s strength at a time when industry regulators have been signalling their support for such financial indicators. Commerce Minister Isola congratulated Premier on its new financial stability report, stressing: “An insurance rating involves significant time and effort on behalf of the company to obtain and as well as a commitment to further layers of inspection and oversight to that business, which can only be positive.“
As Steve Quinn, Premier’s managing director, said: “Previously, ratings have been confined to the large insurers, but as a small provider in a crowded motor market, the
addition of the A M Best ratings will enable us to be differentiated positively from other insurers.” Quinn, who joined Premier in March with wife, Liz as Financial Controller – they previously ran Gibraltar-based Artex Risk Solutions with Premier as a client - noted: “Credit ratings have gained a higher profile in recent times among UK financial services business - banks and insurers - in part because of insurance failures.”
Gibraltar Finance’s Ashton observed: “Lack of a rating, per se, doesn’t stop an insurer being well-regarded, but having a rating does assist in appealing to brokers for certain business. There is an argument that says more smaller-to- medium-sized insurers in Gibraltar should look to obtain a rating, because it provides another level of control and oversight and that is positive. However, there is another view that it is much more about demonstrating to brokers, intermediaries and policyholders that the business has solid reserves and cash flow, and that the management and controls in place are second to none.”
GIA chairman, Cawdery says in 2019 a key issue is ensuring a good relationship with the UK. “As we will be in a single market with the UK, we will understandably need to ensure broad equivalence of regulatory outcomes with those insurers in the UK – ensuring the regulatory landscape in Gibraltar achieves a similar end- result as those required by UK’s PRA and FCI.
“There is a risk that the GFSC could become rule takers from the PRA if there are greater regulatory breaches in Gibraltar than the UK, and the focus now is very much around ensuring insurers’ good corporate governance to see that they are fully aware of what they are underwriting and how they are pricing it to avoid anti-selection, given that a substantial amount of Gibraltar business is arranged at arm’s length through UK intermediaries”, Cawdery concluded.
Car Insurance Graph, Deloitte Ltd
14 Gibraltar International
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