Guernsey: ILS Funds In Guernsey

Carey Olsen partner Christopher Anderson provides an overview of the benefits of structuring ILS funds in Guernsey.

As described in our earlier briefing, Guernsey has a thriving insurance linked securities (ILS) sector and is home to an abundance of ILS structures, including:

  • hundreds of special purpose insurers (SPIs) writing billions of dollars of life and general risks for ILS funds and investors
  • ILS funds, both private (often for a single, sophisticated investor) and blind pool managing billions of dollars of ILS assets
  • 'A'-rated reinsurance companies established by large scale ILS managers writing billions of dollars of gross written premiums annually.

Facilitating this success is a bespoke regulatory regime that has been specifically designed for the sector. Fast-track authorisation rules enable SPIs to be established and regulated with immediate effect. These SPI Rules are designed to accommodate certain features that are peculiar to ILS transactions.

Guernsey's funds pedigree

Guernsey is home to a wide range of investment funds as the following credentials illustrate:

  • There are more than 800 Guernsey-domiciled funds
  • £263 billion in total assets under management, including over £100 billion in private equity
  • 119 London-listed entities with £46 billion in capitalisation.

Carey Olsen advises over 70% of all Guernsey funds, the 10 largest promoters of Guernsey-domiciled investment funds by assets4 and nine of the world's top ten 10 private equity firms5.

A number of European ILS managers raise and deploy capital using a UCITS fund (Undertakings for the Collective Investment of Transferable Securities). A UCITS is an open -ended fund, offering liquidity to investors through the right to redeem their interest upon notice (often monthly or quarterly).

UCITS are heavily regulated by the EU but the upside of this burden is market access as UCITS can be distributed to any investor throughout Europe (even retail).

Guernsey also offers a variety of categories of open-ended funds from Class A schemes aimed at retail investors to Class Q aimed at sophisticated and professional investors.

The extent of regulation varies depending on the type of investor. Schemes offered to professional or sophisticated investors, for example, are subject to fewer investment strategy restrictions or diversification requirements provided that adequate disclosure is made in the offering documentation.


The assets underlying an ILS fund (other than catastrophe bonds) can often be relatively illiquid. This is particularly true in the case of life ILS transactions, which tend to endure for a longer period of time than general insurance ILS.

Structuring a fund as open-ended does not in itself provide liquidity for investors. As the credit crunch showed, offering redemption rights to investors based on liquidation of the underlying assets can be problematic. A number of well-known open-ended property funds had to suspend redemptions both in 2008 and following the Brexit vote due to the illiquid nature of the underlying assets.

Whether open or closed-ended, the listing of the shares in the fund on an actively traded stock market such as the London Stock Exchange (LSE), is an alternative way to provide liquidity to existing investors without relying on the prompt liquidation of the underlying assets. A listing enables existing investors to realise their investment through secondary sales to prospective new investors on the exchange.

Guernsey funds have enjoyed a close relationship with the LSE for decades and Guernsey companies have listed their shares on a number of other leading stock exchanges, including the NYSE, NASDAQ, ASX and TSX.

Guernsey also remains home to more non-UK LSE-listed entities listed than any other jurisdiction in the world. At the end of Q1 2018 there were 90 Guernsey 'financial' entities listed on the LSE main market (12.69% of the total number), making Guernsey the market leader for fund listings on the exchange outside of the UK6.

Globally, Carey Olsen advises 101 LSE-listed clients, which is more than double the number of any other offshore law firm7.

Global distribution

Although Guernsey is outside of the EU, its funds are able to be distributed to a variety of investors in a large number of countries throughout Europe, the Americas, Asia and the Middle East. Guernsey funds are currently promoted or sponsored in more than 55 jurisdictions throughout the world.

A listing on a recognised stock exchange can also aid distribution.

The International Stock Exchange (TISE), which is headquartered in Guernsey, hosts both ILS vehicles and ILS funds. TISE was the chosen exchange for the world's first listed private cat bond transaction and the first securitisation of TAKAFUL (Sharia compliant) insurance policies.

TISE is recognised by the UK's tax authority HMRC and the German regulator Bafin as well as other authorities globally.

Reputation for innovation

Guernsey likes to innovate. It was the first jurisdiction to establish legislation permitting the formation of protected cell companies in 1997. Since then it has also introduced the incorporated cell company and the SPI Rules.

More recently, industry has been considering the possibility of the establishment of entities that combine insurance and investment activity in one vehicle. Although at an early stage, this could present significant efficiencies for ILS fund managers.

An international partner

Guernsey also continues to lead the way in international compliance matters. It adheres to the highest standards of international tax and regulatory principles and is committed to ensuring that this continues.

The jurisdiction has given its full support for the transparency principles central to the current G20, Organisation for Economic Co-operation and Development (OECD) and EU tax initiatives and is working as part of the wider international community in the development and effective implementation of internationally agreed standards, including those set by the Financial Action Task Force (FATF) and the OECD.

Guernsey has been assessed as being amongst the best quality financial centres in the world when measured against the rigorous international standards for tackling money laundering and terrorist financing set by the FATF.

Guernsey also participates fully in numerous international initiatives such as the OECD's base erosion and profit shifting project and developing the global 'Common Reporting Standard' and the automatic exchange of information between tax authorities.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions