Europe has always had a vibrant insurance market. Lloyd’s is perhaps the most famous and historic insurance institution in the world, while many of the larger insurance companies—including AXA, Zurich, Swiss Re and Munich Re—are European. In the world of captives, though, Europe remains a relative backwater, with most of the action taking place in the US, Bermuda, and the Cayman Islands.

That said, Europe does have pockets of activity. Guernsey is an internationally respected domicile for captives, and the original author of protected cell company (PCC) legislation, which has been copied the world over. While the seven captives it launched in 2020 lag behind the 12 registered in Bermuda and the 38 created in Vermont, the hardening market could bring more in 2021.

In recent months there has been much excited talk about increasing captive insurance activity in Europe. Strategic Risk Solutions and Davies, two big international players in captive management, are not just talking up their ambitions in Europe—by opening offices in Guernsey, both are putting their money where their mouths are, and both clearly expect increasing activity to justify their efforts.

“In recent months there has been much excited talk about increasing captive insurance activity in Europe.”
Solomon Teague, editor, Captive International

The US captives industry grew into what it is today through competition. The early US jurisdictions, notably Vermont, emerged as onshore competitors to Bermuda. Now, more than half of the states in the US have brought their own captive insurance legislation, and stiff—if friendly—competition between them raises the quality of all their offerings.

This level of competition has traditionally been largely absent in Europe, but there are signs that this is starting to change. Guernsey has long been competitive, but other jurisdictions such as the Isle of Man, Ireland, Malta, and Luxembourg have been raising their games. The Isle of Man, which (like Guernsey) sits outside the scope of Solvency II, has been actively marketing its captives offering, to try and close the gap with Guernsey.

Meanwhile, there has been talk of France working on a plan to encourage its indigenous companies to redomicile their captives in their home country. How successful this will be remains to be seen, but competition will certainly benefit the industry in Europe.

Good prospects

With all that in mind, we believe it is the perfect time to present Captive International’s first Europe Focus report. We examine the tax and regulatory developments in Europe, and what considerations prospective captive owners need to keep in mind when thinking about where to launch a new captive. We speak to the European Captive Insurance and Reinsurance Owners Association about the prospects for captives in Europe, and the factors companies need to think about to ensure the effort that goes into launching a captive pays off.

We have updates from Guernsey and the Isle of Man, showcasing their respective jurisdictions and outlining why captives owners should consider being based there. Randall & Quilter Investment Holdings (R&Q), one of the leading players in the legacy space for captives, explains why business has been booming—and is set to continue to do so.

We hope you enjoy this Europe Focus report and believe it will be the first of many, as Europe’s captive insurance industry goes from strength to strength.

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